Strategic Management Report: IKEA's Market Analysis and Strategy

This report provides a comprehensive strategic analysis of IKEA, examining its external and internal environments. It begins with an introduction to strategic management and the chosen organization, IKEA, highlighting its vision, mission, and the challenges it faces, particularly in maintaining product ...Read More

Strategic Management
1

Table of Contents
1. INTRODUCTION.......................................................................................................................3
MAIN BODY ..................................................................................................................................3
2. Environmental analysis................................................................................................................3
Macro trend environment analysis...............................................................................................3
Micro trend environment analysis...............................................................................................8
Identification of Opportunities and Threats...............................................................................12
Internal environment capability analysis...................................................................................12
Strategic Fit with operating environment..................................................................................18
3. Strategic Options........................................................................................................................19
4. Proposed strategy and implementation challenges....................................................................24
CONCLUSION .............................................................................................................................29
.......................................................................................................................................................29
REFERENCES..............................................................................................................................30
2

1. INTRODUCTION
Strategic management is referred to as the process of ongoing planning, analysing,
monitoring and assessing the necessities of the company in order to meet its objectives and goals.
This management helps the organisation and its leaders to think and plan for the future existence,
thereby fulfilling the responsibility of the directors. It is like a direction for the company and its
workforce which helps in monitoring and testing the activities of the organisation which can
result in greater efficiency, profitability and market share. The organisation chosen for this report
is IKEA, multinational conglomerate which designs and sells the ready to assemble goods which
includes furniture, home accessories and kitchen appliances. This company is non diversified
organisation which deals in retail industry and has been selected for this assignment because it a
leading brand which is facing emerging challenges in entering any new market, maintaining
quality and low level of labour standards. It is facing challenges in terms of quality which have
resulted in many harsh consequences like allergic reactions, tragic injuries and malfunctions.
The vision statement of IKEA is to provide a better life to customers, co workers and the people
associated with it and its mission statement is to give better life to people but the issue of quality
have been a major challenge which is a threat to its mission and vision (IKEA, 2021). This report
shall cover the macro and micro environmental analysis, strategic options for company and
proposed strategies and implementation challenges.
MAIN BODY
2. Environmental analysis
Macro trend environment analysis
PESTLE analysis
It is a framework needed to analyse the key factors of external environment which
influence the working of the organisation. It is a tool which is used to identify the macro forces
which a company faces (Alexander and Joe, 2019). In context to IKEA, the PESTLE analysis is
illustrated below-
3

Illustration 1: Pestel analysis, 2021
PESTEL FACTORS IMPACT LIKELIHOOD MITIGATION
POSSIBLE
Political  Covid 19 The company
operates in more
than 41 countries
and is obliged to
abide with the
regulations of
each country. The
pandemic have
affected political
stability of many
countries and
without economic
IKEA is serving
in multiple
countries and
pandemic have
affected dozen of
countries by
affecting the
international trade
but the Asian
market have
given opportunity
to IKEA to
The company can
enter the market
of India as the
'Make in India'
movement attracts
foreign countries
to conduct their
business in India
and this
opportunity will
help IKEA to
overcome its
4

stability, the
organisation
cannot survive in
any location.
generate
maximum
revenue.
challenge of
entering new
market. IKEA can
expand in
multiple location
in India to capture
large market.
Economic  Brexit The Brexit have
impacted the
businesses in UK
as it has become
difficult to carry
on the activities
in UK due to
difficulty in
hiring the labour
from Britain.
The free flow of
goods within
European Union
is stopped due to
Brexit exit which
is affecting the
operations of
IKEA. Brexit is a
threat to the
company due to
difficulty in
international trade
in whole
European Union.
IKEA can
overcome this
threat by entering
other markets of
developing
countries like
India where there
is free flow of
trade so that it can
expand its
business and
enhance its sales.
Social  Values
and
culture
This factor also
affect the
operation of the
company as
different country
have different set
of values and
culture and IKEA
have to take care
The company
IKEA has a threat
of this factor as
the organisation
does not know its
customers.
Knowing the
local culture is
important and
IKEA can
mitigate this by
producing such
products which
fits the culture of
that particular
market and
customer segment
so that they can
5

