Innovation and Sustainable Business Development: IKEA Analysis

This report provides a detailed analysis of IKEA's innovation and sustainable business development strategies. It begins with an introduction to innovative strategies and their impact on business success. The report then explores the core concepts of the lean startup methodology and its application within IKEA, a leading furniture manufacturer. It includes a background of the company, highlighting its innovative designs, marketing strategies, and initiatives like providing alternatives to tents for refugees and launching AR-based shopping apps. The analysis examines the impact of the lean startup approach on IKEA's organizational performance, including its ability to reduce new product failure rates, understand customer needs, and create eco-friendly products. The report also offers recommendations for IKEA, such as investing in employee training, implementing advanced technologies, and gathering customer feedback to further improve its performance and maintain a sustainable position in the competitive market. The report highlights IKEA’s commitment to sustainable practices and customer satisfaction.

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Topic: Innovation and Sustainable Business Development
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Table of Contents
Introduction......................................................................................................................................3
Core Concept of Lean Startup.........................................................................................................3
Background of the Company and Its Innovation Trend..................................................................5
Analyze the Impact of Lean Startup Innovation Trend on the Organization..................................6
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Innovative strategies help a business organization to run their business operation
successfully and also attain the desired success within a specific time. Moreover, with the help of
innovative strategies, a company can be able to compete with their market competitors and also
improve their customer based. In this particular study, IKEA, a furniture manufacturing
company, has been taken into consideration. The core concept of the lean startup has been also
discussed in the paper to understand the impact of innovative strategies on an organization. After
that, the study provides a brief background of the company and also discusses their innovative
strategies. Lastly, the paper critically analyzes the impact of lean startup methods on the
organizational performance of IKEA.
Core Concept of Lean Startup
Innovation is one of the important aspect, which has created a significant impact on the
business performance of an organization. Cooper & Vlaskovits (2013), claimed that innovation
brings an opportunity for a business organization to expand its business entity. Lean startup is a
method, which is utilized by a business organization when the company introduces a new
product in the current competitive market. With the help of the lean startup method, an
organization can be able to launch customer-centric products within its operating market to meet
its customer needs and demands. On the other hand, it can be asserted that it is considered as an
approach, which helps an organization to conduct investigation and experiment programme in

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order to develop new innovative products for their target market customers to meet their
increasing demands.
Simultaneously, in the early 2000s, the core concept of lean startup was developed and
the concept was implemented in the business around 2010. Moreover, lean startup is also known
as lean manufacturing. According to, Blank (2013), it can be said that lean startup has created a
positive impact on the overall business performance of an organization and it provides
opportunities for every business organization to implement appropriate innovative ideas within
their organization to expand their business entity. In addition to this, by utilizing the lean startup
principles, the manufacturing department of an organization can be able to understand their
target market customer’s demands, which will help them to redesign their department to
manufacture customer-centric product for their target market customers. Moreover, it can also be
asserted that the lean manufacturing process also helps an organization to minimize their wastage
in its product life cycle. According to sources, it can be argued that lean startup based
organization mainly hires employees, who have the much of ability to learn and work quickly,
where traditional business organization mainly employs employees based on their ability,
qualification, and experiences. The aim of this method is to determine the problems of product
manufacturing section and after that, the method should provide certain measures to address the
problems. After addressing all the issues of the manufacturing department, with the help of this
method producer has produced a very small amount of new product for launching and then
accumulate feedbacks from their potential customers, which help an organization to make
appropriate strategies for improving their business performance (Frederiksen & Brem, 2017).
Therefore, it can be asserted that lean startup is considered as a less expensive method of final
product testing and it also reduces the failure rate of a new product.

