Comprehensive Strategic Plan for IKEA: An In-Depth Analysis Report

This report provides a comprehensive analysis of IKEA's business strategy, encompassing both internal and external factors. It begins with a PESTLE and SWOT analysis to assess the macro-environmental influences and IKEA's internal capabilities. Porter's Five Forces model is then applied to evaluate the competitive landscape. The report identifies various strategic directions available to IKEA, recommending suitable growth platforms and strategies, and culminates in a strategic management plan with specific objectives. The analysis covers IKEA's resource-based view, financial, physical, intellectual, human, reputation, and relational resources, highlighting core competencies and competitive advantages. The study leverages established frameworks like the Ansoff Matrix to propose market penetration, product development, market development, and diversification strategies, aiming to bolster IKEA's market position and ensure sustainable growth. Desklib offers access to similar assignments and study tools for students.

BUSINESS STRATEGY

CONTENTS
INTRODUCTION.................................................................................................................................1
PART – 1 (INTERNAL AND EXTERNAL ANALYSIS)....................................................................1
Pestle analysis....................................................................................................................................1
SWOT analysis..................................................................................................................................2
Analysis of capabilities of Ikea..........................................................................................................3
Porter’s five force analysis................................................................................................................4
PART – 2 (STRATEGIC PLAN)..........................................................................................................5
Different types of strategic direction available to Ikea......................................................................5
Recommending suitable growth platforms and strategies..................................................................7
Strategic management plan with objectives.......................................................................................7
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10

INTRODUCTION
The current vigorous and forceful external condition involves the significance of
strategic planning and assessment for the organization. Purposeful planning is required for
the associations that are attempting to transform into the huge player in the business. The
term strategic examination is being insinuated as the evaluation of the objective, capacities,
expenses and understanding the current monetary circumstances of the firm that structures the
substance for the headway of the key methods. Along these lines, it is measured as the most
crucial gadget for approving strategic planning process inside the business (Baye, 2010). The
present research study revolves around offering an imperative examination of Ikea, an
association built up in Sweden, UK. It is being associated with selling and arranging of
furniture, ornamentation and home mechanical assemblies. As a corporate strategy manager
of Ikea, assessment of the external environment of the association in which it is functioning
and it’s connected issues impacting the firm will be done. The examination will in like
manner revolves around the internal abilities of the firm. Assessment of the result from
porter's five force model will likewise be done. The last bit of the evaluation will enlighten
possible vital plan that IKEA can utilize for proceeding and improving its engaged position.
PART – 1 (INTERNAL AND EXTERNAL ANALYSIS)
Pestle analysis
 Political factor – The advantages of Ikea is significantly influenced by the pace of
corporate taxes which basically drops down the after charge profit. Further, there are
various charges and trade blocks upheld by the organization of UK which prompts
increase in the expenses of items purchased from various nations by the system of
import. Furthermore, in the time of 1970 to 1980, IKEA has utilized custodial labours
in East Germany which has built up a political debate all over the world (Gong,
2013). Dispute in connection with the store network disturbance caused because of
political precariousness in the country likewise influences the key basic leadership
process.
 Economic factor – The advancement of the economy of the nation really impacts the
business. There has been fast advancement in the economy of UK, which is furnishing
better desires for living alongside extended pace of work. Advantageous to this, the
cost of work is another factor that impacts Ikea cruelly. There are various nations, for
instance, China as well as India where experienced specialists are high in numbers
and hence, can offer progressively large income to the organization. In perspective on
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the development rates in the country, the lead of the buyers is mutilated and there is
time of avoidable insufficiency of benefits. Taking everything into account, the
market is furthermore undermined (Johnson, Scholes and Whittington, 2005).
 Social factor – The vital decision of Ikea will undoubtedly affected by the statistic
variable of the nation. In United Kingdom, the developing people are quite less that
make procurement related to furnishings. Additionally, the lessened pay level of the
people in the country will ask them to place furniture on lower rank in their necessity
list. Social patterns likewise impacts the offers of the firm this ought to be kept into
thought.
 Technological factor – Computerized innovation has helped the firm to arrive at
enormous number of clients and offered a more practical spending knowledge to
them. Because of the online retail stores, there is tremendous selling movement for
the vendor. Moreover, the use of social media tools as unusual publicizing channel by
most of its opponents will basically exhibit extraordinary hazard to Ikea (Takreem,
2015).
 Legal factor – Legitimate dangers are record-breaking serious issue before the Ikea.
