IKEA India: Exploring Co-operative & Competitive Strategy Success

This case study provides an in-depth analysis of IKEA's co-operative strategy in the Indian market, examining the company's approach to entering and competing in India. It explores the strategic alliances formed by IKEA, particularly with local suppliers, to overcome challenges related to resources, local laws, and market-specific requirements. The study highlights IKEA's business strategy, focusing on cost leadership and differentiation, and discusses the importance of adapting to the Indian consumer's preferences and affordability. The case study also addresses the challenges faced by IKEA, such as the do-it-yourself culture, sourcing strategies, and competition, emphasizing the role of co-operative strategies in mitigating these challenges and achieving sustainable growth. This assignment provides valuable insights into how multinational companies can leverage co-operative strategies to succeed in emerging markets like India. Desklib is a platform where you can find more solved assignments and past papers.

Co-operative Strategy 1
Competitive Strategy- IKEA India

Co-operative Strategy 2
Executive Summary
The role of the cooperative strategy is huge in achieving the target of the company in a
significant manner. This paper is elaborated the depth analysis of cooperative strategy by taking
consideration of the IKEA’s case study. The company is dealing in various home appliances,
kitchen products, and furniture and it is required for the company to adopt the cooperative
strategy in order to increase the revenues of the company. The decision of the company to enter
in the market of India is good as it is the second largest population country which has a largest
open economy market.

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Introduction
Competitive strategy is known as the long-term strategy that helps in business to grow in an
effective manner. The main focus on the company is on a co-operative strategy in which IKEA
India Company will be taken to describe the cooperative strategy. Organizations like IKEA
focusing on the process of developing a protective location in the respective market comes under
the strategic management. It will also highlight the strength of the company in India. In order to
provide a detailed analysis of the Australian supermarket, the cooperative strategy will be
explained with strategic alliances, business level cooperative strategy, international cooperative
strategy, and corporate level cooperative strategy. IKEA is one of the prominent house furniture
manufacturer companies around the world headquartered in Sweden. The corporate structure of
the company was constructed in order to prevent any takeover as well as to protect the family
from the burden of the taxes. The discussion will be made on IKEA case study by taking various
kinds of strategy.
Background of the company
IKEA is an international company that is able to sell the home furniture products, appliances of
the kitchen and assemble furniture. It has been found that IKEA is an international company that
deals in furniture and satisfy the customers by providing them with high-quality services. The
company has 375 stores in 46 countries in which more than 172, 000 employees are working
worldwide. The company is known for its modernist design for various sorts of furniture and
appliance and it's interior design work which is relegated to eco-friendly simplicity. The
company has produced more than 9,500 products of furniture with a number of interior features.
The company has more than 1.2 billion visitors visit its websites and purchase products. The

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main reason of the companies famous is operational particulars, cost control and corporate
attributes that represented IKEA to smaller its range uploaded by an average of 2% to 3% in the
time of growth of global. It has been found that the current landscape of the furniture industry is
dynamic that is why it is required for the company to look forward in the latest trend of furniture
in order to attain the momentum in the competitive market (IKEA.com, 2018).
Cooperative Strategy
The role of the cooperative strategy in the competitive market is huge as it helps in attaining the
objectives of the company in an appropriate manner. It refers to a planning strategy in which two
or more than two firms work together in order to attain the common goal of the business. There
are so many companies all over the world that applies this strategy for the purpose of increasing
the profits by cooperation with other companies that stop being competitors. It entails various
strategy such as strategic alliances, business level cooperative strategy, international cooperative
strategy, and corporate level cooperative strategy. This study is focused on its objective to
provide the alternatives of overcoming the consequences of the acquisition strategy of the
targeted company IKEA. It has been found that the strategy categorized two subsets such as
collusive strategy and strategic alliances. The role of the collusive strategy is dependent on the
working criteria of several organizations in order to eliminate the output of the industry below
the competitive level. This strategy can perceive in the organization in the form of the defensive
strategy. Strategic alliances are another subset of the cooperative strategy which increases the
position of the competition of the industry as a whole. It has been found that alliances are
typically made at the research and development stage on the basis of a different level. The
cooperative strategy has a significant role in the company as it helps in increasing the

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competition in the market by making an improvement in the company’s operation. There are
various reasons for using this strategy in the company which is mentioned below:
Lack of resources: a cooperative strategy facilitates in fulfilling the resources in order to
accomplish the task. The role of the resources in the company is huge as it helps in attaining the
objectives of the company in a significant manner. Cooperative strategy facilitates in providing
the guidance on how to increase the resources within the company (Schramm-Klein, Morschett,
and Swoboda, 2015).
Acquiring new skills and resources:
There are many international companies and trade projects that need expertise from various
kinds of fields. Comparatively, companies have endeavored to improve all kind of required skills
in-house. The role of the cooperative strategy is to make a sure company that they are valuable
assets and their skills and can enhance the revenue of the company.
Cooperative Strategy in IKEA
The strategy of IKEA Company is different from others as the major focus of the company on
core competencies that have been impacted in the term of maintaining the productivity. The
capabilities of the company have been expanded globally in which the value of the supply chain
is embedded. The business model of the company is based low-cost strategy that facilitates
customer to accumulate the rewards of high superiority intent furniture (Prasad and Warrier,
2016). To create firm brand equity is the major core competency of IKEA Company in which the
unique promotions and revolutionary advertising campaigns are involved. The company is
financially strong and the major strength of the company is brand value because this company is
stood at 46th position in the world in which the value of the company accomplishes the target of

