BUSS5300 Global Business Environment: IKEA Case Study Report

This report provides an in-depth analysis of the IKEA case study, focusing on its strategic management within the global business environment. The report begins with an executive summary highlighting the key aspects of IKEA's global operations, followed by an introduction to strategic management and the company's background. It then delves into a case summary, identifying IKEA's strategic objectives and strategies, including differentiation and customization. The report identifies and assesses key issues faced by IKEA, such as high costs, market entry expenses, alignment with target markets, price differences, and competitive rivalry. Recommendations are provided to address these challenges and ensure the company's continued success. The report concludes with a summary of the findings and references used.

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Running head: ASSESSMENT 2
ASSESSMENT 2
Name of the Student
Name of the University
Author Note

1ASSESSMENT 1
Executive Summary
Globalization has increased to a great degree. In connotation with this, it needs to be stated that,
any firm as present in the global business environment would be essential to see to it that, they
are successfully being able to participate in operative connotations with the right party in the
right manner. In connotation with this, the case study chosen for the particular report is IKEA. In
connotation with this, the report identifies the key issues being faced by the enterprise, the
different problems being faced by the firm and recommends a set of solutions and
recommendations to resolve the same.

2ASSESSMENT 1
Table of Contents
Introduction......................................................................................................................................3
About Ikea.......................................................................................................................................3
Case summary..................................................................................................................................4
Key issues identified........................................................................................................................5
Assessment of the issues..................................................................................................................7
Outcomes the firm seeks to achieve................................................................................................8
Recommendations for the firm......................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

3ASSESSMENT 1
Introduction
Strategic Management can be measured to be an effective part of the business
organization. In connotation with this, it can be considered very relevant to consider and ensure
that the business is being able to adopt considerate steps with the help of which all the goals and
objectives will be attained accordingly. In connotation with this, the company which is being
considered in the given report can be mentioned to be the IKEA. The IKEA is an international
furniture enterprise which is essentially involved in undertaking procedures which provides
cheap as well as durable yet fashionable products to the different customers (Ansoff et al. 2018).
In connotation with this, as the business of the enterprise is based globally, it becomes effective
to ensure that, it may be facing certain uses which are required to be resolved in order to see to it
that the goals of the enterprise can be achieved in a successful manner. Hence, the given study
will be following a systematic format based on which the IKEA as a business will be examined
and this will be followed by the analysis of the case summary (Baumgartner and Rauter 2017). In
addition to this, the Key issues will be identified accordingly which will then be followed by
with the help of which the various issues will be assessed and the outcomes which the firm aims
to attain will be described accordingly. The report aims to provide certain recommendations
based on which the various departments of the company will be able to work together and in
connotation with this, they will successfully be able to secure a sound positioning in the market.
About Ikea
IKEA is a European multinational group which is engaged in retailing ready to
accumulate furniture and pantry utilizations along with home accessories other related goods. In
connotation with this, it is serious to confirm that the enterprise was found in Sweden by the 17

4ASSESSMENT 1
year old Ingvar Kamprad and has been the largest equipment seller since the year 2008. In
consideration with this, the business is a private corporation which is held by IKEA systems and
is recorded in the Netherlands. It is controlled by the sons of its founder Ingvar Kamprad and the
main reason why the company is essentially popular is because of the modern designs of the
appliances and equipment, interior design work and the ecofriendly simplicity (Bryce 2017).
There are currently 433 IKEA stores in 52 countries as of 2019 and the firm is also
engaged in selling the products of the firm online. In connotation with this, it is effective to
mention that, the website of the enterprise earns about 12000 products whereby 2.1 billion
visitors go to IKEA`s websites. Additionally, the company is also responsible for 1% of the
world marketable product wood intake, which makes the enterprise of the largest operators of
wood in the retail sector.
Case summary
The case study which has been selected for the purpose of the analysis can be mentioned
to be the IKEA. The case tends to focus on the manner in which IKEA has been successful in
overtaking the global furniture market and in consideration with this, has been able to attain its
strategic objectives (David and David 2016). The strategic strategy which the firm has made use
of in order to attain the different objectives of the firm ca be mentioned to be the Differentiation
strategy.
The differentiation strategy can be mentioned to be a strategy using which the company is
successfully being able to distinguish a product or a service in the market from the other products
which are present and are essentially offered by the various competitors who are present in the
market. In connotation with this, the development of the product or the service can be