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There are certain companies, such as General Electric, Intuit and Qualcomm have utilized
lean startup methods within their business operation in order to reduce their new product failure
rate. For example, General Electric used this innovative approach while developing new batteries
for mobile phones companies in developing countries (Edison 2016).
Background of the Company and Its Innovation Trend
IKEA is a Swedish furniture manufacturing company, which also provides home
accessories and kitchen appliances for their target market customers. In the year 1943, Ingvar
Kamprad had established IKEA. The headquarters of IKEA is in Leiden, which is situated in
Netherland. According to sources, it can be asserted that IKEA is the largest furniture
manufacturing company across the globe. Moreover, the company has more than 1200 products
variety, and the company has marketed its products in approx. 52countries (Inter IKEA Systems
B.V. 2019). Especially the company is known for its innovative designs, which will help this
organization to draw the attention of their target market customers. On the basis of a statistical
report, it can be asserted that IKEA is responsible for 1 percent of world commercial wood
consumption. According to the annual report of IKEA, it has been observed that the revenue of
the company in the year 2018 was US$ 44.6 billion (Vinay & et al. 2017).
IKEA is also known for its innovative marketing strategies, which create a significant
impact on their business performance. Being a giant furniture retailer, the company also takes
certain appropriate initiatives to improve its brand image, which has created a positive impact on
the buying behavior of customers. On the other hand, IKEA has also introduced several
innovative and attractive products for their customers to meet their expectation level. The main
aim of this company is to provide premium quality furniture at an affordable price, which helps

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the company to improve its productivity as well as its profitability (Dejnaka 2017). In the year
2013, the IKEA had announced a plan regarding the safety purpose of refugees. By keeping this
in mind, IKEA has launched alternatives to tents for refugees. On the other hand, the company
also provide certain furniture, which is made from recycled products. In 2017, IKEA had
launched a modular kitchen setup, which is made from the recycled plastic utensils and
destroyed woods. In order to gain customer loyalty, the higher authorities of IKEA also offers
AR (Augmented Reality) services to their customers, which enhances their shopping
experiences. With the help of Apple, IKEA has launched its AR-based shopping app for its
customers, which has been playing a significant role in the new product launching session (Inter
IKEA Systems B.V. 2019). Moreover, IKEA also provides a wide range of smart lighting
products for their customers, which can be controlled by the remote and app. It will help this
company to accomplish its customer’s satisfaction level. The higher authorities of IKEA also
conduct market research programmes on a regular basis to determine their customer demands
and according to that, the company has taken certain innovative strategies to attain their
customer needs and demands (Vinay & et al. 2017). These aforementioned innovative strategies
help IKEA to become the largest furniture retailing company in the world. Moreover, with the
help of appropriate innovative strategies, IKEA can be able to meet their customer’s expectation,
which has created a positive impact on organizational performance.
Analyze the Impact of Lean Startup Innovation Trend on the Organization
Appropriate innovative strategies help a business organization to improve its overall
performance. Moreover, with the help of effective innovative strategies, an organization can be
able to successfully compete with their market competitors easily. Likewise, by utilizing several

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innovative strategies, IKEA improves its performance as well as increase their customer base.
The lean startup also provides opportunities for IKEA to reduce the failure rate of new products.
As it is known to all that, the company also manufacture their products in an eco-friendly
manner, which helps to create a positive impression on the inner mind of their customers. In
relation to this, it can be said that it also creates a significant impact on the sale volume of the
company (Levinthal & Contigiani 2018). With the help of lean startup, IKEA can be able to
identify their manufacturing related issues easily, and after identifying the issues, the operation
manager of IKEA has taken certain measures to mitigate the issues efficiently. After that, IKEA
has manufactured a small amount of new attractive products for its customers to reduce the
failure rate. Then, the company accumulated feedbacks from their potential customers. On the
basis of the feedback, the manufacturing department tries to find out their area of improvements,
and then the key personnel takes certain initiatives to improve their quality of the new products
to meet their customer’s expectation. This innovative method helps IKEA to minimize the
number of wastages in the production cycle, which has created a positive impact on the
company’s financial position (Yang, Sun & Zhao 2019).
Simultaneously, innovative strategies have an aim to improve the market share as well as
profit by providing innovative products and services. IKEA tries to provide products as per their
customer’s needs and demands, due to this reason, the higher authorities of IKEA has conduct
market research programme on a regular basis to identify their target market customer’s needs
and demand and also determine their competitors’ marketing strategies. Based on the market
research report, the marketing and operation managers have taken certain innovative strategies
for IKEA to meet their customer’s expectation as well as to sustain in the current competitive
environment (Osterwalde & et al., 2011). On the other hand, the principle of the lean startup also