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$11.9 billion. It shows the strong financial condition of the company. Along with that, it has been
found that the revenue of the company was €32.7 billion in 2015. However, the company has
approached all those strategies from which they can increase their revenues that is why the role
of the product price plays a significant role by which the customers of the company get a high
ROI on the funds.
It has been found that it is not an easy task for the multinational companies to enter in the market
of India by taking entire acquisition. IKEA has taken around 12 years to enter in the market of
India because the company did not want to become a partner of any company that is why they
took longer period (Burt, Johansson and Dawson, 2015). It is required for the company to adopt
the cooperative strategy in order to increase the revenues of the company. India is the second
largest population country which has a largest open economy market. The company has a huge
range of products in which 7500 products are being offered by the company (Tandon, 2018).
There are various challenges which have to be faced by IKEA at the time of entering the country.
These are do-it-yourself culture, needs to change sourcing strategy, store format, competitors
with very low prices, low home, and garden expenditure and no brand awareness. Along with
that it has been found from the case study that there are some another challenges such as the
availability of retail space and its cost, Hiring activities and vendor negotiations, Last-mile
supply chain issues, IKEA’s do-it-yourself (DIY) concept may not work in India, IKEA’s anti-
corruption policy, Reception of IKEA’s products is unpredictable (Businesscase, 2018). The
main motto of the company is to search out the suppliers who should be able to manufacturer
effective design sub-assemblies at the lower cost. It would be able to increase the productivity of
the business and to save the delivery which would be effective not only for the supplier but also
for the producers (Dobbs, 2014).

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Strategic alliances
It has been found that IKEA took around 12 years to establish a store in India and finally in
2018, the company opened a store in Hyderabad. IKEA wanted to enter in the country with full
share without partnering but local laws of the country allowed 51% foreign ownership that
hampered the entire planning of the company (Martinez-Simarro, Devece, and Llopis-Albert,
2015). After 3 years in 2012, the Indian Government says IKEA that they can invest around 600
million in the country and after that, the proposal of the company is accepted by India’s Foreign
Investment Promotion Board. The company did a partnership with its supplier Hyderabad-based
Shree Malani Foams Pvt Ltd, which makes mattresses. Strategic alliances are the major factor of
cooperative strategy that helped the company to eliminate the lack of resources and capabilities
from the company. The cooperative behavior has the ability to develop value in the view of their
partners that they are the valuable component of the company. Similar strategies applied by the
company and them give great value to their suppliers (Alänge, Clancy and Marmgren, 2016).
GATI-KWE is another partner of IKEA company In India in which the partnership of the
company with GATI-KWE helps the company to manage home deliveries if its products (Do-It-
Yourself) sold from its India store to homes across Telangana (TOI, 2018). It shows that one of
the challenges of the company while entering the market of India has vanished. Alliances have
the ability to provide a new source of revenue and increase the range of responding to market
opportunities and technological changes. This initiate of the company is able to reduce the
competition and the major reason behind choosing strategic alliances strategy is slow-cycle,
standard cycle, and fast cycle. Along with that, it has been found that the company has made
IWAY which is the code of conduct which specifies the requirements in which the importance of

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the suppliers in case of products and service in which what they can expect in return for IKEA
has been developed (IKEA, 2018).
Business strategy
Business strategy helps the organization to achieve the aims of the company which can be
simplified by recounting the long-term business planning. It has been found that the business
strategy is considered as the game plan which is helpful in strengthening the performance of the
company. It is the strategy that elaborates how business should be managed to achieve the
desired aims. The cost leadership strategy can be taken into consideration in order to remove the
obstacles of IKEA. The cost leadership strategy is referred to the porter’s generic strategies that
have been proposed by Michael Porter (Hitt, Li and Xu, 2016). It has been evaluated that the
company has adopted a differentiation strategy due to the different process of adding the
customer of the company in the value chain. The combination of both will be helpful in
increasing the attention of young buyers who are exploring things at lower costs. IKEA has
adopted a business strategy and trying to develop the maximum products according to the
affordability of the customers. It is required for the company to focus on third-party
manufacturers. Along with that, the company should seek for the suppliers who have the ability
to manufacture effective subassemblies at affordable rates. The concept of IKEA is different
from other companies as they allow customers to choose their furniture option as per their
affordability and choices. The main focus of the company is on the idea of “You do your part
and we do our part and it will save our money”. This idea will be helpful for the Indians as well
because they can select the option as per their affordability which will rich them with full of
integrity (Leonidou, Christodoulides, Kyrgidou and Palihawadana, 2017).

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Conclusion
From the above discussion, it has been found that competitive strategy helps in attaining the
objectives of the company in an appropriate manner. The discussion will be made regarding the
competitive strategy in which the case study of IKEA has been taken into consideration. The
cooperative strategy has been taken in which strategic alliances defined in an effective manner. It
has been found that the business strategy is another strategy of the company which helped in
attaining the target of the company in the Indian Market.

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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.
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.
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strategy/strateg.html. Accessed on 19th May, 2018.
Dobbs, M. E., (2014) Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Hitt, M.A., Li, D. and Xu, K., (2016) International strategy: From local to global and
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Sept 2018].

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