of all while
conducting its
business in a
particular nation.
IKEA is close to
it as its every
marketing
material is put
like that but they
do not receive
such response
from their efforts.
retain the
customers for
longer time
frame.
Technological  Digital
marketing
IKEA have been
in traditional and
digital marketing
where it reaches
the customers bot
through online
and offline mode
(Byun, 2017).
The company
puts many efforts
to know its
customer base so
that it can
enhance their
satisfaction level
in order to
increase their
brand value and
profits.
The digital
marketing
channel has been
an advantage to
the company as
its digital
catalogues or
website reflect
their efforts to
know their
customers. The
website lets the
customer know
their closest
outlet, sales,
discounts, offers
and many other
things which
helps in
enhancing the
customer
satisfaction.
The organisation
can use digital
platform and
technologies to
reach large
audience and
enhance their
goodwill so that
they can attract
potential
customers from
new and emerging
market.
6

Environmental  Worldwid
e
Sustainabi
lity
As people are
getting aware of
the climate
change, it has
become the
responsibility for
every business to
produce such
products which
are sustainable
and IKEA is also
ensuring it.
IKEA has been
developing a
strategy which
emphasises on the
use of recyclable
and renewable
materials. But it is
an opportunity for
the company as it
is serving in more
than 40 countries
and it is challenge
to become
sustainable in all
the locations
altogether.
The company can
use this as an
opportunity to
attract customers
as sustainability
will help in
building the
goodwill of the
organisation. The
sustainable
strategy will also
contribute in
retention of
customer and will
help in stabilising
its business in any
new market.
Legal  Accused
of harm
and death
Businesses are
suspected of legal
threats and IKEA
is a global
company which
have to follow the
laws of different
nations in order to
prevent any legal
consequences.
IKEA have a
major threat of
legal
consequences as
its products like
furniture are
harming the
people due to its
poor quality
which results in
death and
injuries. These
devastation is
affecting
IKEA can
mitigate this
threat by ensuring
the quality of its
products and also
ensure that its
products are safe.
Improving quality
by using tools like
total quality
management may
help IKEA to
maintain and
monitor its quality
7

communities and
families.
in products so that
its reputation is
not harmed.
Micro trend environment analysis
Porters five forces
It is the method which is used to analyse the competition of the company. It derives five
forces which determines the competitive intensity and attractiveness of the industry in terms of
profitability (Beattie, 2018). In context to IKEA, porters five forces are discussed below-
Illustration 2: Porters Five Forces, 2020 Competitive rivalry- It analyses the ruthlessness of the competition by identifying
existing market and players. In context to IKEA, the power of this force is high as IKEA
is a global brand and has many local manufacturers in market with strong roots like
amazon, walmart, tesco as its competitors who have strong and intensified presence in the
market. Threat of new entrant- It is the force of new entries into the market and size of it plays a
major role. It analysis the easiness to enter the market. In relation to IKEA, the power of
8

this force is high as entering the furniture market is easy in terms of process, skill and
capital. Small amount of capital and low skilled labour is sufficient to make furniture. Threat of substitute- These are the key cause of the competition and generally the
substitute products are sold at reasonable rates which increases the level of threat. In
relation to IKEA, the power of this force is low as innovation in furniture or replacement
of wooden furniture with artificial is not substitute which makes the power of this force
very low. So IKEA have low force of this factor. Bargaining power of suppliers- These exert the substantial bargaining power over
companies by threatening them to increase the price or degrade the quality. In context to
IKEA, the power of this force is high as the suppliers have end number of options to sell
the raw materials to different manufacturers. Wood is a scarce resource and the supplier
has dominant position in the market.
 Bargaining power of buyers- The customers have ability to compete wit supplying
industry and may put the company under pressure which affects the price and influence
cost of product. IKEA has high bargaining power as there are many manufacturers of
furniture at national and international level and the customers have many options and
switch the cost which increases the bargaining power of customers.
Industry life cycle stage
It is the evolution of business through four stages which is based on characteristics of
business displayed on each phase (Carayannis, 2018). In context to IKEA, these are discussed
below-
9

