Corporate Strategy and Customer Retention: An IKEA Case Study

This report provides a comprehensive analysis of IKEA's customer retention strategies within a dynamic market context. It begins with an introduction to corporate strategy and governance, highlighting the significance of customer retention for IKEA's success. The report reviews the problem faced by IKEA, which is the failure of corporate strategy in regards to customer retention, and provides background information on the company. It then examines the research aim, objectives, and questions, followed by a literature review that covers customer retention, customer service, and their impact on competitive advantages. The methodology section outlines the research approach, design, and data collection methods. The analysis employs thematic analysis to identify key themes and insights. The report concludes with recommendations and an action plan for IKEA, offering strategies to improve customer retention and enhance its competitive position in the furniture retail market. Overall, the report emphasizes the importance of adapting to the dynamic market and focusing on customer service to achieve long-term success.

Corporate Strategy and
Governance

Table of Contents
TOPIC:.............................................................................................................................................3
INTRODUCTION...........................................................................................................................3
REVIEW OF THE PROBLEM FACED....................................................................................4
BACKGROUND OF RESEARCH AND COMPANY..............................................................4
SIGNIFICANCE OF THE RESEARCH....................................................................................5
RESEARCH AIM.......................................................................................................................5
RESEARCH OBJECTIVES.......................................................................................................5
RESEARCH QUESTIONS.........................................................................................................5
LITERATURE REVIEW................................................................................................................5
Customer retention and areas for improvement by which this issue can be mitigated...............5
Customer service and its benefits to gain competitive advantages.............................................7
Role of customer service in attainment of competitive advantages for IKEA............................8
RESEARCH METHODOLOGY ....................................................................................................9
Types of Research.......................................................................................................................9
Research approach....................................................................................................................10
Research Design........................................................................................................................10
Data Collection..........................................................................................................................11
Gantt Chart................................................................................................................................11
DATA ANALYSIS........................................................................................................................14
THEMATIC ANALYSIS.........................................................................................................15
RECOMMENDATIONS AND ACTION PLAN .........................................................................22
CONCLUSION .............................................................................................................................24
REFERENCES..............................................................................................................................25

TOPIC:
“To analyse the importance of evaluating the issue of customer retention in dynamic
market”. A case on IKEA.
INTRODUCTION
Corporate strategy is basically being considered as hierarchically developed strategic
plan, which mainly aid a business organisation in meeting all the corporate goals along with the
objectives. Strategic management is said to be one of a crucial business strategy that is required
by every single business organisation so that satisfaction level to both customers and employees
can easily be given in specified time frame. It has been analysed that, a developed corporate
strategy does not always offers customers with benefits and to employers as well. On the other
hand, if it is talked about corporate governance, then it is being considered as a range of rules,
laws and processes that are basically required or need proper control (Agius, 2017). In other
other words, the term i.e. corporate governance, the internal and external factors that affect the
interests of a company's stakeholders, including customers, shareholders, government regulators,
suppliers, management and so on. Away with this, it is also said that it is pretty much required
for every single business organisation like IKEA.
Away with this, there are ample number of stakeholders, suppliers, customers,
management of the company and on government regulators as well that mainly impacts upon
business organisations. Customer retention is a crucial factor, which is required by a business
company to look into today's dynamic business environment. It has been analysed that, IKEA is
one of the crucial business organisation, which is performing as a crucial furniture retailer
dealing at international level but due to ample number of reasons, company has failed in
developing strategy in regards to customer retention (IKEA is changing its strategy, and it
reflects a shift in what customers really want, 2019). This impacted negatively upon productivity
and profitability at the same time of this business organisation. The main reason, which has been
identified over here was the dynamic business environment. This made IKEA to make alterations
among it's business strategy as it became hard for them to deal with all the issues that IKEA was
facing in regards to customer's needs and requirements as well.