5ASSESSMENT 1
considered to be unique for the customers in terms of the design of the product, the brand image
of the enterprise, the features or the customer service. In line with this, the differentiation
strategy followed by the firm is providing special designs which are modern, affordable yet
durable in nature (Frynas and Mellahi 2015). A combination of such offerings is considered to be
important to ensure entrepreneurial success.
Another policy which is being surveyed by the firm can be understood to be the
Customization strategy. In this scenario, it can be stated that, the firm tends to customize the
offerings of the products for every country in which it plans to expand its operations (Hitt et al.
2016). For instance, the company received huge backsplash in areas located in the European
countries due to the poor design. In connotation with this, the designs which the firm introduced
in Europe were based in the united States and in consideration with this, it is critical to consider
that the firm then realized that this lag was leading to reduced sales and in connotation with this,
it is operative to appreciate that, the firm would be required to follow these strategies then in
consideration with this, it is relevant to ensure that, Ikea has been able to provide the utility to
the various customers, engaging in product innovation, increase in the product performance,
setting the price of the product adequately and creating a good brand image of the firm in the
long run. The case study mentioned that, the target market of the firm is 20 to 40 years.
Key issues identified
All enterprises often face certain issues while performing in the global environment. In
reference to this, it can be mentioned that while carrying out the expansion plan, the IKEA as an
enterprise faced a number of issues as well. Hence, the various issues which were faced by the:
The key issues which have been identified can be mentioned to be as follows:

6ASSESSMENT 1
The higher costs incurred by the enterprise: The IKEA engages in the differentiation
techniques as well as the customization strategy in order to engage in long term success and to
expand the operations of the firm into the different countries. In connotation with this, the costs
of the company go up to a great degree and in connotation with this, the firm needs to plan
accordingly as along with the costs; the firm would be required to invest the human resource and
social capital as well (Hill 2017). In connotation with this, it is integrate to see to it that, the firm
would be required to consider these aspects and plan and strategize in advance.
Cost of entering a market: The cost of entering a market is also an issue which is often faced
by IKEA. In consideration with this, it might be considered very effective to ensure that, as a
global company the firm would be required to expand into various enterprises and in connotation
with this, the firm would be required to face high costs which may not be aligned with the
overall spending of the firm.
Alignment with the target market: IKEA has faced this issue before which relates to the fact
that it was not able to align the overall offerings of the enterprise with the target market. In
connotation with this, it is integral to mention that, a market research which would be undertaken
prior to carrying out the expansion plan would be to undertake an analysis of the existing target
market and to understand the needs of the various customers (Jenkins and Williamson 2015).
Only when the firm would be able to undertake this, would it be able to ensure successful
completion of the objectives in the right manner.
Price differences in different countries: The alignment of the pricing strategy with the country
has to be undertaken by IKEA. In consideration with this, it can be noted that the prices which
are set by IKEA are often very low in North America as per their own income along with

7ASSESSMENT 1
moderate pricing strategies being provided in Europe (Karadag 2015). However, in various
countries like China and India, the prices of the products and related services can be considered
to be high and it is due to this reason that the company might not be able to achieve its sales
target and incur losses.
Competitive rivalry: The IKEA also faces large risk of competitive rivalry. In connotation with
this, it is critical to mention that now a days, global giants like Walmart, Amazon and Alibaba
have also come into the furniture business and in connotation with this, the company might end
up facing intense competition which may ultimately influence the profits of the enterprise and
also have a negative influence on the market standing of the firm.
Assessment of the issues
Hence, in the given section, various issues which are currently being faced by IKEA as
examined in the case study were discussed critically. In connotation with this, it is relevant to
reference that, the first issue which IKEA has been currently facing is the issue related to
customization (Lasserre P., 2017). In deliberation to this, it is operational to appreciate that, as
IKEA is a global business brand it may face problems related to the customization and related
costs involved. In connotation with this, it can be mentioned that, customization is not an easy
task. It requires considerate investment and in connotation with this, it is not possible to be
carried out by all the organizations as present.
Secondly, it is considerate to understand that, the cost of entering the market can also be
considered to be essentially high. In connotation with this, it is effective to mention that, the
different markets have different legislative rules and regulations and in consideration of this, it
can be mentioned to be adequately important to note that, the company is required to fulfill all

