A Detailed Analysis of IKEA's Competitive Strategies in India

This report provides a comprehensive analysis of IKEA's competitive strategies, focusing on its entry into the Indian market. It begins by examining IKEA's business strategy, emphasizing the cost leadership approach and its relevance to the Indian context. The report then delves into the corporate strategy, highlighting sustainability initiatives and CSR efforts, including their impact on brand perception and customer trust. Furthermore, it explores IKEA's international strategy, using Porter's Five Forces to assess the competitive landscape in India, considering factors such as supplier power, buyer power, new entrants, substitutes, and industry rivalry. The report concludes by synthesizing these strategies, offering insights into how IKEA can effectively compete and succeed in the Indian market by adapting its business model and leveraging its strengths in cost leadership, sustainability, and brand recognition.

Running Head: Competitive strategy 1
Competitive strategy
IKEA In India

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Contents
Introduction.................................................................................................................................................3
Business strategy.........................................................................................................................................4
Corporate strategy.......................................................................................................................................5
International strategy...................................................................................................................................7
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12

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Introduction
This report will show the objective of the IKEA Company in which the elaboration will be done
of three strategies. These strategies are a corporate strategy, international strategy, and business
strategy. In the context of business strategy, the report will explain the cost leadership strategy
which would be helpful to determine that in what way company can get more success. The
corporate strategy will entail the sustainability and CSR of the company so that the company can
catch the attention of the customers of India. At last, the international strategy will be described
in the context of case in which the report will describe the how IKEA will compete in India using
Five Forces analysis.

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Business strategy
Business strategy facilitates organization to attain the objectives of the company which can be
simplified by describing the long-term business planning. It is considered by the business for a
long period of action which is designed to attain a specific objective or set of objectives. The
strategy is the game plan of the management which is planned for strengthening the performance
of the enterprise. It defines how business must be organized to attain the desired objectives. It
has been discussed in the case study that the current challenges of IKEA are lack of availability
of retail space and its cost. The cost leadership strategy should be taken by the company for
making effective marketing strategy.
Cost Leadership Strategy
The cost leadership strategy is based on the porter’s generic strategies which were proposed by
Michael Porter. However, the company has adopted the indirect differentiation strategy because
of the unique way of adding the consumer of the company in the value chain. The combination
of it is included the focus strategy in which the young buyers find fashionable and stylish
household and furniture at low cost. The company has adopted this strategy and endeavoring to
provide the maximum products as per the affordability of the customers. IKEA should consider n
the organization’s engineers design low cost and modular furniture ready for meeting by
consumers instead of focusing primarily third-party manufacturer. IKEA should seek for the
suppliers who could manufacture effective subassemblies at an affordable rate and allow
Customers to assemble the products themselves. It would be beneficiary for the company to
enter in the market as this method has the ability to save the delivery costs not only for the
producers but also for the customers. It permits many manufacturers of the company to reduce

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the unnecessary costs as soon as a customer can buy the products at affordable rate. The
company can be able to win the market of India with the competitive process in which it can
attain the wide market.
It has been found that the customers of the company are actively included in the shopping
experience due to attractive concept of IKEA. The concept of IKEA is relied on consumers to
opt, collect, transport and assemble the products themselves which increase the rate of the
customers appropriately. The company can adopt the same strategy in the market of India for
getting huge benefits. Company should focus on the idea of “You do your part and we do our
part and it will save our money”. This idea would be beneficiary for the company to get
advantages in the market of India. The concept of the company with the help of business strategy
can be attained when people of India will get chance to assemble their products on their own in
which they can get higher quality with lower prices according to their choice (Alänge, Clancy
and Marmgren, 2016). Along with that the cost leadership strategy can reduce the challenges of
failure.
Corporate strategy
Corporate strategy is the sum of business strategy and the competitive advantages. As per the
case study, the challenges of hiring and vendor negotiations can be reduced with the help of this
strategy. This strategy incorporates the allocation of the resources, organizational design,
strategic tradeoffs and portfolio management in which the company’s vision mission, objectives,
and strategies incorporated. The sustainability strategies and the CSR will be described below in
the context of IKEA Company.
Sustainability strategy