Illustration 3: Industry life cycle, 2021
 Introduction- It involves development and early marketing of new product. The
innovators create new businesses in order to enable the production of new goods or
service. This industry is highly fragmented in this stage and profits are low due to high
expenses and low revenue. Growth- Here the consumers have come into the phase where they understands the value
of new product and its demand increases rapidly. Here the profits are not the top priority
as the organisation is spending on either the research or marketing. Maturity- This phase begins when the growth is slow down and the focus of company
shifts to reduction of expense and the consolidation occurs. As soon as the maturity is
achieved, the barriers to the entry are high.
 Decline- It marks the end of the industry's ability to support the growth. The evolving
end market impacts the demand negatively which results in declination of revenues
(Crowley and Bourke, 2018).
In context to IKEA, the company is at maturity phase as the business is being operated
from last fifty years and the sales have also steadied. The main focus of the company is to reduce
its cost and expenses so that it can get stabilise in the industry.
10

Customer Segmentation
It is a process which involves grouping the customers together on the basis of their
characteristics. On the basis of four categories, the customers can be segmented which are
discussed below-
Illustration 4: Market segmentation, 2021
 Geographic- These include grouping the customers on the basis of physical location
which can be on the basis of country, region, or city. Demographic- This includes grouping the customers on the basis of non character traits
which involves age, gender, income, religion, etc. Psycho-graphic- It is focused on personality of customers like traits, values, belief,
hobbies, etc.
 Behavioural- This includes segmenting the customers on the basis of their habits like
spending, browsing, purchasing, etc. (Fitri and et.al., 2019)
11

Looking at the segment of the customer which are targeted by the company in the current
scenario it had been identified that the company generally used to segment the customers on the
basis of demographic which is based on age group between 21-50 and also specifically focused
on the one who are in business line. Reason behind the same is that the product which is offered
by the company in the market is good enough to target this segment in the market.
Identification of Opportunities and Threats
After going through the Macro and micro environment analysis, it is analysed that there
is very good opportunity for IKEA which are narrated below-
 To use good quality of raw materials and technology in order to develop new and
innovative product in the market which can attract the customers and help in winning the
trust of consumers.
 Another opportunity for IKEA is to use such digital marketing channels which can help
in attracting more customer but for this, the company has to initially improve the quality
of the products.
Biggest threat for IKEA are discussed below-
 The impact of Brexit as the free flow of international trade is difficult in European Union
states and also there can be difficulty for the company to arrange the labour at low price
in Britain.
 Another threat is the production of offering according to the culture and values of
different countries in order to sustain the market at international level.
Internal environment capability analysis
Resource based view (RBV) of strategy
The resource based view strategy is considered to be a managerial framework which is
used to determine key strategic resources which a firm can exploit in order to attain sustainable
degree of competition advantage over the competitor who are present within the market. This
concept became dominant paradigm in the strategic planning in the year 1990. RBV strategy
focuses on internal resources of company where the processes must be organised and able to
obtain the competitive advantage (Dyer and et. al., 2017).
IKEA focuses on selecting the most feasible option when it comes to the delivery of the
goods and services. The warehouses of the IKEA Company has been located very smartly within
various different sectors in order to have great degree of control of activities. This resource-
12

based strategy is useful in analysing the processing time, resources used, queue time for various
set of action (Gürel and Tat, 2017). Moreover the staff of the IKEA Company is rotated regularly
to complete the orders of the customers from each picking area. Moreover, the resources has
been stimulated at high level and has been detailed in applicable working schedules. However
this helps IKEA company to stay above of its competitors in the market and attain high degree of
operational efficiency and productivity.
McKinsey 7s Model
It refers to the tool which analyses the organisational design of the company. It is aimed
to depict how effectiveness of the company may be achieved through interaction with seven key
elements (Fibbi, Maselli and Pieri, 2020). In context to IKEA, it is illustrated below-
Illustration 5: McKinsey 7s framework, 2021
 Strategy: Looking at the strategy it has been identified that strategy of company is based
upon quality, design and value of sustainability
 Structure: Looking at the structure it had been identified that the structure of IKEA is
very unique at the same time very complex. Reason of this complexity is to pay less taxes
13

in the market (Dandage, Mantha and Rane, 2019). The organisational structure of
company is divided into two parts which are franchising and operations. The former is
managed by INGKA group and the latter is organised by IKEA who have same founders.

