Strategic Analysis: IKEA's Vision, Mission, and SWOT Report

This report provides a comprehensive analysis of IKEA, a multinational furniture retailer, focusing on its vision and mission statements, and a detailed SWOT analysis. The report begins with an introduction to IKEA, its history, and its global presence. It then explores the importance of vision and mission statements in strategic management, defining their roles and significance. The report examines IKEA's specific vision and mission statements, discussing the rationale behind its business concept of providing affordable home furnishing products. Furthermore, the report delves into the use of SWOT analysis as a strategic review tool, explaining its components and importance. It then presents a SWOT analysis of IKEA, identifying its internal strengths and weaknesses, as well as external opportunities and threats. The report concludes by summarizing the key findings and implications of the analysis, offering insights into IKEA's strategic position and future prospects. References and bibliography are also included.

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Table of Contents
1. Introduction..........................................................................................................................3
2. The importance of forming vision and mission statements..............................................4
2.1. Vision statement..............................................................................................................4
2.1.1 Role of the vision statement.......................................................................................4
2.1.2 Importance of vision statement..................................................................................4
2.2. Mission statement............................................................................................................4
2.2.1 Role of the mission statement....................................................................................5
2.2.2 Importance of mission statement...............................................................................5
2.3. An example of a successful company that did had a vision and mission statements......5
3. Possible mission and vision statements of the organisation.............................................6
3.1. The rationale behind the concept of IKEA......................................................................6
3.2. IKEA vision and mission statements...............................................................................6
4. How organisations use SWOT analysis for their strategic review..................................7
4.1. What is SWOT analysis...................................................................................................7
4.2. What is strategic review..................................................................................................8
4.3. Why SWOT analysis is important for a strategy.............................................................8
5. IKEA SWOT analysis..........................................................................................................8
5.1. What is SWOT analysis...................................................................................................8
5.2. SWOT analysis table for the international company of IKEA........................................9
6. Conclusion...........................................................................................................................10
References and Bibliography...................................................................................................13
References............................................................................................................................13
Bibliography.........................................................................................................................13
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1. Introduction
Ikea is a multinational European organization that mainly designs and also sells the
ready-to-assemble furniture, home accessories and kitchen appliances. The organization was
established in the year 1943 in Sweden by Ingvar Kamprad. Ikea has been able to develop its
position as the biggest furniture retail based organization since the year 2008. The founder of
Ikea Ingvar Kamprad has also been able to become the eighth richest person in the entire
world (Ikea.com 2020). The corporate structure that has been developed by Ikea in the last
few years is considered to be quite complex in nature.
Ikea is currently operating more than 430 stores that are present in around 52 countries in the
world. The website of Ikea offers around 12,000 products and more than 2 Billion people
visit the website on a daily basis. The organization is mainly responsible for around 1% of the
total commercial wood based products that are offered to the customers. Most of the factories
and stores of Ikea are mainly owned by INGKA that is a holding company which is mainly
controlled by Stichting INGKA foundation (Ikea.com 2020).
The report will be based on the analysis of the role that is played by vision statements
and missions statements in the organizations. The importance of mission and vision
statements will also be analysed in the report in detail. The vision and mission statements of
Ikea will be discussed in order to understand the rationale behind its implementation. The
SWOT analysis framework will be analysed and it will be implemented for the purpose of
understanding the internal environment of Ikea. The process of strategic review will also be
discussed in the report in detail. Ikea is an international organization and the SWOT analysis
framework will be able to provide a detailed picture of the international strengths and
weaknesses and the external opportunities and threats as well.
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2. The importance of forming vision and mission statements
2.1. Vision statement
According to Darbi (2012), vision and mission statements are powerful tools that are
considered as an important part in forming a strategic management process to help any type
of organisation to understand its strategic position and choices, in order to achieve its goals
and objectives.
Vision is the first step in a strategic planning of any organisation, even before setting
its mission (Darbi, 2012). It is defined as a desired future state which answers the question
“What the business should aim to become?” (Wilson, 1992). In simple words, vision is a
statement of what a firm would like to achieve in the future.
