IKEA's Strategic Direction: VRIO, PESTLE, and Porter's Five Forces

This report provides a comprehensive analysis of IKEA's business strategy, evaluating its vision, mission, and objectives in setting strategic direction. It assesses IKEA's competitive advantage using the VRIO framework, examining valuable, rare, inimitable, and organization-specific resources and capabilities. The report illustrates the external environment using the PESTLE framework, covering political, economic, social, technological, environmental, and legal factors impacting IKEA. Furthermore, it explains Porter's Five Forces model to analyze the competitive intensity within IKEA's industry. The analysis reviews IKEA's organizational strategy, concluding with an overall assessment of its strategic management plan and recommendations for enhancing its competitive edge and market position. The study uses various strategic management models and theories to provide a thorough evaluation of IKEA's business strategy.

BusinessStrategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations using examples from selected organization..................1
2. Assess the competitive advantage of the selected company, using the VRIO framework.....3
3. Illustrate external environment by using PESTLE framework for analysing toward selected
business.......................................................................................................................................5
4. Explain the Porter Five Force Model for the selected organisation........................................5
5. Analyse and review about organisation strategy of selected organisation. .........................5
CONCLUSION................................................................................................................................5
.........................................................................................................................................................5

INTRODUCTION
Business Strategy is comprises about to generalise to define about certain planning or
tactics which involves in specific business to gain better competitive advantages (Abiyyu, Najib
and Asmara., 2020). The importance of business strategy is essential as it describe how
individual company can make their market research and proper analysation in perspective of pros
and cons which generate better outcomes to gain more competitive advantages. In this strategy
evaluation is also plays an important role to specify process for determining where the
effectiveness within given strategy to accomplishing organisational objectives (Dilami, Hosseini
and Ahmadi., 2021) .It is taking corrective actions wherever required in marketplace and
business environment.
In this business strategy report, the company is selected IKEA is one of largest furniture
retail business that deals with innovative design and ready to sell for better assembling of
furniture, kitchen appliances and home where among of goods and services. The topics are used
to covered in following report vision, mission, and objectives related with selected company
along with strategic direction. To analyse the competitive advantages where it evaluate regarding
with four attributes by using VIRO. External analysis for that using of Pestle Analysis and Porter
five forces to mapping effective competitive analysis. At last there are evaluation of internal
environment and relevant frameworks, strategies to enhance competitive edge and market
position and ultimately the theories, models to produce a strategic management plan with proper
analysation regarding with overall assessment to provide organisation strategy.
MAIN BODY.
1. Illustrate about company related mission, vision and goals along with specify the objectives in
setting goals the strategic formulation.
About Company:
IKEA is leading manufacturing brand of furniture and other retail base product and
services offer. The company is majorly situated in globally and they have 476 stores and online
store which they owned private manner. IKEA is has been world largest furniture which is
retailer to attention towards cost control, operational, details and continuous product and services
which allowed IKEA within annually within lower prices towards better average costs control. In
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following there is mission, vision and objectives are elaborates of IKEA company along with
better strategic directions:
Mission:
The Mission statement of IKEA is “to create a better life or making effective standard of
living effective people life. IKEA business idea support with this better range of offering of well
designed and functional home furnishing product and prices and so low prices to offer”.
Vision :
At heart of IKEA concept which have vision to create better every day life for so many
people.
Values:
 Living up to their home furnishing legacy.
 Togetherness.
 Concerned for people.
 Revenue of people.
 Different of meaning.
 Given and take responsibilities.
STP for IKEA:
Segmentation: The market segmentation of IKEA is people looking for furnishing and items in
product and services and they can approach the people on the basis of demographic and
geographic factors.
Targeting: They usually target middle range of people or families.
Positioning: IKEA offers great ready to assemble furniture with great buying experience.
Strategic Direction :
There are certain strategic direction which specify for IKEA company:
 Consistency: It is strategy which defines about lack of different ways. It also present
which must not having inconsistent with having broad plans and policies which related
towards corporate strategy (Gurzawska, 2020). For instance, operating problem are
brought which are not top towards reformulate the policies for its effective
implementation. In perspective of IKEA company which is comprise that they have their
own policies and regulation where they use to follows on which their objectives are get to
accomplished effectively.
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 Consonance: It is key evaluate on which consonance is to understand which is having
existence of business. The business is must having essential to match and be adapted
towards its environment towards having critical changes occurring.
 Advantages: There are two important aspect business where the mission in relation
towards the environment. There is one aspect that business which must fit to the
environment. Second aspect where the business compete with other firms that are trying
to adapt environment. The advantages of IKEA company applies competitive strategy to
prove for provide proper resources and improve skill to evaluate position effectively.