Illustration 6: IKEA organisational structure, 2019
 As per Illustration 1, IKEA has inter IKEA group which connects all the
franchises of IKEA and the group is formed of 3 core business which are Inter IKEA
system, IKEA Range & supply and IKEA industry. This is the reason why its structure is
complex and unique.
 System: There are variety of different type of systems which are followed in the
organization, some sort of structure are recruitment and selection system, team
development and orientation system, transaction processing systems . For instance, flat
pack furniture delivery system of IKEA is such which enables the low cost of the
product, thereby increasing the profit for the company.
 Style: The company IKEA follows leadership style according to the situation. For
instance, if the managers have to take immediate decision, it will follow directive
leadership style where decision making power is in the hands of superiors and when they
have time to take opinion of others, it follows participative or supportive leadership style.
 Staff:Looking at number of employee in retail sector is 134400. In total there are 149000
employee who used to work in IKEA. They are highly educated and are well raised in
construction industry which helps the company in moulding its business according to the
idea given by them.
14

 Shared value: Looking at core competency it had been analysed that Unique design
capability is one of the core competency of Ikea in long run.
 Skills: Company generally used to provide the training to different employee to improve
the level of skill possess by different employee.
VRIO Analysis
This model is used to assess a situation inside the company which are resources,
competitive implication and the potential for improving the given area or resource (Yudiono,
Wilopo and Iqbal, 2019). In context to IKEA, it is illustrated below-
Illustration 7: VRIO analysis, 2021
Resources Valuable Rare Imitable Organised
Finance Yes - - -
Human resource Yes - - -
Product line - Yes - -
Patent - - Yes -
Brand recognition - - - Yes
15

 Valuable: Looking at Valuable resources possessed by company it had been analysed
that Financial resources and Human resources which are possessed by the company is
very much valuable.
 Rare: Looking at the rare resources of the company, it had been understand that product
line of the company is very much rare in nature. It had been analysed that there are no
company who used to offer this sort of product in the market.
 Inimitable: Some of the design of company are Patent by the company in the market, so
it is very much difficult to imitate that resources of the company in general.
 Organizational Applicable: Ikea is in the market from last so many years this has helped
the company in building good brand recognition which had helped company in being
successful in recent time (VRIO analysis, 2020)
Value chain Analysis
It is a analytical framework which assist in identification of the business activities in
order create value and the competitive advantage to the business. The main aim of this is to
increase the efficiency of the product so that the organisation can deliver the maximum value at
best possible cost (Gu and Kunc, 2019). The activities of production are categorised into two
activities which are discussed below in respect of IKEA-
Illustration 8: Porters value chain analysis, 2019
Primary activities Inbound- It is associated with buying the raw materials and ready items from different
suppliers which are located worldwide in 55 countries. It is the major source of value
creation for company. into different finished furniture for different organization.
16

 Operations- IKEA's operations are divided into three which are franchise, finance and
property. Among all, franchise is the core of business. The organisation follows de
centralised business strategy in running its operations at global level. Outbound- It involves warehouse and distribution of the ready products in 50 markets to
end users. The organisation uses two types of delivery services which are parcel delivery
when the purchase is below 25kg and truck delivery when the purchase exceeds 25 kg.\ Marketing and sales- IKEA use two types of marketing platform that is Social media
platform and traditional in the market. IKEA also provide after sales services to different
customer in the market, so that they are happy with the product of company.
 Service- In value chain, customer service is its primary activity which involves set of
practices and techniques like refund, feedback, telephone or online customer service in
order to enhance customer satisfaction (Saengmuang and Sitjongsataporn, 2020)
Secondary Activity
There are variety of different type of secondary activity which are also carried out in the
organization, one of them is Human resource management. As company used to make sure that
good level of Human resource is maintain to carry out variety of different activity in the better
way in the organization. Another supporting activity is technology which plays an important role
in tackling the production, sales and supply chain related challenges for IKEA. The organisation
invest in digitalisation so that it can improve the manufacturing capabilities of the company in
order to meet the changing demands of the customers.
Strength and weakness
The major strength for the company is its resources which are categorised as valuable,
rare, imitable and organised. It includes human resource, finance, patent and its brand
recognition. Another strength of company is its location of warehouse which is at the centre of
all and the company is able to deliver the product to the customer easily.
The weakness of the company is its poor quality which is decreasing the customer
retention and the organisation is also struggling to battle the competition as it has competitors
like walmart who have strong presence in the global market.
17