This is a result of the way that the laws and guidelines are exceptionally extreme and
little infringement can demonstrate expensive to the firm. The laws being planned for
security of the purchaser limits the down to practical movement of the association in a
couple of ways. Besides, the definitive need demands the business objectives of Ikea
to be in higher consistence with the local responsibilities present in the examined
markets
 Environmental factor – For the organizations such as Ikea, environmental elements
are measured very significant for their sustenance. Ikea has put resources of worth
around 1 billion dollar towards the sustainable power source. Furthermore, they are
likewise trying endeavours to source cotton and wood from feasible assets (Clapham
and Pestel, 2008).
SWOT analysis
 Strength – One of the major strength of Ikea is its brand value in the market. In the
year 2015, the revenue being earned by the firm is around €32.7 billion. Further,
different types of products are being produced by the company which are cost
effective as well. Last but not the least, Ikea is also well-known as a smart marketer as
well as for the product placement.
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 Weakness – Nevertheless, there are some weaknesses of Ikea as well. The company
has some negative image in some parts of the world. In addition to this, the major
concern of the firm is to make cost effective products and many a times they fail to do
so (Inter IKEA Systems, 2014). Other than this, scaleability is another major
weakness of Ikea because it has its operations in range of markets where same kind of
standards and laws are not applicable. Lastly, issues related to environment also
fashions depraved image of the organization in the arcade.
 Opportunities – One of the major opportunities coming in front of Ikea is increasing
demand of eco-friendly merchandise in the current marketplace. Furthermore,
nowadays people are showing greater interest in regards with the costs of the products
they buy. Another vital opportunity that Ikea can grab is by targeting the nations with
lower level of per capita income like India as well as China (Fine, 2009).
 Threats – Ikea majorly faces intense level of competition from the fake products.
Other than this, modification in the laws & regulations of the government influences
the prices of the merchandise. Additionally, growing disposable income of the people
will enable them to make purchase in the advanced and sophisticated markets.
Analysis of capabilities of Ikea
Resource based view of Ikea
For long stretch perseverance, corporations such as Ikea attempt to get or proceed
with an advantage. In association with the asset based view, competitive advantage can be
cultivated by focusing on the capabilities and characteristics which are its extraordinary
resources. Moreover, it likewise helps in characterizing the organization in connection with
the things it is equipped for performing through its assets and capacities (Bo¨hm, 2009). The
asset based perspective on Ikea is portrayed beneath:
 Financial asset – The major source of revenue of Ikea is from franchise model. The
firm has also made 14.8 billion EURO in the year 2005. There has been increase in
the sales of the company by 15 percent. Lastly, the firm has also estimated around $
23 million in 2010.
 Physical asset – Ikea has around 300 stores in almost thirty countries all across the
globe. Further, it is one of the largest retailers of furniture in the world and around
thirty seven stores of the organization are franchised.
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 Intellectual resource – The furniture style of Ikea is very unique. They too have a
good relationship with their suppliers and government. Even the staff members of
Ikea are skilful and well-trained. The store also operates 24 hours daily (IKEA, 2013).
 Human resource – The Company has given employment opportunities to more than
125000 of people which are talented and skilful. The services given to the customers
is also irreproachable. All the workers within Ikea are encouraged to achieve higher
level of goals by effective reward system in place.
 Reputation resource – Talking in relation with the reputation resource, brand image as
well as brand name is main assets of Ikea. Furthermore, the brand is quite popular in
the region of America and Europe. Franchising is also considered as a reputation
resource of the firm (Hill, 2001).
 Relational resource – The relational resource of Ikea significantly includes its
networking system, transport system and distribution centres. In addition to this, the
internet access of the company is also very good. Transport system is quite worthy.
The firm too have twenty eight distribution centres that forms the major relational
resource of Ikea.
Because of one of an exclusive resources, Ikea is in a circumstance to have number of
capacities. This section pivots a successful retail system which progresses in the direction of
making the firm genuinely exceptional and driving retailer the entire way over the world. The
organization bases on its centre thought of sensible alongside various home outfitting and not
in the slightest degree like the other fighting giants that spotlights on including progressively
more item contributions to their business (Drejer, 2012). Likewise, there are many core
aptitudes of the association as well. At first, to keep up negligible expense of the things, the
packaging of the things is done in an essential way using less over the top materials.
Furthermore, the firm keep up its structure and model and gets their patent right. Thusly, the
firm makes dedication from its customers. At last, the course of action of the affiliation isn't
so astounding and is versatile too.
Porter’s five force analysis
 Bargaining power of the buyers – The dealing power of the buyer is strong because of
the fact that there is an abundance of availability of choices as substitutes.
Furthermore, examining the worldwide markets, for instance, China & Japan, there
exists extraordinary challenge between these retailers (Scott, 2009).
