Individual Report on IKEA: MBA600 Capstone Assessment 2

This report, prepared for an MBA600 capstone assessment, provides a comprehensive analysis of IKEA's business strategy and model. It begins with an executive summary and introduction, then delves into IKEA's organizational strategy, outlining its approach to operations, product development, and marketing. The report examines IKEA's strategies for innovation, growth, and change, as well as its strategic implementation. It incorporates Porter's Five Forces and PESTEL analysis to evaluate the internal and external environments. The report identifies IKEA's competitive advantages, strengths, and weaknesses. Finally, it offers recommendations for future performance enhancement, followed by a conclusion summarizing the key findings and insights. The report utilizes various sources to support its analysis and provides a detailed overview of IKEA's business practices and future prospects.

Subject Code: MBA600
Subject Name: Capstone
Assessment Title: Assessment 2 – Individual Report
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Executive Summary
The IKEA Company has applied new strategies to increase the variety of products in the
market and this has benefitted the company in many ways. The productivity of the employees
and the company has increased. This company has also expanded the business worldwide to
increase the sales of the company. Product marketing is an approach to bring the product in
the market and see the success of it. The company also tries to drive the demand and usage of
the product. The IKEA Company has also used many marketing strategies to enhance the
growth of the business.
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Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
Organization strategy:................................................................................................................4
Outline of organizational functions............................................................................................5
Recommendation........................................................................................................................8
Conclusion..................................................................................................................................9
References:...............................................................................................................................10
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Introduction
The marketing strategy of the business is a plan for reaching the people and turning them into
the customers of the company. This is a long-term process. The IKEA Company has also
adopted some marketing strategy to expand the business. The segmentation, targeting, and
positioning are three pillars of the marketing strategy of this company. This company has 380
stores in all over the world. These three marketing strategies are very important to run the
business globally. This company manufactures new products for the kitchen and bedrooms to
attract customers. In this way, they have been able to create a huge customer base over the
years.
Organization strategy:
The strategy is the main plan, which determines the mission and vision of the company. The
strategy is underpinned by the value of the company (Brown, et al., 2016). The strategy of
IKEA has always been to develop and design the products depending on the needs of the
customers. This company tries to keep the prices of the product is very low. In this way, the
IKEA Company is able to provide attractive, functional, and reliable solutions and
furnishings. Sustainability is the main pillar of the strategy of the IKEA Company throughout
evolution. In the year of 2012, this company had launched the strategy, which was based on
the people, and planet sustainability strategy. This helped the company to achieve positive
social and environmental impacts (Franchisor, 2019). This sustainability strategy brings the
elements of values, vision, and mission together to transform the business of IKEA. This will
help the competitiveness of this company by securing the access, which is long term. This
strategy also helps the relationship between co-workers and customers. The innovative
strategy enhances the increasing market share of this company. By the year, 2020 IKEA
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Company aims to produce as much energy as it consumes in the business operation
(Franchisor, 2019).
The integral elements of the business strategy of the IKEA business are as follows:
Offering the lowest price:
The effectiveness of cost plays an important role in this IKEA Company. This gives this
company a competitive advantage over other companies. The retailer of global furniture is
able to produce low price. This strategy works only because of the combination of economies
scale and the technological integration in the business of this IKEA Company. The low price
of the product also attracts the customer to buy the products from this company. This cost-
effectiveness also helps the business model of this company.
An increasing variety of products:
IKEA Company also provides a great range of products, which gives the company an edge
over other companies. There are almost 9500 products across in the portfolio of IKEA. This
company renews the range of the product by annually launching 2500 new products. This
company is also trying to get its foot into the food and catering industries. In the year 2016,
the main slogan of this company was “it starts with the food.” In the year of 201, the food
turnover of this company consisted of bistros, Swedish food markets etc. This also caused the
company almost EUR 1.7 billion (Franchisor, 2019).
Market expansion strategy in abroad:
Another strategy of this company is to expand the business internationally. The home
appliances and the furnishing chain have entered the new market in an aggressive manner.