Strategic Fit with operating environment
SWOT Analysis
It is a tool which is used to identify the strength and opportunities of the company so that
it can overcome its weakness and threats. This tool is a part of micro environment analysis
(Sarsby, 2016). In relation to IKEA, it is illustrated below-
Illustration 9: SWOT analysis, 2019
Strength Weakness
 The company IKEA have creative staff
which comes with different innovative
ideas so that they can bring attractive
and innovative offering for the
customers in order to retain customer
loyalty. IKEA regularly brings
innovation in its products so that
customers can get new offerings from
organisation.
 IKEA have huge competitors in the
countries where it has expanded its
operations. These competitors have
strong roots in the market which makes
difficult for the company to survive for
longer time so company has pressure to
come up with different ideas in order to
survive in market.
Opportunity Threat
18

 The opportunity for IKEA can be to
expand its operations in developing
nations where there is free flow of
international trade. The free trade will
offer new opportunity to company to
reach large audience and attract
potential customers with its innovative
products.
 Legal threat are some of the threat
which are very high in the industry,
This will create the variety of the issue
for the organization in the long run
(Pestle analysis, 2020).
EVR framework
Environment value resource is a model which provides the ideal framework to the
managers and entrepreneurs so that they can manage their resources in effective manner in order
to sustain and create the organisational success and effectiveness (Rosales and et. al., 2017).
IKEA is a leading retail furniture brand which must set some standards in order to comply with
environmental regulations so that it can implement new sustainable strategy in the organisation.
After going through the different strategy which are made by Ikea in the organization it
had been identified that company always look to take care about the environment of the nation
by specially focuses on the values of the company and resources which are possessed by them.
3. Strategic Options
TOWS matrix
It is a framework which is used to assess, compare, create and then decide on the business
strategies. It is a modified part of SWOT which helps in making the strategies by using strength
and opportunities (Sarsby, 2016). In relation to IKEA, it is narrated below-
19

Illustration 10: TOWS matrix, 2020
Strength Weaknesses
Opportuniti
es
Strength Opportunities strategies
 Expanding the business in
the oversea market more
importantly in ASIAN
market and adapt the
changes in its product lines
based on the culture of that
country which will help in
building strong position and
in grabbing market share.
 Further working on
improving its product
quality along with putting
emphasis on the low cost
strategies.
 Ikea can grab the
opportunity in regard to
Weakness Opportunities strategies
 The company have large
number of competitors like
walmart, tesco, etc. who have
strong root in the market. It can
bring such innovative products
in the market which can help in
beating the competitors and
capture large market share.
 The company can work on to
improve their quality in order to
prevent any legal consequences
as its poor quality products
have cause severe injuries and
harm to people. The company
can use different tools like total
quality management in order to
20

creating environment
friendly products along with
the integration of innovation
and creativity at a lower
cost which can be sold out
at the lower price as well.
As nowadays, people are
having interest in gathering
unique products which
distinguish them from the
others. This results into
building up a positive and
unique image of the
company.
1. The company can make use
of the social media
platforms for the purpose of
promoting the business by
marketing its product to the
larger group and in return
attracting more customers
towards its page and official
website.
 IKEA have creative staff
which comes up with
different ideas and plans in
order to innovate its existing
product or bring something
new in the market. It can
utilise its human resource to
capture large market in
monitor and improve its quality
of product so that it can
increase customer retention.
 The company needs to put in
more emphasis on the meeting
with the needs of the customers
as it has mainly focused on the
standardization of its products
instead of listening to the
requirements of customers on
account of its global business.
21