2.1.1 Role of the vision statement
Vision is used for describing a picture of a company’s future, which has been
developed under the best possible conditions and in accordance with the organisation’s
willingness as a whole (Papulova, 2014). In other words, it does not exist yet. This is
exemplified in the work undertaken by (Lipton, 1996), where is stated that vision is not about
earning money, it is about solving a problem which makes the world a better place to satisfy
the needs of customer, the employee and the supplier.
2.1.2 Importance of vision statement
It is commonly known that every company in this world we live wants to be a reliable
partner, or customer focused. Managing with a vision, it meant to inspire, give focus and
direction to employees of the company (Lipton, 1996). So, setting a vision, is an important
element for an organisation because it expresses a company’s mission, strategy and values
(Papulova, 2014).
2.2. Mission statement
On the other hand, a mission statement is another important element of strategic
planning which has been broadened to include the overall purpose of an organisation and
concerned with its scope and boundaries. Simply can be described as an operation designed
to carry out the goals of an organisation. As far back as 1973, [7] has shown that, mission
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statement exists to answer the following fundamental question that faces all strategists:
“What is our business?”.
2.2.1 Role of the mission statement
A company’s mission statement is used to guide all processes of strategic planning
and answers the question above by providing employees and stakeholders with clarity about
“whom” the organisation serves and “what” supplies them with (Alegre et al., 2018). The
research found that the use of a clearly defined mission statement, develops a company’s
position, strategy and future visions that influence its overall purpose and values (Campbell
& Yeung, 1991).
2.2.2 Importance of mission statement
Agwu, Lawal and Taiwo (2016), have shown in their study that forming a mission
statement is an important strategic tool for every organisation that can distinguish itself from
others, by developing significant and unique features and identifying its activity area inside
the business market. Williams (2008) stated that companies conducting a mission statement
should be more successful than those without and can therefore stimulate a significant level
of financial performance.
2.3. An example of a successful company that did had a vision and mission statements
Microsoft’s first revolutionary founding vision given by Bill Gates in 1975 was: “Our
vision is a computer on every desk and in every home, running Microsoft software” (Fridson,
2000). Years later, the company’s CEO Satya Nadella has revealed a new vision statement
for some reasons that are not relevant to this study. However, Microsoft’s corporate mission
up to date is “To help people around the world realize their full potential” (Microsoft, 2014).
This case has shown that Microsoft’s success as a global corporation has a direct relationship
with its corporate mission and vision statements (Stross, 1995).
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3. Possible mission and vision statements of the organisation
3.1. The rationale behind the concept of IKEA
Based on the given scenario for conducting this study, the concept of the IKEA
international organisation started with the idea of providing home furnishing products in
affordable rates, so that rather than a few people, everyone would be able to buy them. This
concept has been achieved by combining aspects like function, quality, design, value and
sustainability at the core of the organisation. From the design and sourcing to packaging and
distribution, the whole of the company is built to support the customer’s core values. It seems
that, the rationale behind the IKEA’s Concept is that a low-priced good offering can make its
products accessible to more consumers. In that way, the author believes that IKEA’s Concept
can be described as a win-win situation. What this means regarding (Dictionary, n.d.), is that
the concept “is good for everyone who is involved”. Both for business and customers. This
pricing tactic can easily satisfy people and can also make the business much more profitable
though lower costs or even attract customers who will also buy other, more profitable
products. The company has developed its core competencies and organisational operation in
such a way that will support this motto.
3.2. IKEA vision and mission statements
By applying the theory already elaborated in the first section, the author has clearly
identified on the basis of the given scenario, the organisation’s possible mission and vision
statements as they are. As discussed above, vision and mission statements are not created in a
whim. Rather, behind the creation of these statements, there is much thought and deliberation
going on. The mission statements consist of the core values along with the present motto of
the company (Bowen, 2018). Companies create missions so that they have a guidance for
their day-to-day work. The core values of IKEA include humbleness, leadership, will power,
being different, sustainability, ethical business, collaboration and enthusiasm and cost-
effectiveness. These core values contribute to the formation of their mission statement.