This company has more than 340 stores in the 28 markets. In almost 11 countries this
company has 22 pick-ups and order points. This company is also aiming to open its market in
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the market of India and Serbia. This company also pays attention to the sustainability of the
product. This also helps this company to gain productivity and profitability in much
stipulated time (Li and Zhang, 2016).
Outline of organizational functions
Operations:
IKEA Company is a privately held organization. This company has witnessed an increase
over the last years. There is three core business which works together to create a robust
franchise system for the company. The main aim of the company is to provide the franchise
with the best possible condition for applying the IKEA concept. There are many companies
work under the IKEA trademark. This furniture company achieves knowledge by
communicating with the internal and external stakeholders. The stakeholders also help the
business of IKEA to cooperate with other business and develop it. This also helps the
conditions and social responsibility of this company (Franchisor, 2019).
Marketing:
The IKEA Company is the largest home-furnishing retailer in the world. This company is the
provider of the stylish modern home architectural designed furniture. This company manages
the marketing strategy to achieve the objective of the business. Branding is the main element
when it comes to marketing strategy. Positive words, empowering the co-workers have
helped this company to create awareness in the marketing strategy. The various popular
advertising campaigns also help the business of this company. Analyzing the target market
and the essentials of market value should be taken into account when the marketing strategy
is concerned.
Product development:
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The main challenge of the company is to make products at a very low cost. This company
starts with an understanding of what people need every day at home who income limited and
live in a limited living space. In this way, this company has succeeded in providing the best-
designed and functional products. To make the product saleable, this company also pays
attention to the market value and depending on this value, this company designs products.
This company uses the best raw materials to manufacture a product. This is the reason the
elements of the design are decided on the factory floor (the Vardar, 2018).
Innovation:
This company creates affordable and desirable furniture for the young city dwellers. The PS
collection of this company suits for homes, which have limited spaces. The designers of this
company always feature design by well-known names. This company also offers refugees an
alternative to tents. In the year of 2013, the charitable foundation of this company announced
that they would launch plans for refugee shelters (Franchisor, 2019). These tents will be
unlockable tents, and these tents can be easily used to the house victims of the displacement.
The innovation lab of this company in Copenhagen is investing in the market to boost up the
health and wellbeing of the employees of the company (Tronvoll et al., 2019).
Growth:
In the year 1950, the IKEA was a Swedish company. This company has turned the total
business of furnishing upside down. The three main features of this company are quality,
function, and low price. During 1960, this company also introduced the warehouse principal
(Franchisor, 2019). In Stockholm, this company opened a huge store from where people
could pick all the kinds of stuff from the shelves. This company has also made such a huge
drift towards delivering products to the customers. In the year of 1963, this company for the
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first time went to Norway. This group has also 70000 co-workers and the turnover of this
company is around 9.43 billion GBP.
Change:
This company has also announced some changes recently. These changes are:
Urban stores:
This company has announced recently that they will open 30 new stores. They have also
decided that this company will move from the outskirts of modern cities to a proper place
where they will be closer to many people. This company is going to open its first store in
Paris. This store will be 5000 square meters. This is almost 25% more than the outskirts area
of Paris (Franchisor, 2019).
Changing the layout:
Almost more than 80% of the people research thoroughly before going to the stores. The
stakeholders of this company have also sold the products at a very low price and in this way;
this company has easily met its goal in a much stipulated time. This company has also cut the
number of products, which they display on the floor. They will manufacture the products
more for the kitchens and bedrooms. This will emphasize the experimental part of visiting the
main store. This company also helps the customers to shop online.
More delivery:
This company has also decided they are going to deliver more products to the customers. It
will help them to grow profitability. This company is also planning to invest more in the
delivery. In this way, the company can easily make a good relationship with the customers
and it will help them to create a huge customer base (Lebherz and Hartmann, 2017).