Asian market so that it can
increase its profitability and
revenue generation
(Sanderson, Stanton and
Plant, 2020).
Threats Strength Threats strategy
 The company faces tough
competition in the market
but they have creative staff
who offers great idea to the
company as to how to
produce the product in
better manner.
 In addition to this,
technological development
is also consider as a threat
as company has to invest in
technologies which will
lower its profitability But it
has a strength of using
effective marketing strategy
that assist the firm to
improve the results and also
maintain the brand image at
international level to. Such
that it has an online store
and that is why, company
uses social media, website
which in turn improve the
brand image at international
level.
Weakness Threat strategies
 As company faces tough
competition, but company do
not invest in the research and
development department.
Therefore, it is spending way
less than a few players within
industry which have a
significant advantage such that
offering innovative products.
 As Brexit have lower the
chances of the company to
freely trade across the globe, so
company can expand in other
developing nations like India
which have free trade so that it
can successful expand its
business.
22

Evaluating the feasibility, acceptability and suitability of a strategic options
By conducting the TWOS matrix it is analysed that there are two strategic option
available for company which are -
 Offering the product in Asian market by using effective promotional tools that assist to
improve the results. Asian market is best suitable for the organisation as it has free flow
of trading and also the company is affected by the Brexit which have impacted on free
trade across European Union.
 Another option is to improve its quality in the product so that it can retain its customers
and also win the trust of other customers who were disappointed from the offering of the
company due to its poor quality which resulted in death and injury to several customers
in the past.
Suitability: For the 1st option, offering product in Asian market by using marketing
strategy that assist to improve the results in positive manner. Through this strategic option
company offered the product and tries to meet the demand of customers. On the other side, for
2nd option, company has to offer the innovative product and same should be offered at low cost.
This in turn improve the results and also attract the customers. However on the other side, the
chances of implementing 2nd option within a business have difficulties which in turn affect the
results.
Acceptability: For 1st option, it is analysed that the company generate the best results and
this in turn affect the performance of a company in positive manner. Further, there is no
limitation of this strategic options, whereas for 2nd option, it is analysed that company improve
the performance by offering the innovative product at low cost and the chances of getting results
are low as compared to first option.
Feasibility:This factor is concern with the resources which are required to implement the
strategy which is available and for that same, proper funding and timing is required that assist to
evaluate the feasibility of two strategic options. Hence, it is analysed that for the first option,
company required more resources such that human resource, technological resource, physical
resource and financial resources. On the other side, by evaluating the second option, it is
analysed that only human and financial resource is required which assist to meet the define aim
(Gürel and Tat, 2017).
23

By considering all the criteria, it is analysed that there second option is more preferable
as compared to first one because it do not require high amount and in return the profit is minimal
as compared to first but it helps to meet the generate more income in the next some years. This in
turn affect the results in positive manner and that is why, generate the best outcomes as well. On
the other side, there are range of innovative products offered by the company at low rate which
in turn improve the results and also maintain the brand image of a firm too.
4. Proposed strategy and implementation challenges
Porters generic strategies
Manager is responsible for deciding appropriate strategies that could be used by
enterprise to gain competitive positioning in external environment. Manager before deciding
particular course of actions conduct market research and analysis in order to find recent trends
and specific strategy that can yield fruitful outcome. Porter generic strategies illustrated four
different strategy that IKEA can make use in order to grow and expand its business operation
(Rosales and et. al., 2017). These are discussed below-
Illustration 11: Porters generic strategies, 2021
 Cost leadership: It is a strategy in which firm planned to gain competitive advantages
by reducing its overall cost of products or services lower than existing competitors (Fitri
and et.al., 2019). IKEA is delivering products to the customers by adding maximum
value to it at low cost through economies of scale and optimum utilisation of resources.
24