The vision and mission statements of organizations might seem alike, but they are in fact
quite different (Dimitrova and Petrova 2016). While the mission statement describes what the
company is doing now or what their motto is, the vision statement shows the place that the
organization wants to be in the next five or ten years. This is their long-term goals which also
include their philanthropic views and goals.
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The mission statement for IKEA is to offer their customers a wide range of home
furnishing products that are well designed and functional at such a low a price that mass
people are able to afford them. While, IKEA’s vision is to make everyday life better for as
many people as possible through their business. Evidently, the mission statement is customer
centric, meaning to serve the customers better while the vision statement is more
philanthropic and includes not only the customers but their stakeholders, community and
environment.
The mission and vision statement of the company influences the strategic course and
review that they undertake. They also guide the behavior and culture of the organization
itself.
4. How organisations use SWOT analysis for their strategic review
4.1. What is SWOT analysis
In broad terms, a fundamental part of understanding the strategic position of a company
and managing a strategy in action, is the analysis of the business environment (Prajogo,
2016). There are four elements of a company SWOT analysis, the strength of the company,
the weaknesses that it has, the opportunities that the company has in the environment that
they are competing and the threats that it has in that same environment (Gürel and Tat 2017).
Along with the input taken from SWOT analysis, the strategists need ask questions regarding
their aims and objectives, their long-term vision and expectation of the company’s future. In a
SWOT analysis, the capabilities and the available resources of the company create the
strengths of the company as they act as auxiliary means of generating profit and create a
competitive advantage of the organization. The strength of organizations varies. Some
organizations might have their unique product range as their strength while some may have
exceptional customer service. Even the interval features like organizational culture, structure,
human resource management could be the strength of an organization.
Weaknesses of a company are the hurdles or barriers that the company might face in the
business world. They could be a bureaucratic organizational structure, constrictive culture,
high labor and production cost and everything that constitutes the strengths of a company. It
depends on how the company performs on each aspect that determines it (Phadermrod,
Crowder and Wills, 2019).
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Opportunities are the scopes of performance that the company has in macro world. These
are sometimes calculated beforehand while some arise suddenly. The threats of an
organization may be controllable or uncontrollable. These are entities, organizations and
groups that pose a risk of reducing the competitive advantage of an organization.
4.2. What is strategic review
A strategic review is a process which helps the managers and executives to identify the
opportunities that creates value for the business. Strategic review might involve improvement
of existing activities and departments, targeting a new market opportunity. Strategic reviews
can happen quarterly, half-yearly or annually. Strategic reviews often become important in
crisis scenarios or when companies go through a change. Appointment of new CEO,
expansion to a new market, merger and acquisition and entry of new competition in the
market calls for a strategic review where managers and executives revise the existing strategy
and create new ones (David and David, 2019).
4.3. Why SWOT analysis is important for a strategy
SWOT analysis is an integral part of strategic planning and review of an organization
(Haile and Křupka, 2016). Organizational strategic planning involves many stages and
SWOT is among the very first steps that is taken to create the background for planning.
Organizational strategic planning is created in organizations so that they can achieve the
missions and visions that they have created. Due to globalization business environments are
changing constantly and companies too need to keep up with those change (Jasiulewicz-
Kaczmarek, 2016). Competition has increased so much there is no industry which does not
face overcrowding. In this kind scenario, the managers and strategists need to understand the
micro and macro environments of the company and determine the chances that the company
has depending on its present condition. SWOT analysis also helps in understanding the
organizational opportunities and weaknesses. The managers can use this information to
develop recommendation-based business plan.
