BUS300: IKEA - International Business Strategy Analysis Report

This business report provides an in-depth analysis of IKEA's international expansion strategy. The report begins with an overview of the company, its current operating position, and a review of its international competitive strategy, primarily focusing on Porter's Generic Strategies, particularly the "Cost Leadership" strategy. It then examines IKEA's organizational design structure, control issues, and the various entry strategies employed to enter different regions and countries, including franchising. The report further explores operational control, production, distribution, and supply chain management, highlighting IKEA's lean management and just-in-time approach. The management of human resources across borders is also discussed. The report identifies key issues and opportunities for management, including weaknesses and threats, and offers recommendations, such as considering joint venture strategies for further international expansion. The conclusion summarizes the analysis, emphasizing IKEA's use of Porter's strategy to expand its business internationally. References are also included in the report.

Analysis of IKEA

Cover Content
 Introduction
 Overview of the company and current operating position
 Review of company’s international competitive strategy
 Existing organisational design structure and control issues
 Entry strategies used to enter other regions/countries
 Operational control, production and distribution/supply chain
management
 Management of Human Resources across borders
 Identify key issues or opportunities for management
 Recommendations to management for improvement
 Conclusion
 References

Executive summary
The purpose of this business report is to perform the
analysis of Ikea that has expanded its operations
across borders into foreign market. Analysis is done
by taking into consideration overview of the company
current operating position, by reviewing of company
international competitive and entry strategies used to
enter other countries.

Introduction
IKEA is one of the privately held international home
product retailer who deals in selling accessories,
flat pack furniture, bathroom and kitchen items in
their retail stores all around the world.

Overview of the company
and current operating
position
 Ikea is one of the Swedish founded multinational
group which generally sells and design ready to
assemble furniture, home accessories and
occasionally home service.
 It was founded in 1943 by Ingvar Kamprad and
began to sell furnitures five years later.

Review of company’s
international competitive
strategy
IKEA is mainly based on Porter's Generic Strategies
which was proposed by Michael Porter. “Cost
Leadership strategy” is mainly taken into
consideration by Ikea who seeks for suppliers and
could fabricate well fashioned sub-assemblies at the
lowest cost(Hrelja, Isaksson and Richardson 2012).

Existing organisational
design structure and control
issues
Organisation structure of the every business
company refers to a formalized practice of action
that connect the company technologies, people
and tasks (Jonsson, Rudberg and Holmberg,
2013).

Entry strategies used to enter
other regions/countries
There are different types of entry strategies which
can be used by different organisation in order to
enter a foreign market, as one strategy cannot be
used by all international market.
Therefore, IKEA implement the Franchising strategy
in some countries so that it can manage minority
stores.

Operational control, production
and distribution/supply chain
management
Ikea is one of the most successful furniture retail
company with its 276 store in 36 countries and
they have managed there own special way of
selling furnitures to its final customers which has
lead in increase in sales.

Contd....
Operation function refers to the series of process
which are interdependent to each other and
consumes resources as an input in each stage of
operations.
Ikea takes into consideration lean management and
just in time approach to control the overall
production process of the company.

Management of Human
Resources across borders
As the main vision of Ikea is to “create better
everyday life for many individuals like for
customers, employees, community etc. As per
human resource philosophy of Ikea it is being
believed that employees term to be more
productive and committed towards their
respective task only when the company take care
of them and their respective needs.

Identify key issues or
opportunities for
management
Key issues and opportunities for Ikea management
can be identified only if Ikea admits its weakness
and threats so that they can be controlled and
overcome. Thus, it will help in assisting IKEA to
set their goals and to expand business at an
international level Major weakness