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 Bargaining power of the suppliers – Bargaining power of the supplier force is very
feeble in power considering the way that the suppliers of the association are offering
contention to each other consistently for keeping up a not too bad relationship with
the significant furniture mammoths. Thus, the fragile mechanical power approves the
business relationship to make all the more full use of the advantages and helps in
intensifying their advantages.
 Threat from substitute – Considering the in vogue brand perspective on Ikea, it has
the choice to attract at the same time hold tremendous base of customers. In fact, even
there is an abundance of openness of substitutes in the market, the association is
getting reputation and along these lines it is in like manner considered as a frail power
(Temporal, 1999).
 Threat from new entrants – Risk from new participants is being seen as the slight
power in light of the fact that the headway of the new opponents in the furniture
business is commonly meagre. This is because it incorporates huge proportion of
capital outlay alongside high market drenching.
 Competitive rivalry – Contemptible proportion of compression and contention is faced
by Ikea from the near sorts of furniture retailers, for instance, Galiform, Euromarkets,
Designs Inc., Argos etc. Additional, both China & Japan is reflected as the most
promising as well as engaging markets for the furniture business and henceforth,
association stood up to strong difficulties in such regions (Livesey, 2016).
PART – 2 (STRATEGIC PLAN)
Different types of strategic direction available to Ikea
Ansoff matrix
In this engaged & energetic business world, the destiny of the association is
commonly hopeful. Ikea is required to concentrate on crucial movements in its present as
well as probable markets. This is a consequence of how challenge is growing at a brisk pace
just like the business designs. Identifying with this, Ansoff structure can be used for helping
the organization to devise future strategic directions and approaches. Clarification of these
strategies are as per the following:
 Market penetration – Market penetration strategy is being referred as the name given
to an advancement procedure where the business focuses on selling existing things
into prevailing markets. The primary target of embracing this system is primarily to
expand the share in the market of the present items. Ikea can accomplish this by
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embracing aggressive valuing methodology, sales advancement, individual selling and
promoting (Lymbersky, 2008). Market development – Market development is being alluded as the methodology
where prevailing things are being offered to the new clients or market. This procedure
can be drawn nearer by Ikea through sending out items to new country or land
territory, new element of the item or bundling, fluctuated valuing arrangements and
new dissemination. In any case, it is being viewed as the most hazardous system since
the firm will target new markets.
 Product development – Throwing light in relation with the product development
strategy, it is a kind of a development procedure wherein new things are being sold in
the current market or clients. Under this methodology, Ikea needs to adjust its items
and grow new capabilities. This should be possible through successful innovative
work, subtleties bits of knowledge in respects with the necessities of the clients and
being the beginner in the entire market (Scott, 2009).
 Diversification – Diversification development methodology is vital as it includes
selling new item into the new market. This strategy is progressively unsafe system
since the business is venturing towards the market which is obscure to them and have
almost no experience. It is obligatory on the part of Ikea to survey the measure of
hazard being engaged with this development methodology. In the event that correct
assessment of hazard and reward is completed than it will become more fulfilling.
Porter’s generic strategies
Underpinning the discussion further, the contemporary world is been portrayed by
extraordinary and strong challenge amongst the brands of the business. Each and every brand
driving the market has picked up this situation because of their one or other competitive edge
in the market (Bowhill, 2010). Without this advantage, no association can progress past its
opponents. As showed by Michael Porter, there are three approaches which can reinforce
checks in building and proceeding with an edge over the associations in the market. Each one
of these procedures are being expounded underneath:
 Cost leadership – In the cost authority technique, the organization focuses on the
expansive market and give the items at most reduced conceivable cost. In such a
procedure, there are commonly two alternatives accessible for the firm for example,
either keeping the expenses as low as could be expected under the circumstances or
having bigger offer in the market with normal expenses.
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 Differentiation – Speaking in connection with the differentiation methodology, here in
this the target market is wide, for example high demanding. In any case, the item or
the administration has extremely unique in nature. Endeavours are put in by the firm
to make their items elite as conceivable in contrast with their rival's item. Great
innovative work, development and excellent quality is obligatory in such
methodology (Ketzes, 2003).
 Focus – In this methodology the target market is niche in which there is little
challenge and market is additionally much focussed. Business Corporation offer items
either with least cost or a one of a kind or selective element in the item. It by and large
includes solid brand faithfulness.
