Strategic Management: IKEA Business Strategy Analysis Presentation

This presentation analyzes the business strategy of IKEA, a global furniture retailer. It begins with an overview of IKEA's successful business model, including its franchising, supply chain, and industry divisions. The presentation details IKEA's expansion plans, including new store formats and online initiatives, as well as its commitment to providing quality furniture at reasonable costs. It also explores IKEA's corporate governance, risk management, and employee relations. The presentation discusses IKEA's strategy to address decreasing sales growth by opening small stores, introducing pick-up points, and establishing pop-up stores. A key strategic initiative involves renting out low-cost products to increase sales and customer satisfaction. The presentation concludes with a discussion of IKEA's corporate values and its commitment to incorporating customer feedback. References to relevant academic articles and IKEA's annual report are also included.

TRANSCRIPT:-
Hello Everyone! I think that I don’t need to introduce myself to all of you and you all
must know my name, so let’s not talk about that. Well, IKEA has been running very
successfully, therefore, we would see the success stories of IKEA first. IKEA has 349
stores very successfully in 43 countries. IKEA has been much successful; therefore, it has
divided itself with 3 core business i.e. Franchising, Supply and Industry. These all core
businesses are integrated with each other to provide a proper system and supply to its all
franchises. IKEA is struggling in provide all the condition to implement better
environment in the franchises to its customers and the IKEA concept can also be
successful. I would like to know that we are expanding with a great speed, therefore, we
have opened 11 stores in the year 2018 only and the number of stores have increased
from 321 stores to 332 stores all over world. We have the core value to provide our
customers the best service and the best possible furniture at a very reasonable cost,
therefore, we are successful. IKEA is concerned about its customers, therefore, we
produce innovative designed furniture not only for their bedrooms but full home furniture
and appliances are available on out stores. Our employees working at front office i.e.
IKEA stores and back office i.e. head office or the regional office are also important to
company, as because of you people, the success of IKEA is possible. We value our
employee, therefore, the employees at the front officers i.e. on franchises are the leaders
of the business. They generate the profits for IKEA, therefore, with the compensation,
IKEA assures the employee to provide them the safe environment for its customers.
The corporate governance of IKEA is also related to the three core businesses and the
same is organized through these three core business. All the risk management, control
risk and compliance are custom made through these core businesses. However, the IKEA
has been very much concerned about its growth and development and the company also
wants to secure its IKEA concept, therefore, the corporate government has established its
corporate government on the basis of the said considerations. The IKEA is providing full
readymade furniture as well as the half made furniture for its customers, thus the IKEA
would give you as much possible training so that you are able to make our customer
understand the product and handle the product efficiently. If you would hesitate in
assembling the product and get confuse, so the impression on the customer would be
upset. So we value your respect before our customers. IKEA has been more successful,
therefore, the company has earned total revenues of 25.5 billion dollars and many of the
same has been achieved through the franchising fees or royalties and the finished goods
made by IKEA. IKEA has owned more than 40 units of the furniture production and we
have two separate factories in which production of the components for the furniture are
made. I feel very sorry that the sales growth this year has been decreased therefore; the

inventory in the warehouse and stores has been increased. But to increase the sales of
IKEA, the company has come up with the idea to open stores in three different ways.
Firstly, the small stores would be opened in the remote areas, where the IKEA stores are
not available, for not only increasing the sales but also to cater the medium and low class
people to provide them best quality of furniture in very low cost. Secondly, the pick-up
point system will be introduced in IKEA which will make more convenient for the
customers and the customers could only purchase our products online and the products
and assembling of the furniture would be offered to the customers by IKEA itself. Lastly,
the pop up store would be opened in the remote areas and the areas in which IKEA is not
available to check the market feasibility and if the stores are profitable, then the same
would be permanently settled in the same area. These pop up stores would be firstly
opened for the period of six months or 1 year and then the same premises would be
bought if the store is profitable. I would also like you to know that it is our corporate
value of respecting the ideas of the customers, so if you have any valuable idea at the
time of training so you can share it at the same time and if it is useful for the company
and can be incorporated and you are also successful in practically doing it, so the same
idea could also be incorporated in the product. Furthermore, the main motive of this
session is that we have made a new strategy and as the CEO of the company, I would like
to deliver the same directly to you. As you all are in stores and you know the consumer
behavior and the sales of each product in our IKEA store and being the CEO, I also get
the reports, so it is evident that our cheap products are not being sold at a good pace and I
have heard that most of the consumers thinks it as a disposable product. Therefore, the
management of the company has come up with a strategy to give the same product on
rent. This will give the customer an idea of the product and he will also oversee that the
same product is useful for him or not and if the customers is not satisfied with the
product, then the same can be returned to the stores. Thus, it would increase the sales of
these products and further, the customer satisfaction level would also be high, as the
customers would have the impression that we are trusting on them blindly. So, this is all
from my side and I wish you best of luck.

References:-
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expansion. Journal of Retailing, 87, 345 – 365.
Altinay, I., & Brookes, M. (2012). Factors influencing relationship development in
franchise partnerships. Journal of Services Marketing, 26, 278 – 292.
Awadh, A. M., & Saad, A. M. (2013). Impact of Organizational Culture on Employee
Performance. International Review of Management and Business Research.
Baena, V. (2009), Modeling global franchising in emerging markets. An entry mode
analysis, Journal of East West Business, 15, 164 – 188.
Fink, L. (2011). How do IT capabilities create strategic value? Toward greater
integration of insights from reductionistic and holistic approaches. European
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Grewal, D. & Iyer, G. R., Javalgi, R. R. G., & Radulovich, I. (2011). Franchise
Partnership and international expansion: A conceptual framework and research
propositions. Entrepreneurship: Theory and Practice, 35, 533 – 557.
Heinemann, G. and Schwarzl, C. (2010). New Online Retailing. 1st ed. Wiesbaden:
Betriebswirtschaftlicher Verlag Gabler, p.1
IKEA, (2018). IKEA Annual Report 2017-2018. Available at
https://preview.thenewsmarket.com/Previews/IKEA/DocumentAssets/525222.pdf
Jeng, D., J., Bailey, T. (2012). Assessing customer retention strategies in mobile
telecommunications: Hybrid MCDM approach. Management Decision, 50,
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Lisanti, T. (2014). Pop-Ups Reflect Retail Trends. License Global, p 7
Stewart Douglas (2010), Growing the Corporate Culture, obtained from
https://www.wachovia.com/foundation/v/index.jsp?
vgnextoid=ab411f07760aa110VgnVCM1000004b0d1872RCRD&vgnextfmt=defa
ult on July 9th, 2010