Business Strategy Analysis: IKEA's Use of 7s Model and Porter 5 Forces

This report provides an in-depth analysis of IKEA's business strategy, focusing on the application of the 7s Model and Porter's Five Forces to understand its success in the furniture retail industry. The analysis begins with an introduction that highlights the importance of market entry strategies in today's competitive business environment, emphasizing IKEA's position as a leading furniture retailer. The report then delves into the 7s Model, examining the interconnectedness of shared values, structure, systems, styles, staff, skills, and strategy in driving customer satisfaction and business performance. Following this, the report explores Porter's Five Forces, including competitive rivalry, threats of substitutes, new entrants, supplier power, and buyer power, to assess IKEA's competitive landscape and identify key factors influencing its continued business success. The conclusion emphasizes the importance of adapting strategies, such as potential manufacturing adjustments for emerging markets like Sri Lanka, to cater to the specific needs of target consumer groups, and the overall significance of the 7s and Porter's models in strategic business planning. The report concludes with a bibliography of relevant sources.

11/24/2017
Student Name
IKEA – strategies that win consumer interest

Contents
Introduction......................................................................................................................................1
IKEA 7s Model................................................................................................................................1
The Porter 5 Forces and Continued Business Success....................................................................1
Conclusion.......................................................................................................................................2
Bibliography....................................................................................................................................2

Introduction
With businesses across the globe reporting higher levels of competition across the globe, it has
become important for every proposed business plan to consider evaluating their market entry
strategies so as to develop the best plans. IKEA is one such company which has registered huge
success but the success has not coincidental and the business has implemented and used
important marketing approaches to boost their performance and be ranked as the largest furniture
retailer. To understand the factors influencing the businesses success both the 7s model and
porter 5 model used by the company must be analysed to determine the businesses performance
(Marr, 2016).
IKEA 7s Model
The 7 s model consists of a shared value, structure, systems, styles, staff, skills and strategy
which all require being implementing and using to develop a successful model. Shared value
involves interlinking, structure, systems, styles, staff, skills and strategy which all play an
important role towards identifying customer needs and trends which can be adopted and help the
business propel to success. Each of the elements play an important role towards the businesses
performance and must be interlinked and work as a single unite by contributing feedback and
insight to each other so as to improve the products and services a business is delivering staff
skills, knowledge of consumer interests must be utilized to boost the organisation understanding
of customer needs so as to develop suitable products which meet their expectations (Daniell,
2004). The staff will in most situations be in direct contact with the consumer thus they can
provide important feedback to assist the organization understanding areas which may require
improvement.
The Porter 5 Forces and Continued Business Success
The porter 5 models consist of 5 main elements which include the analysis of competitive
rivalry, threats of substitutes, the threat of new entrants, supplier power, buyer power (Smith,
2013). Each of these elements plays an imperative role towards a business’s performance and
data generated from each of these elements can be used to identify issues as well as a solution to
the identified issues. Again similar to the 7s Model the porter 5 model elements are also closely
interlinked and related. This results in each of them needing to be interlinked with the other and

data evaluated to deliver findings based on the specific elements criteria but also based on its
dependence on the other elements (50MINUTES.COM, 2015). Elements such as the threat of
substitutes and new market entrants are directly interlinked making it important for the business
to constantly remain innovative so as to remain ahead of competitors and substitutes who may
consider entering a market if the businesses do not practice innovation at an acceptable scale.
Conclusion
This is especially important for businesses like IKEA while considering to enter highly
competitive markets like Sri Lanker where the markets are currently dominated by products
manufactured in Asian countries which may require IKEA to now consider adopting suitable
approaches where the business may require to modify and begin manufacturing within Asia so as
to be able to deliver affordable furniture to the middle-income group earners which are the
largest income groups most businesses are targeting in Asia due to the large amount of income
that can be harnessed from these consumers. This makes these the preferred and best income
groups to consider and the use of the above told plays a huge role towards IKEA as well as
businesses considering expanding their operations.

Bibliography
50MINUTES.COM, 2015. Porter's Five Forces: Understand competitive forces and stay ahead
of the competition. 50 Minutes.
Daniell, M., 2004. Strategy: A step-by-step approach to development and presentation of world
class business strategy. New York: Springer.
Marr, B., 2016. Key Business Analytics: The 60+ Business Analysis Tools Every Manager Needs
To Know. Pearson UK.
Smith, M.H., 2013. The Natural Advantage of Nations: Business Opportunities, Innovation and
Governance in the 21st Century. London: Earthscan.