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Sustainability is considered as the root of the strategies of IKEA throughout its evolution. It has
been found that the company has introduced its People and Planet Positive sustainability strategy
which helps the approach of the company to attaining the effective affirmative impacts of social
and environmental. The company should set out the same strategy for IKEA in India so that the
trust of people on the company is increased and they prefer the products of this company. The
sustainability strategy of the company will bring entire aspects of values mission and vision
together to drive innovation and change the business of IKEA (Keyes, 2016). The company gets
success in the market of India with this strategy which will strengthen the competitiveness of
IKEA through making safe long-term access to vital raw materials, handling and maintaining the
base of the supplier, enhancing the relationships with employees and customers and enhancing
the market share. The company should implement the sustainability strategy for the business of
India and it should work on to motivate its customers to live a more sustainable life at home
(Businesscase, 2018). The strategy of sustainable of IKEA Company should be developed not
only for the customers but also for the co-workers. For instance, the company should focus on
inclusion and diversity strategy involving the aim of having women of India of entire
management positions at every level across the business. This would increase the face of the
company and people will encourage to get employed in this company which is the cause of
success (Purce, 2014). Along with that, the company needs to motivate co-workers to involve in
the community involvement activities in their local areas.
CSR
The corporate social responsibility efforts are dealt by Chief Sustainability Officer, Steve
Howard. IKEA and CSR activities and efforts entail supporting local communities, empowering
workers, educating, and addressing the concerns of the gender equality within the organization. It

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would be helpful for the company to reduce the current as well as potential challenges of the
company in an efficient manner (Schramm-Klein, Morschett, and Swoboda, 2015). Furthermore,
the global furniture retailers tasks to diminish the consumption of the energy and derive energy
from alternative sources. It has been found that the sustainable sourcing shows a CSR conflict
that IKEA need to define within the scope f its operations. IKEA has taken various steps in the
context of energy consumptions. The energy consumption products of IKEA are more effective
and IKEA has taken an initiative step to establish the solar panels in which the company has
installed 70,000 solar panels. In the context of the Indian market, IKEA will gain huge
advantages due to this idea. IKEA Company has committed to EUR 1.34 million investments to
facilitate about 100,000 farmers all over the world to generate cotton with less utilizing less
water and chemicals (HuffPost, 2012). IKEA impose supplier code deny to use child labour,
bonded labour and discrimination at work. This kind of activities and applied law in the company
will facilitates the company to reduce the impact of child labour in India and contribute in the
development of India as well (Leonidou, Christodoulides, Kyrgidou and Palihawadana, 2017).

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International strategy
International strategy is making effective relations with the other countries (Burt, Johansson and
Dawson, 2015). IKEA operates in Sweden and in relation to the expansion of the business in the
international market; the organization has chosen Indian market due to emerging economic
conditions in India. This has attracted IKEA and this will also help the organization to attain its
goals and objectives in relation to the expansion and growth of business in international market.
As per the case study, the international strategy of the firm is the strategy by which the
organization is able to sell its products outside its domestic market (Regnér and Zander, 2014).
The several reasons have been defined by Ikea to pursue an international strategy such as
international markets increases the new opportunities, required sources can be secured, huge
potential product demand. The Porter's five forces as a strategy are defined below in the context
of International strategy in which the description will be made on the five aspects of this strategy
to define the threats of substitutes and new entrants, power of suppliers and buyers, rivalry in the
industry (Hitt, Li, and Xu, 2016). This strategy helps the company to analyze the situation in the
market of India in which it can take appropriate action to reduce the impact of threats on the
company. The Porter's five forces are defined below to understand the various aspects of Ikea
Company.
Bargaining power of suppliers
It is necessary for the company to bright in the business world to control its supplier. It is
because when the suppliers have control over the raw materials, they will start to rule the
company indirectly and charge a higher rate to raw material and deny designing the products as
per the company requirement (Prasad and Warrier, 2016). In the term of Ikea, it can be clearly