Job cuts and new jobs:
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This company is going to cut 7500 jobs around the world. However, they are also going to
recruit new employees, and the number will be around 11500. This will help this company in
the delivery system. In this way, the company can deliver most of the products to the
customers. These changes are designed to change the business model of this company.
Strategic:
Hitting the right demographic:
This company has chosen the right place to run the business. This company is also known for
paying workers a good wage. The right demographic place has also helped this company to
collect the resources very easily, which can expand the business worldwide.
Not expensive, not too cheap:
This company has made a strategy that they will manufacture product for all type of
customers. This is why this company has fixed the price not too expensive and not too cheap.
In this way, this company will get good value for the products (Foray, 2018).
Stores are the main destination:
This company has made sure that the shoppers get incentives to come into the stores. This
incentive is as if they will get more discount than the e-commerce stores. This will help
people to come more often to the stores.
Implementation:
This company has chosen the promotion to expand the business. This company has also
implemented the process of outsourcing. This will help the company to gain a strategic
advantage in the global market. This IKEA Company has also implemented the customer
lifetime value by focusing on a single transaction. This company has also paid enough
attention to the desires of the customers and they have manufactured the product accordingly.
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This implementation has also enhanced customer loyalty to this company. This company has
also focused on improving the quality of the existing products and this will reduce the
competition in the market.
Recommendation
Depending on the SWOT analysis of this company it is found that the strength of this
company is brand recognition globally. The market concept of this company is very niche.
This company is recently over emphasizing on the prices. These are the weakness of this
company. There are many threats of this company in the global market and depending on this
SWOT analysis, this company should diversify the strategy of the business. This company
should focus on joint venture strategy. This will improve the delivery quality of the products.
Depending on the PESTEL analysis, this company should open its business in the new
countries in Asia. The economic situation in China will also help this company to increase the
sales of the products. This company should continuously focus on innovation. This company
should also enhance the supply chain management, which will contribute to the growth of the
business.
The IKEA Company should also periodically enhance and review the existing strategy. The
blue ocean strategy will help this company to create new customers. In this way, this
company will provide lasting core competitiveness. This strategy competitiveness will help
this company to attain growth in the future (Norgren, 2016.).
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Conclusion
Product marketing is an approach to bring the product in the market and see the success of it.
The company also tries to drive the demand and usage of the product. The IKEA Company
has also used many marketing strategies to enhance the growth of the business.
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References:
Brown, B., Bleecker, J., D'Adamo, M., Ferreira, P., Formo, J., Glöss, M., Holm, M., Höök,
K., Johnson, E.C.B., Kaburuan, E. and Karlsson, A., 2016, November. The IKEA Catalogue:
Design fiction in academic and industrial collaborations. In Proceedings of the 19th
International Conference on Supporting Group Work (pp. 335-344). ACM.
Foray, M., 2018. Understanding the Management Control System Used by Hybrid
Companies: A Case Study of IKEA and MIO.
Franchisor, 2019. Inter IKEA Systems B.V. - The IKEA Concept. [online] Available at:
http://franchisor.ikea.com/the-ikea-concept-2/?_ga=2.89927899.1355248720.1557230717-
1155925696.1557230717 [Accessed 7 May 2019].
Lebherz, M. and Hartmann, J., 2017. Applying the value grid model to the furniture industry:
the example of IKEA.
Li, J. and Zhang, Y., 2016. Chinese Consumers’ Attitudes toward Experiential Marketing:
The Case of IKEA.
Norgren, S., 2016. Case studies on Entrepreneurship and Strategy in Sweden.
Tronvoll, B., Edvardsson, B., Möllerskov-Jonzon, M. and i Innlandet, H., 2019. From
Customer Feedback to Innovation: The IKEA Innovation Journey from Screws to
Click. Service Innovation For Sustainable Business: Stimulating, Realizing And Capturing
The Value From Service Innovation, p.75.
Vardar, N., 2018. The national launch of an international brand: IKEA Turkey. SAGE
Publications: SAGE Business Cases Originals.
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