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helps the manufacturing department of IKEA to understand their customer’s needs and desires,
which will help them to redesign their products as per their customer’s needs and demands that
will help to meet their customer’s expectation. Moreover, IKEA also produces its products from
recycled products and materials, which has created a significant impact on the customer’s minds
and their buying behavior. This innovative strategy of IKEA help to improve their sales volumes
as well as to obtain a sustainable position in the current competitive market. On the other hand,
with the help of lean startup, IKEA can be able to provide alternatives for refugees, which helps
to improve their brand image that will create a positive impact on the revenue of the organization
(Vinay & et al. 2017). Therefore, it can be asserted that the lean startup method helps IKEA to
implement its innovative strategies within their business organization to improve the overall
organizational performance.
Recommendations
In order to improve the overall performance of the organization, the higher authorities of
IKEA should take certain measures. The key personnel of IKEA should conduct training and
development of programmes for their employees to improve their skills and knowledge, which
will help them to maintain the organizational standard. Moreover, advanced technologies help an
organization to improve its product quality and with the help of effective technologies, an
organization can be able to deliver the right quantity product to the right person at the right time
(Yang, Sun & Zhao 2019). Therefore, it can be recommended that the higher authorities should
implement advanced technologies within their business operation to improve their product
quality and also effectively run their distribution channel, which will create a positive impact on
the organizational profitability.

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Simultaneously, IKEA should also conduct customer feedback session and try to gather
feedback from all the potential customers of IKEA, which will help the operation managers
IKEA to identify their service related issues. Then, the managers can be able to make certain
appropriate rational strategies to mitigate their service related issues, which will help this
company to gain loyalty from their customers. Besides, IKEA should provide certain offers, such
as seasonal offers, stock clearance, pre-purchase offers and others towards their target market
customers, which will help to draw their attention. In relation to this, it can be said that this
initiative also creates a significant impact on the productivity and profitability of the organization
(Frederiksen & Brem, 2017). Apart from that, the company should take appropriate market entry
modes while entering into a new market. These aforementioned recommendations must be
implemented within the organization of IKEA to improve its overall performance.
Conclusion
Based on the aforementioned discussion, it can be concluded that appropriate innovative
strategies of IKEA help to run their business operation flawlessly and also helps to attain the
desired outcomes within a stipulated timeframe. Moreover, by employing innovative strategies,
IKEA can be able to compete with their market competitors easily, which will help IKEA to
sustain in the current competitive world. Lastly, it can be said that effective utilization of
innovative strategies, IKEA can increase their customer base.

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References
Blank, S. (2013). Why the lean start-up changes everything. Harvard business review, 91(5), 63-
72.
Cooper, B., & Vlaskovits, P. (2013). The lean entrepreneur: How visionaries create products,
innovate with new ventures, and disrupt markets. John Wiley & Sons.
Dejnaka, A. (2017). Technologization of Marketing Communication–New Trends. Annales
Universitatis Mariae Curie-Skłodowska, Sectio H Oeconomia, 51(2), 59-68.
Edison, H. (2016, November). Software Product Innovation Through Startup Experimentation in
Large Companies. In International Conference on Product-Focused Software Process
Improvement (pp. 751-756). Springer, Cham.
Frederiksen, D. L., & Brem, A. (2017). How do entrepreneurs think they create value? A
scientific reflection of Eric Ries’ Lean Startup approach. International Entrepreneurship
and Management Journal, 13(1), 169-189.
Inter IKEA Systems B.V. (2019). IKEA. Hej! Welcome To a World of Inspiration for Your
Home. Retrieved From: https://www.ikea.com
Levinthal, D., & Contigiani, A. (2018). Situating the Construct of Lean Startup:
Adjacent'Conversations' and Possible Future Directions.

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Osterwalder, A., Pigneur, Y., Oliveira, M. A. Y., & Ferreira, J. J. P. (2011). Business Model
Generation: A handbook for visionaries, game changers and challengers. African journal
of business management, 5(7), 22-30.
Vinay, A., Srivastava, I., Vij, S., & Rawat, S. R. (2017). IKEA: The Furniture Guru-An
Exploratory Study.
Yang, X., Sun, S. L., & Zhao, X. (2019). Search and execution: examining the entrepreneurial
cognitions behind the lean startup model. Small Business Economics, 52(3), 667-679.