REVIEW OF THE PROBLEM FACED
The problem, which has been taken into consideration is of IKEA. This organisation was
dealing with an issue i.e. failure of corporate strategy, which was developed by them in regards
to customer retention (Customer engagement persuasion process, 2018). Major factor, which has
been identified was the dynamic business environment, that affected the overall operations of
IKEA. It has been identified that, due to dynamic business environment customer's perceptions
regarding a particular product got changed gets changes. This basically, put IKEA in a situation
where it would require to make alterations among it's existing corporate strategy so that customer
retention process of company can directly gets improvised. With the help of this, IKEA might
become number one furniture retailer within Britain and at international level as well, through
offering customers with a range of unique products and services (Armstrong and et. al., 2018).
BACKGROUND OF RESEARCH AND COMPANY
Performing investigation on a particular topic, would help researcher in pulling out
favourable outcomes. Basically, investigator has taken customer retention as one of the issue,
which affects overall productivity and profitability of a business organisation. Developing a
proper or effective corporate strategy or making modifications within the existing scheme can be
beneficial for a company like IKEA. The vital reason that came in front was companies do not
meet requirements of customers due to rapid change among business environment. This basically
leads an organisation to an issue i.e. shift within the requirements/needs of clients. Since,
furniture industry is carrying high numbers of changes in present time because of many factors
like technological change, current trends and so on (Arrigo, 2018).
IKEA was found in the year of 1943 and founder was Ingvar Kamprad, who made this
company has multinational group, which mainly designs and sells ready-to-assemble furniture,
kitchen appliances and home accessories, among other useful goods and occasionally home
services. In past few years, customer retention has been a problem for the company, and the
reason that came in front was, corporate strategy of this business organisation, which was
developed was not that effective in nature. This impacted negatively upon company's values,
goodwill and on other areas as well like decline among competitive advantages and so on. Due to
uncertain business environment, IKEA analysed that it will be required for them to modify the
different range of corporate strategies.

SIGNIFICANCE OF THE RESEARCH
The vital reason behind conducting the investigation on chosen topic i.e. to analyse the
importance of evaluating the issue of customer retention in dynamic market”, as this will lead
readers to gain knowledge in regards to how a business organisation could effectively make a
range of powerful actions, which will help them in developing much more stronger strategies in
near future. Through this, it can be said that competitive advantages IKEA will gain and might
reach to an all new level where IKEA might reach to number one position in furniture and other
sorts of industry as well (Badwan and et. al., 2017). Along with this, it will also lead IKEA to
change the overall perceptions that they were having in the past and to run business in successful
manner within today's dynamic business environment.
RESEARCH AIM
Aim of present investigation is “To analyse the importance of evaluating the issue of
customer retention in dynamic market”. A case on IKEA.”
RESEARCH OBJECTIVES
 To analyse the issue of customer retention and areas for improvement by which this issue
can be mitigated.
 To understand the concept of customer service and its benefits to gain competitive
advantages.
 To analyse role of customer service in attainment of competitive advantages for IKEA.
RESEARCH QUESTIONS
 What are the issue of customer retention and areas for improvement by which this issue
can be mitigated ?
 What is the concept of customer service and its benefits to gain competitive advantages ?
 What could be considered as the role of customer service in attainment of competitive
advantages for IKEA ?
LITERATURE REVIEW
Customer retention and areas for improvement by which this issue can be mitigated
According to Wedel and Kannan, 2016, customer retention is very important for every
company to build long term relationships with their customers. It is very important for every
company as it helps them in indirectly reducing their costs . It is more expensive to generate a

new customer then to retain an existing one. All programs to retain customers basically aim to
keep as many as customers possible and they always focus on repeated purchases by the same
customer. Loyalty of customers depend upon many factors such as maintaining of the quality of
products, after sales service, the way customers are being treated, Price in comparison to
competitors.
These factors have a impact on customers decision whether there will be loyalty or not
on his part or not. IKEA as a furniture brand has always been appreciated by its customers about
the innovative and best quality services being provided by it in comparison with its competitors.
In 1934, when IKEA started it not only sold furniture to people but soon it was started to be
recognized as a lifestyle brand. People started feeling it to be a great destination for those who
wanted something unique, comfortable and of good quality to be a part of their homes (Bahri-
Ammari and Bilgihan, 2017). Plus it was also a leader in terms of prices at which it was offering
its products in comparison to its other competitors.
Soon after its opening it began to be preferable brand for people in both dimensions of
quality and price. As time passed on people started feeling a little bit of dissatisfaction with
IKEA and this lead to decrease in its sales. This also affected their overall profitability and brand
image, This was the main reason behind IKEA not able to become a global leader in the furniture
industry. Operations department of IKEA is of main concern where improvements has to be
made to correct the loopholes. Technological advancements all the companies have realised the
importance of customers and they are also making continuous improvements in them. This has
lead many competitors emerging for IKEA. This has been one of the reasons why customers
have started comparing IKEA with other brands and feeling dissonance. IKEA mainly consists of
providing the best quality of fabric and woods (Bhat and Darzi, 2016).
This department has to be the major concern for IKEA for all the types of improvements
that needs to be made in the company. The market is totally dynamic and so is behaviour of
customers. It is of utmost importance for them to change with the changing needs and demands
of its customers. Nowadays, People are preferring customized products earlier IKEA had earlier
focussed majorly on its price and quality. Now with the changing scenario, they have to focus on
the customized products being demanded by the present and prospective customers. IKEA has to
be concern for the market share which is decreasing on its part. Efforts must be taken by the