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stated that the power of supplier is low. The company has an effective relationship between each
of its suppliers all over the world. it would be beneficiary for the company to enter the market of
India. Due to have its own manufacturer, it is clear that the threats of suppliers are low and
company can develop products at a lower rate.
Bargaining power of buyers
There is a number of retailers in the industry that are included in the war price against each other.
They are mostly considering as the importers who get their list from China along with a direct
competition in the market. The bargaining power of buyer in the industry is high but there is a
number of customers who prefer Ikea due to brand’s name. However, people of India prefer
readymade furniture or give the order to a carpenter for their designer furniture. The entry of this
company in the market of India will bring change for the people as they will get a latest furniture
item basis on global strategy at lower price that can increase the sales of the company (Bischoff,
2016).
The threat of new entrants
The entrants of a new company of similar industry may impact the company’s strategy but Ikea
is a brand and other companies needs to invest high to compete with it. the threat of new entrants
are considerably low for this company, however, the intensity of the competition in the industry
can fright off new entrants (Kristin’s Blog, 2016).
Threat of substitutes
The threat of substitutes is low on the company as there are no substitute products available for
furniture and the home applicant. Moreover, the company has the efficiency to make furniture in

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an effective manner. The customer retention rate remains effective with IKEA which would be
beneficiary for the company at the time of entering the market of India.
Rivalry within the business
When the industries held high-profit margin, it would attract a number of other companies to
involve its market. The rivalry within the business of furniture is moderate. Even though, there is
a number of retailers in the market of India that provide furniture at low cost and offering
discounts as well like IKEA. The major competitor of this company in the same industry is
Walmart stores, Argos and Galliforms that can take the risk to enter the market of India to
compete for IKEA. On the other hand, IKEA remains the leader in low cost and discount of the
products (HuffPost, 2012).

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Conclusion
In the limelight of above discussion, it can be concluded that the competitive strategy should be
applied by the company to compete with its competitors in an effective manner. In this report,
the discussion has been made on various strategies such as corporate strategy, international
strategy, and the business strategy. The depth information has been given in the relation of that
strategy to make proper understanding about the position of IKEA Company and the potential
impact on the company due to entrance in the market of India.

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References
Alänge, S., Clancy, G. and Marmgren, M., 2016, Naturalizing sustainability in product
development: A comparative analysis of IKEA and SCA, Journal of Cleaner Production, 135,
pp.1009-1022.
Bischoff, A.L., 2016. Porters Five Forces. Innovation through Business, Engineering and Design.
Burt, S., Johansson, U. and Dawson, J., 2015. International retailing as embedded business
models. Journal of Economic Geography, 16(3), pp.715-747.
Businesscase, 2018. Vision, Values and Mission in Driving Strategy An IKEA case study.
Available [online] https://businesscasestudies.co.uk/ikea/vision-values-and-mission-in-driving-
strategy/strateg.html. Accessed on 19th May, 2018.
Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and
beyond. Journal of World Business, 51(1), pp.58-73.
HuffPost, 2012. IKEA’s Environmental Sustainability Strategy Includes Plan For Energy
Independence By 2020. . Available [online] https://www.huffingtonpost.com/2012/10/25/ikeas-
environmental-susta_n_2018703.html. Accessed on 19th May, 2018.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
CRC Press.
Kristin’s Blog, 2016. IKEA–A success of Porter’s Generic Strategies Combination. Available
[online] https://blogs.ubc.ca/junlingliu/2016/10/02/ikea-a-success-of-porters-generic-strategies-
combination/. Accessed on 19th May, 2018.