Recommending suitable growth platforms and strategies
Along these lines, from the four methods inspected above, the most sensible
development system for Ikea is diversification. This system will help the firm operating for
longer time allotment as the thing and the market in which the organization is drawing closer
are both new. It is suitable considering the way that it matches with the mission of Ikea, for
instance, offering individual fulfilment to all people across the world. Stepping into the new
market with new item will give another wellspring of compensation to the association. As the
firm is new, people are foreseeing more from it (Yip, 2004). Institution of new item offering
will display Ikea as a capable brave element who can move in the direction of all way.
Moreover, Ikea has various exceptional resources which can be used inventively for siting up
and running another item offering. Thusly, expansion method will obviously make high
ground for the organization. Furthermore, Ikea ought to embrace diversification methodology
by venturing into another market with new item through cost leadership strategy. In this
respects, it should open another apparel area in their stores. The organizations should keep
their costs low and give quality items to their target market. Moreover, for standing separated
from the gathering isn't commonly straightforward. To achieve this, the association need to
concentrate on satisfying the prerequisites of the cushy class customers which are very
gigantic all through the world (Ireland, Hitt and Hoskisson, 2008).
Strategic management plan with objectives
Strategic vision
Expanding the income along with the reputation of the new item for example, range of
attire improvement of its quality and forceful advancement of the brand.
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Gaol Objective Action plan Measurement
Growing the income
of Ikea
 Introducing new
attire extend for
people in next half
year
 Elevation of sales
in summer season
 Evolving items
for advertise
testing
 Choosing and
propelling the
best items
 Growing offers of
the store by 20
percent by
advancement and
refreshing the
items
On the off chance
that the gross
income
development of the
firm is in excess of
30 percent
Improvement in the
acknowledgment of
the brand Ikea
Advancement of the
brand Ikea by
utilizing publicizing,
in-store showing of
the product and deals
advancement
(Kárpáti, 2001)
Selecting an
individual group
answerable for brand
advancement
autonomously by
deals advancement
 If eighty
percent of the
objective
market
perceives the
brand
 Around twenty
percent
familiarity with
the new item
classification
"apparel"
Enhancement in the
insight of quality
 Enhancement in
the view of nature
of the considerable
number of results
of Ikea
 Accomplishment
of high impression
of value for the
new item
 At the hour of
market testing of
new items in the
potential markets,
quality is the
significant
thought
 Insight should be
transformed by
 Development in
the impression
of value by 2
percent of the
current results
of Ikea
 Awareness of
nature of ninety
percent of the
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classification of
Ikea
utilizing great
quality textures,
creative plans and
hues
new item
dispatches
CONCLUSION
Thus, from the above talk, it will in general be said that the association has various
characteristics alongside assets that can be used effectively for achieving an engaged edge in
the market. Ikea has used half breed method which is exhibited to be both successful and
difficult for the contenders to copy. They have furthermore cantered around professional
class people and offered them isolated things at reasoning expense. This assisted the business
enterprise with accomplishing accelerated performance level and higher advancement of
market.
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REFERENCES
Books and journals
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Bowhill, B., 2010. Business Planning and Control: Integrating, Accounting, Strategy and
People. WILEY Publications.
Clapham, W. and Pestel, R., 2008. Policy, uncertainty, and analysis. 1sted. Laxenburg,
Austria: Internat. Inst. for Applied Systems Analysis.
Drejer, A., 2012. Strategic Management and Core Competencies: theory and Application.
Greenwood Publishing.
Fine, L., 2009. The SWOT Analysis: Using your strength to overcome weaknesses, Using
Opportunities to Overcome Threats. Create Space.
Gong, Y., 2013. Global Operations Strategy: Fundamentals and Practice. Springer Science
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Ireland, D.R., Hitt, A.M. and Hoskisson, E.R., 2008. Competing for Advantage, 2nded.
Cengage Learning Publishers.
Johnson, G. Scholes, K. and Whittington, R., 2005. Exploring Corporate Strategy: Text and
Cases. 7thed. Financial Times Prentice Hall.
Kárpáti, L., 2001. How to Develop a Strategic Marketing Plan: A Step-by-Step Guide.
European Journal of Marketing, 35(11/12), pp.1398 – 1402.
Ketzes, S., 2003. Optimising business performance through innovative workplace strategies.
Journal of Facilities Management, 2(3), pp.258-275.
Livesey, F., 2016. Pricing. 1sted. London: Macmillan.
Lymbersky, C., 2008. Market entry strategies. 1sted. Hamburg: Management Laboratory
Press.
Scott, D., 2009. Strategies. 1sted. Kingston, Jamaica: Sandberry Press.
Temporal, P., 1999. Strategic positioning. 1sted. Shah Alam, Malaysia: Oxford University
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Yip, G.S., 2004. Using strategy to change your business model. Business strategy review,
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