company to overcome all the shortcomings and make IKEA achieve its earlier held position
again (Chang and Zhang, 2016).
Customer service and its benefits to gain competitive advantages
As mentioned by Peppers and Rogers, (2016), customer service plays an very essential
function and it is most important element for the business organisation, which helps management
of IKEA or of any other company for enhancing and grabbing the advantages for competitive
market. It is analysed that, providing the effective customer service has the more chances of
gaining and attaining ample number of competitive advantages form customers. Along with this,
if it is talked regarding the competitive advantages for the business organization, then
management of IKEA, should focuses on analysing their business environment and demand and
requirement of market as well as customer. As this helps in providing the effective products and
services, what they are required and looking for. Along with this, the great customer service
helps the organization in increasing the brand loyalty, enhancing the brand image, customer
advocacy and also helps in increasing the profit revenue for IKEA company. For sustaining in
present, competitive and crowded market, the management of company focuses on giving
effective and great services to their customers (Coussement, Lessmann and Verstraeten, 2017).
According to the Swetha Amaresan, 2019, better customer service is essential and
important for an organisation to retain customers for long time. IKEA is a retail industry that
mainly specialise in selling of Ready-to-assemble furniture, homeware etc. Along with this,
IKEA a Swedish-founded multinational group that designs as well as sells ready-to-assemble
furniture, home accessories and kitchen appliances, among other useful products and
occasionally home services. Occasional cleaning services introduces as a deep cleanup or regular
home cleaning facilities that come with no contract tag. It is a best type of service which have
been provided by IKEA to its customers as it will help them to attract large number of customers
and gain competitive advantages within given time duration. There are different other benefits or
advantages of customer services for IKEA such as improve customer satisfaction, stronger
customer loyalty, reduce marketing costs, consistency of work-flow practices, competitive
advantages, improve market position, staff pride and satisfaction etc. All these are best
advantages of effective customer service provided by IKEA to its customers. As it will support
an organisation to gain competitive advantages and achieve better outcomes within given time
duration. Along with this, there are various ways through which company can gain competitive

advantages by providing better services to the customers. Maintain brand reputation, focus on
brand awareness, increase business turnover, be their problem solver, Handling feedback and
complaints etc. are consider most effective ways for IKEA to accomplish competitive advantages
and retain strong position in marketplace and customer's mind.
Role of customer service in attainment of competitive advantages for IKEA
According to Zhu and Matsuno, 2016, satisfying customers is very important for every
company for every company's long term survival. This will lead to increase in level of
performance of the employees which will directly improve the company's overall performance.
Repeated purchase by the existing customers always prove profitable for every company. As
generating a new lead adds cost to the company and retaining a existing customer proves more
profitable as it involves less cost. Satisfied customers always spreads positivity and helps in the
marketing and promoting the brand. This has a great positive affect on increasing sales and
reducing gap between revenue & cost. This increases profitability level of the company. It must
also make attempts to expand its area of operations. IKEA is having a good share offline but
efforts must be made by the company to get its market share online also. Company should
increase effectiveness and efficiency in its overall operations so that there is saving in terms of
time. Delivery will also be made fast in case of customized orders. IKEA should always work
upon being a cost leader. This will provide the company with competitive edge in terms of low
price and high quality.
According to the Hitesh Bhasin , 2018, one of the main reason good business become
famous is because of the trueness they command from their customers. There are different roles
of customer services which will support an enterprise to gain competitive advantages easily.
Some important and effective role of customer service within IKEA will be define as under:
Increase profitability: When service, word of mouth and references of an organisation
are good, IKEA will acquire new customers or user at a fraction of the cost they were supposed
to. For example: company spends a lot in promotions, advertising and whatnot to acquire clients
to walk in to their shops. But with effective customer service or facilities, all that is being
completed by existing customers of an enterprise (Frow, McColl-Kennedy and Payne, 2016).
Along with this, it ensures fantastic profitability as IKEA is getting more returns on the
investment already completed. Therefore, IKEA provided Occasional cleaning services to their