 Feasibility: It is the test of strategy which is help to assessing towards the firm strategy
or not. An organisation is capable towards compete other firm's base strategy. As the
marketing team of IKEA company prepare their new project to create better strategy
which enhance better work attainment and also they get to attain outcomes effectively.
2. Analyse the competitive advantages of company by using VRIO analysis farmework.
The description of competitive advantages is refers about that allows company which
produce goods and services in better format and also having offer in economic rivals. These
factors allows the productivity which is having entity for generate more sales or superior to
mapping margins compared to its market rivals. In perspective of IKEA company they make
their profit margin and on that basis they provide or offer product and services in lower range
which attain competitive advantages (HAN and Kang, 2020). It usually involved factors which
specify factor including costs structure, branding, the quality of product offering related with
having involvement effective intellectual property. To more understand more internal
environment and competitive advantages using VRIO Assessment which help to examine actual
factors of competitive advantages.
VRIO Analysis:
It is an analytical technique which is evaluate for the company base resource on which
company's base resources which is thus the better competitive advantages that includes analysis
which enhance to include about the analysis where value, rarity, cost and imitate within an
organisation of firm base resources.
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Resources
and
capabilities
Valuable Rare Imitable Organisation Competitive
advantages.
Human
resource
Management
Yes No Yes Yes Strong
Competitive
advantages
Leadership
Teams
Yes Yes No Yes Strong
Competitive
Advantages.
Awareness of
Brand
Yes Yes No Yes Sustainable
Competitive
advantages.
Market
position
Yes Yes No No Not
Competitive
advantages.
Customer
feedback
rating
Yes Yes Yes Yes Realised
sustainable
competitive.
Evaluation:
The Above VRIO Analysis which usually describe that summarise on the basis of IKEA
company perspective. On the basis of each aspect of VRIO assessment which makes important
role in retail business practises to gain more competitive advantages. Human resource Management: In this factor its is considered as valuable where it
consist to form policies and regulation that controlled by Human resource manager of
IKEA company. It is also easily copy process of human resource system by other similar
base of business industry and also it properly organised. But it is not counted as in rare
because every human resource practise having different approach.
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 Leadership Teams: On the basis of this VRIO aspect it explain in leadership and team
situation that it is encompasses for valuable, rare and organised but not imitable because
IKEA use to hire candidate on different skills set. Awareness of Brand: for every specific business brand their awareness among public
platform would be counted as valuable, rare and organised but it could not be imitable
because raise their performance into different aspect in every complex situation in
competitive marketplace. Market position: As per this aspect of VRIO analysis in IKEA it is having valuable and
rare factor sustain in market position (Khairunnisa and Wandebori, 2020). But in imitable
and organised the market position is not considered to sustain because every retail market
position use to fluctuates.
 Customer feedback rating: On the basis of customer feedback rating which is essential to
every business as it helps to provide a rough data for company development in
competitive advantages. In IKEA company, customer feedback rating is valuable, rare,
imitable and organised which is counted long term sustainable for generating positive
outcomes.
3. Illustrate external environment by using PESTLE framework for analysing toward selected
business.
The description of Macro Environment is define about condition of economy in current
manner as whole instead of existing in specific sector. On the basis of Pestle analysis it helps to
examine to generate pros and cons or challenges and opportunities to gain more competitive
advantages within competitive marketplace. In following there are six factor of Pestle Analysis
regarding with IKEA company: Political: It is majorly defined about the influences of government which has particular
on business increase productive. It involves various things like having proper government
policy, corruption tax policy, certain trade restriction and many more. In the context of
IKEA is used to operate in almost 41 countries, political forces ion every countries can
affect its business within country from the supply chain process which is sales and it
involves Government Bureaucracy where in this IKEA is having issues with Russia
which is waited for years to receive towards enabling set of document to open on branch
within the investment in Russia (Mao., 2021). But if the IKEA is planning to invest in
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United Kingdom there is one issue of Brexit Market which can raise more complex to
affect on IKEA growth in competitive marketplace. Economical: This is comprise within the components where overall company allows
enhance better performance. It better involves factor like effective growth, interest rates,
exchanges rates as well as unemployment rates also. In the context of IKEA company the
impact of Brexit market would create more fluctuation in terms of both currency as well
as certain level of inflation forces also. The economic impact also led towards increase
within the prices of oil. In terms of employment rates it will directly which affect towards
the raise the capacity of customers and due to make this their supermarket industry was
getting more affected. Social Factor: This is to determine about overall demographic characterise and
geographic aspect of practises for identify customer which involves customs, income,
lifestyle as well as at their culture. It is important factor for an create make industry. This
is one of important factor where the industry having main focus which make specific
target towards specific customers (Liu., 2020). In the context of business the integration
within the age of population which provides various opportunities towards their
supermarket industry. As IKEA company social factor which affected them which was
increased in education as well as health of customer. Technological factor: There are many innovation which are done in effective
technologies and it directly the business operation also. This includes factors like
automation, innovation, technologies changes are many more. Within the context of
IKEA company they use advanced technologies to handle for effective manufacturing
their furniture base product and services which use to impact on digital technology
provide to promote advertisement to gain competitive advantages. Environment Factor: As per this factor which have become important due to increment
in scarcity for all raw material. It includes different factors like climatic segmentation
change and so on. This would include the different factor like making weather like
towards all carbon emission which got to reduced by 26.9% and their mission around
30% till all year within 2025. As the IKEA company use to manage reduce decreased the
supply chain by using bins for their furniture products. IKEA use to take participate in
CSR activities and gain more competitive advantages.