 Differentiate leadership: It is another strategy that can also be implemented by manager
of IKEA to contribute in growth and sustainability of enterprise for longer time frame.
IKEA by investing in research and development department or finding new and
innovative method that can be useful in meeting expectancy of customer beyond their
needs. Thus, it by differentiating its products or services can gain competitive
advantages in external environment.
 Focused cost leadership: There are companies that make use of focused cost leadership
in order to enhance their profit margin and market share. Focused cost leadership states
that company have lower price for few or specific group individuals only. IKEA by
offering low price products for particular segment of market can earn limited profit.
 Focused Differentiate leadership: This is also one of the strategies that is used by firm
to achieve their respective goals in which organization differentiate its products for few
individuals. IKEA by offering premium quality products to high income group
individuals can easily enhance its profitability and build strong brand image.
Corporate strategy direction- Ans off model
IKEA in order to expand its business in international and domestic market can make use
several strategies to add new customers and enhance market share of firm. Ansoff Matrix is best
suitable model that suggest four alternative direction or strategies that could be used by
enterprise to attain its goals (Xia and et. al., 2020). It is a framework used to identify the strategy
to grow the business. Such as:
25

Illustration 12: Ans Off matrix, 2020
 Market Penetration: It is easiest, quickest strategy that could be used by IKEA to
increase its profit margin as company in it make use of existing products to attract
existing customers. Thus, associated business risk is also low and better outcome can be
yield through effective marketing strategies used by firm.
 Market development: In this strategy firm plan to earn more profit margins by entering
into new market with existing products or services. IKEA manager by conducting proper
market research can decide to enter into emerging market for growth of enterprise.
 Product development: This factor of Ansoff Matrix is widely focusing towards
product innovation and building new varieties domains specification in longer run for
stronger working specialisation which enhances wider productivity. IKEA by product
development will be able to competitively build stronger working standards of new
functional avenues, larger goals efficacy fundamentals and also to evolve widely within
retail industry factorisation in longer business avenues. The product development has
26

been also analysed to be highly important for determining larger horizons efficacy and
consumer oriented scale services which will potentially enhance goodwill in longer run.
 Diversification: This factor of diversification is widely essential and understood to be
strongly important for gaining functional innovation, larger diversification among
working synergy and also to promote stronger diversity at framework. IKEA within
retail industry competitive scenarios shall focus on this factor for pertaining stringent
functional ability among global brands competencies and also to actively work on major
domains of specialised larger functional standards (Fitri and et.al., 2019). This is also
formatively important to be active on gaining consumers goodwill and larger efficacy
onto new parameters within working on higher domains.
(BCG) matrix
Boston Consulting group model (BCG) is one of the most active innovative growth share
matrix which works as planning tool that uses graphical representation of company products and
services, which works as an effort for helping business to enhance globally competitively. It also
develops market reinforcing strategies with cost advantage that governs larger attractiveness and
relative market share and growth rates, with underlying various drivers of innovation. The
specific combination of relative market share and growth is developed at work which enables
larger goals formulation and efficacy among performance measures. IKEA with smarter working
target, larger significance new efficacy standards will be able to gain stronger domains
specialisation and larger revenue standards. Low growth, high share: Companies should milk theses cash cows for cash to reinvest
where there are larger investments scenarios to be widely impacting on operational
innovation. The low growth and high share will enable Ikea for productive growth within
industry domains, specialised functional synergy.
 High growth, high share: This focuses on significant investment among varied new
capital range and future potential aspects within untapped arenas, larger goals efficacy
among corporate scenarios and for stronger working scenarios in keen paradigms. This
factor is widely essential for larger growing paradigms of innovation and to pertain on
stronger revenue operations.
27

 High growth, low share: Ikea under this factor shall focus on high growth domains and
low share investments pertaining onto business domains where learning scenarios of
larger functional enhancement is actively analysed.
 Low growth, low share: This factor widely focuses on fact that companies if facing
losses there is demand to liquidate and build varied aspects of divesting their fundamental
growth aspects. This is widely understood to be the most negative aspect where business
is facing wide losses and goodwill loss which has been found to be widely hindering
growth in longer run.
Feasibility of new directions
The company IKEA can opt for product development where it will enter new market with
innovative product so that it can expand its operations and enhance its quality of the product.
This strategy will help in attracting a new customer segment and the quality products will help in
customer retention for long time. Moreover the company can opt for differentiated leadership
where it will produce such products which satisfies the customer demand and also helps in
battling the competition which is also one of its challenge.
28