potential customers which will help them to increase their profitability and gain competitive
advantages easily.
Competitive advantage: Customer service and manpower that IKEA employ for service
can become its competitive benefit. If organisation's workers themselves are creating an effective
relationships with clients, then they will not accept a challengers to enter as well as place
toehold. Therefore, business of IKEA become competitive and sustainable and difficult to beat.
Therefore, better customer service is beneficial and essential for growth and success of company.
Increase sales: Good customer service also play vital role in increasing sales and market
ratio of IKEA. If customers are happy towards specific product or brand, company will be able to
maximise their sales and attain competitive advantages within given time duration. Therefore,
IKEA must give effective and better customer service to the customers (Homburg, Jozić and
Kuehnl, 2017).
RESEARCH METHODOLOGY
Research methodology is basically a set of procedures which are used to analyse and
research on a specific topic. It is basically conducted by an investigator and this type of research
is performed, when both the objectives and goals have been preset. On the other hand, it has also
been analysed that critical evaluation is done and then various findings & conclusions are drawn
based on that research. In present context, research methodology is basically identified as an
effective process which an investigator uses for collecting appropriate data so that effective
decisions and results could be implemented in specific time frame (Homburg, Jozić and Kuehnl,
2017). This basically stays enclosed with a number of things like interviews, surveys publication
research and more. It could also cover both historical and actual data. In addition, it is the
systematic and theoretical analysis of the different methods used to a field of research.
Types of Research
Mainly, there are two types of investigation which are being utilised by investigator and
these are qualitative and quantitative research methods and these are described underneath in a
rightful manner.
Quantitative Research : This type of research is based on numerical data. Data is
collected by the researcher while conducting research and the analysis of that data is done

considering the information, which has been gathered. After analysing the data various
inferences are drawn from it (Jaeger, Zacharias and Brettel, 2016).
Qualitative Research : This is also a type of research methodology in this type of
research techniques are used to analyse the collected information. In this in depth analysis is
done to draw various conclusions. Basically, it is the choice of investigator to select one type of
investigation or the mixed method. This is being chosen after performing proper analysis of the
chosen topic and method, which is fitting at the situation directly aid a researcher in pulling out
favourable outcomes (Katsikeas and et. al., 2016).
In present investigating research, where the topic is to analyse the importance of
evaluating the issue of customer retention in dynamic market for IKEA, researcher is going to
take into consideration of qualitative research as it is best fitting method, which is soothing the
reason why investigator has taken report and, customer retention and dynamic business
environment as well (Mahmoud and et. al., 2016).
Research approach
Another crucial element within the research methodology section, where researcher
mainly selects an approach considering the topic, that has been taken into consideration.
Basically, deductive and inductive are the two types of research approaches, which may aid
researcher in pulling out favourable outcomes in regards to a particular topic (Mgbemena and
Bell, 2016).
Since, the investigator has taken qualitative research methodology, approach that has
been taken into consideration i.e. inductive approach as it will directly aid researcher in pulling
out favourable outcomes considering the thoughts and perceptions of individuals that has any
sort of link with the chosen topic, which is issue of customer retention in dynamic market (Noe
and et. al., 2017).
Research Design
Another crucial element of research methodology section, which is being divided among
two sections and these are exploratory and conclusive. If it is talked about exploratory research
then it basically aid in exploring the chosen topic to identify the proper solution to existing issue.
There, researcher will be using exploratory research design in order to identify issue of customer
retention in dynamic market (Preikschas and et. al., 2017).

Data Collection
Data collection is a first step in every research, where it could be considered as a step at
which person known as researcher collects and gathers data. It is the most crucial step of every
research process as collected data is the basis on which whole research process is depended.
Following are sources of data collection:
Primary Method: In this method data is collected through sources such as questionnaire,
telephonic information, interview, survey and so on. The data is originally collected and consists
of first hand information (Rakthin, Calantone and Wang, 2016).
Secondary Method: When the data is not collected by the researcher but is taken from
some other sources. It is low in terms of cost and is also less time consuming. Care must always
be taken by the researcher that the data extracted is completely reliable.
In present context, researcher has taken questionnaire (Primary Method) has its primal
method to perform the data analysis section and the reason behind this is that, investigator was
looking forward to build this research with much more authenticity. Here, researcher has taken
20 respondents and these are customers who will be answering the questions. On the other side,
for performing the literature review section, researcher has collected information from secondary
data like books, scholars and so on (Rathore, Shioramwar and Ilavarasan, 2016).
Gantt Chart