8ASSESSMENT 1
regulations, market conditions, political requirements as well as the technological requirements
which are required to be researched upon by the enterprise in order to ensure that, the overall
needs of the company can be fulfilled accordingly (Meyer, Neck and Meeks 2017).
The competitive issue can be mentioned to be another issue which is essentially faced by
the enterprise. In connotation with this, it is operative to comment that there are several
companies such as the Walmart, Ali Baba and Amazon who tend to apply the strategy similar to
that of IKEA and provide products and services with the help of which they will be able to attract
the target market. In line with this, it is critical to consider that, if the firm aims to expand and
combat against the competition related to these domains, then the firm would be essential to
combat against these forces accordingly. In connotation with this, it is integral to note that, the
issue related to differential prices can also be considered to be an issue which has to be
adequately combated by the enterprise (Morden 2016). As the country aims to expand to various
countries, it has to realize and understand how the pricing factors vary in the different countries
and in connotation with this, it is integrate to understand that, the firm needs to set prices as per
the target market.
The designs of the products also need to align well with the target market designs. The
needs of the various customers tend to vary in the different countries and in connotation with
this, it can be considered to be very integral to comprehend that, the organization will be
essential to take into consideration the appropriate style of the target audience with the help of
which they will be able to gain an idea of the different factors affecting the business operations.

9ASSESSMENT 1
Outcomes the firm seeks to achieve
Hence, the issues have been examined and the primary aim of this section is to
understand the various outcomes which the company aims to achieve in the long run. The desired
outcomes can be rightfully defined as the aims and objectives which are generally focused on by
the enterprise in order to see to it that they are successfully being able to attain all its objectives
and achieve the different goals which it has set for itself (Peppard and Ward 2016). In
consideration with this, the different desired outcomes which the firm has set out for it can be
mentioned to be as follows:
1. To attain 50% market share by 2024
The firm aims to attain a higher market share by 2024 and aims to become a market leader in the
long run. It is through this initiative and effort, that the firm will be able to accomplish its overall
objectives.
2. To ensure that IKEA will be successfully able to expand its operations into the different
countries as present in Asia and Pacific
Although IKEA has expanded its operations in the Asia Pacific regions, it is essentially to
understand that the firm would be compulsory to see to it that it is being able to manage the
different operations in an effective manner (Bryce 2017).
3. To generate 30% growth in the company operations by 2024.
Another objective of the enterprise can be mentioned to be to generate considerate growth of the
enterprise by 2024. In consideration to this, the firm will be able to effectively see to it that it is
being able to become a global leader.

10ASSESSMENT 1
Recommendations for the firm
The various recommendations which can be provided to the enterprise in terms of the
issues as well as outcomes are as follows:
Issues
To resolve the different issues which are being faced by the organization, the firm would
be essentially required to see to it that they will need to engage in pricing strategies based on the
country national income and the Personal disposable income. In connotation with this, it is
operative to mention that, it would be required to see to it that it engages in prior market research
with the help of which the firm will be able to ensure effective operations and considerate costs
which will help the firm in guaranteeing better positioning (Rothaermel 2016).
Outcomes
To achieve the outcomes which the business has set for itself, the firm would be essential
to see to it that it is successfully being able to participate in a market development strategy with
the help of which it is being able to ensure efficacy. In line with this, to engross in long term
growth, the firm would be vital to adopt various effective marketing and the strategic
development strategies which shall assist it in ensuring overall successful operations (Trigeorgis
and Reuer 2017).

11ASSESSMENT 1
Conclusion
Therefore, from the given investigation, it can be lawfully mentioned that the enterprise
would be vital to undertake various initiatives with the help of which it will be able to engross in
successful outcomes. The company which was considered in the particular assessment is IKEA.
The report lays down the case study of the enterprise and discusses the different issues being
faced by the firm. This was then followed by the assessment of the method in which the
enterprise will be able to participate in long term welfare. Certain outcomes for the firm have
been provided which is then followed by analysis of the same.