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 Legal Factor: These type of factors which include certain laws and employment laws,
copyright and parents. Health and safety laws and many more. So companies need to
understand where it actually is legal and what not. In context with organisation, the main
legal which influenced the supermarket industry was the fair trading. In perspective of
IKEA company their human resource policy is allows to implement employment
legislation that specify that overall work which conduct is regulates on compliance
oriented manner.
4. Explain the Porter Five Force Model for the selected organisation.
Porter Five Forces is the type of model that identifies and analyse five competitive forces
where five major forces helps to understand the competitive market for specific business or
industry to compete and provide sustainability in long terms preference. Threat to new Entry: In the competitive marketplace there is always having existence of
newly business which comes and gets established which can be counted as threat of
business. When new companies enters which they uses about more advancement
technology which become threat to them. In context of IKEA there is Low Barriers in
furniture market as because IKEA is the only company who majorly deal with have small
economics of scales with having cost advantages and create product differentiation. Threat of Rivalry: The business get affected when there is huge range of competition in
competitive marketplace between competitors. The impact would either raise or decrease
the profit (Piza, Connealy and Feng, 2020). In context of IKEA is having the level of
competition is moderate where al through IKEA has a lot of competitors as supermarket
and brand stores which is selling furniture that relatively enhance low pricing offering
like discounts IKEA. Such as D-Mart, Walmart, Tesco plc etc.
 Threat of substitution: In every business there is a threat of their substitutes which is
available as they are also offer same kind of product. In term IKEA company perspective
they have low level of substitute in certain reasons where IKEA is having strong build
strong brand image which accompanied which is having trust between consumer itself.
Overall IKEA company provide affordable prices which is offering. Bargaining power of Suppliers: As per the situation of IKEA company there is low
level of suppliers where IKEA not officially own any private supplier. So, it would be
easy to switch towards another suppliers. IKEA is working within 1380 suppliers around
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within 54 countries. Through which they developed the better code of conduct like not
promote child labour and they prefer to allow young workers, right to not discriminate
within workplace, right to freedom association.
 Bargaining power of Buyers: In this recent world buyer demand as it increasing through
day by day where the demand lot of material as possible. Due to having demand company
get stress that how will they be able to set their business in the long terms (Vincent and
Pinsker, 2020). In perspective of IKEA company there is moderate level of threat because
there many other furniture base manufacturing of furniture business such as Walmart,
Tesco, Asda Stores. But quality of IKEA is more influence of furniture manufacture
product and services.
5. Analyse and review about organisation strategy of selected organisation.
On the basis of above model and business related practise analyse in perspective of IKEA
company such as Pestle Analysis, VRIO and Porter five forces specifies about internal and
external environment of retail base business specification that generates more competitive
advantages. As Pestle Analysis where Political, Economical and environmental can raise barrier
in IKEA business effectively. But Social and technological factor would raise benefits in form of
approaching demographic and geographic range of business and advanced level of digital
marketing platform and advanced equipment where Artificial Intelligence base advancement
could generate more positive outcomes (Shindy, El-Maghraby and Harb., 2020). In VRIO IKEA
is having more factors like Brand Awareness, Market competitive position is imitable because
there are many other competitors who are dealing with similar base of product and services can
surpass the competitive advantages. At last analysation of Porter Five forces in perspective
where Bargaining power of buyers is vulnerable because many other furniture base company like
companies Tesco, Walmart etc.
CONCLUSION
It is been inferred about report which driven in above following to measuring the use of
different strategies within order to accomplish success. There is evaluation to mapping better
competitive advantages for that VRIO analysis conducted for mapping in competitive advantages
. By understanding of external or Macro Environment allows to understand about outside factors
which would create drastic change in business, it can be calculated in terms of positive and
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negative outcomes at the edge of attaining competitive advantages. To achieve success proper
planning should be done as which strategy must be made to tackle all challenges. Further more,
to specify organisation strategy it describe about overall assessment of model and theory of
business related specification which generate more competitive advantages that leads towards
compete with other competitors.
REFERENCES
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