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5. IKEA SWOT analysis
5.1. What is SWOT analysis
SWOT analysis is created after the company’s analysis in the light of macro and micro
environments. The macro and micro environmental analysis helps in determining the
strengths and weaknesses of the company. These factors determine the strengths, weaknesses,
opportunities and threats of an organization and determine the readiness of the organization
in the international market and the competitive edge that it has in the market (Bull et al.,
2016). For conducting a successful SWOT, a detailed PESTLE analysis is needed. PESTLE
is a useful tool for the analysis of the external factors that affect the country. The Political,
Economic, Social, Legal, Technological and Environmental factors make up the PESTLE
analysis.
5.2. SWOT analysis table for the international company of IKEA
The following table illustrates the SWOT analysis for the international company of IKEA
that incorporates both the macro and micro environmental factors:
S - Strengths
 IKEA has a clear vision and mission which helps them in serving the customers
better.
 They have a well-defined business strategy which focus on targeting the effective
customer bases.
 They continuously invent new designs and makes them available to the customers.
 The products that they sell are easy to assemble and thus is preferred by the
customers.
 Cost effective pricing as labour cost is less.
 Cost leadership approach.
 Renewable resources for products make them leaders in the market.
 Resource management is done effectively to reduce waste.
 Long-term relationship with the suppliers.
 Ethical business policy to avoid child labor and unethical labor accusations.
W - Weaknesses
 IKEA has many locations across all over the world which makes it difficult for the
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organization to maintain the standards of product quality and service.
 Due to the mass availability and online stores, the designs are easily replicable
which makes it difficult for them to maintain their uniqueness.
 Due to the importance given to cost leadership, sometimes, the quality is
compromised which affects the business especially when the costs of raw material
and other inputs increase.
 Some environmental concerns are still present. The greatest problem is its inability
to communicate their sustainability policy to their customers, shareholders and
community.
 They are unable to tap the premium market properly.
O - Opportunities
 They are shifting towards a green business model which is effective in capturing the
premium market.
 Ethical consumerism is becoming popular and consumers are becoming more
concerned with the sourcing and processing of the products that they buy.
 Balancing cost leadership with business will ensure that they are able to keep more
customers loyal and happy.
 Keeping a minimum standard across all locations.
 Expansion to untapped markets will enable them to earn more profit.
T - Threats
 Their business model and core values are available easily and can be copied by
other competitors.
 Lack of innovation may lead to the organization losing their competitive edge.
 Due to the popularity of online retailers who do not have any physical presence,
IKEA is losing its cost leadership position. These companies do not have
establishment cost and thus are able to provide products at lesser price.
6. Conclusion
The report can be concluded by stating that vision and mission statements of the
organizations can play a major role in development of the strategic plans. Strategic
management process is considered to be an important aspect that is related to the ways by
which different organizations can maintain their operations in their respective industries. The
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mission statement and vision statements are mainly based on the goals and objectives that
have been developed by the organizations. The importance of vision statement and mission
statement is considered to be quite high for the development of strategic plans.
The statements are able to answer different questions that are raised by stakeholders
and the employees as a part of the strategic planning process. The example of Microsoft has
been able to depict the importance of vision that had been formed by Bill Gates in the year
1975. The company had developed its operations and goals with respect to the vision that has
been set by the founder of Microsoft. On the other hand, Ikea has also been able to maintain
its operations with the proper development of vision statement and mission statement. The
vision that had been implemented by Ikea was mainly based on offering the home furnishing
products to customers at affordable that are based on their demands and needs.
The entire production and distribution process of Ikea is developed with respect to the
core values of the customers. The company has mainly aimed at enhancing the levels of
accessibility of the products. The discussion related to SWOT framework is mainly based on
the importance of the framework and the ways by which it can be used for the purpose of
analysing different international organizations. The importance related to implementation of
strategic review in the organizations have been discussed in the report in a detailed manner.
SWOT analysis framework has also been used in order to analyse the internal environment of
Ikea in an effective manner. Strengths and weaknesses have depicted the internal aspects of
the organizational operations.
On the other hand, opportunities and threats are mainly related to the external aspects
related to the operations of Ikea in the highly competitive environment. The major threats that
have been faced by organization were mainly related to the lack of high levels of innovation
in the products that are offered to customers. The opportunities that have been found with
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