CONCLUSION
It can be concluded from above report that there are numerous challenges that are faced
by company while operating its business in external environment like impact of Brexit, Covid19
pandemic, expansion in other countries and poor quality of products. Through PESTEL analysis,
the macro environment has been analysed which will help in overcoming the threats and
grabbing the opportunities. SWOT and Porters five forces helps in analysing the micro
environment of the company which opened the space of IKEA to mitigate its challenges. IKEA
can use different strategies such as by being more focused in qualitative products or innovative
method to deliver services may contribute in making best utilization of opportunities. At last it
can be concluded that IKEA have sufficient resources and strategy which are effectively aligned
with company objectives that contribute to the growth of firm in competitive environment for
longer run.
29

REFERENCES
Book and journals
Alexander, B. and Joe, T. eds., 2019. Managing Innovation: What Do We Know About
Innovation Success Factors? (Vol. 33). World Scientific.
Beattie, A. I., 2018. The Pitfalls of Porter’s 5 Forces. Updated, 9, p.2018.
Byun, J. W., 2017. Why is LEGO so Successful?: Porter’s 5 Forces Analysis. 무 무 무 무 무 무 무 ,
17(4), pp.43-64.
Carayannis, E., 2018. Strategic management of technological learning. CRC Press.
Crowley, F. and Bourke, J., 2018. The influence of the manager on firm innovation in emerging
economies. International Journal of Innovation Management, 22(03). p.1850028.
Dandage, R.V., Mantha, S.S. and Rane, S.B., 2019. Strategy development using TOWS matrix
for international project risk management based on prioritization of risk
categories. International Journal of Managing Projects in Business.
Dyer, J .H and et.al., 2017. Strategic management: Concepts and cases. John Wiley & Sons.
Fibbi, L., Maselli, F. and Pieri, M., 2020. Improved estimation of global solar radiation over
rugged terrains by the disaggregation of Satellite Applications Facility on Land
Surface Analysis data (LSA SAF). Meteorological Applications. 27(4). p.e1940.
Fitri, H and et.al., 2019. Strategic management of organizational knowledge and competency
through intellectual capital. Polish Journal of Management Studies, 19. 44
Gu, Y. and Kunc, M., 2019. Using hybrid modelling to simulate and analyse strategies. Journal
of Modelling in Management.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research, 10(51).
Rosales, R. M and et.al., 2017. Value chain analysis and small-scale fisheries
management. Marine Policy. 83. pp.11-21.
Rosales, R. M And et.al., 2017. Value chain analysis and small-scale fisheries
management. Marine Policy, 83, pp.11-21.
Saengmuang, A. and Sitjongsataporn, S., 2020. Convergence and Stability Analysis of Spline
Adaptive Filtering based on Adaptive Averaging Stepsize Normalized Least
Mean Square Algorithm. International Journal of Intelligent Engineering and
Systems. 13(2).pp.267-277.
Sanderson, M.A., Stanton, N.A. and Plant, K.L., 2020. Individual Dynamic Risk Analysis
(iDRA): a systematic review and network model development. Safety
science. 128.p.104769.
Sarsby, A., 2016. SWOT analysis. Lulu. Com.
Xia, Z.J. and et.al.,2020. SAF-189s, a potent new-generation ROS1 inhibitor, is active against
crizotinib-resistant ROS1 mutant-driven tumors. ActaPharmacologicaSinica,
pp.1-7.
Yudiono, N., Wilopo, W. and Iqbal, M., 2019. VRIO Analysis to Measure E-Business Readiness
in the Automotive Industry in East Java (Study on Otobus Company Kalisari and
Otobus Company Menggala). Wacana Journal of Social and Humanity Studies. 22(4).
Online
IKEA, 2021 [Online] Available Through <https://www.ikea.com/>
30

Pestle analysis, 2020 [Online] Available Through <https://pestleanalysis.com/swot-analysis-of-
ikea/>
VRIO analysis, 2020 [Online] Available Through
<https://www.case48.com/vrio-analysis/13655-IKEA>
31