Strategic Management Assignment - HRM & Corporate Strategy

This assignment analyzes IKEA's strategic management, focusing on its mission and vision statements, and how organizations use SWOT analysis for strategic review. The report begins by constructing potential mission and vision statements for IKEA based on its core concept of providing affordable home furnishings. It then discusses the application of SWOT analysis in strategic reviews, outlining the strengths, weaknesses, opportunities, and threats. Finally, a detailed SWOT analysis of IKEA is presented, considering both macro and micro-environmental factors. The analysis examines IKEA's strengths in clear vision, cost-effective pricing, and ethical practices, while also addressing weaknesses like replicable designs and potential quality compromises. Opportunities include the shift towards a green business model and expansion into untapped markets, and threats include competition from online retailers and potential lack of innovation.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
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a) Based on the concept of IKEA above provide the possible mission and vision
statements of the organisation.
The concept of IKEA started with the idea of providing affordable products of
home furnishing in affordable rates so that rather than a few people, everyone would
be able to afford it. They achieve this by combining aspects like function, quality,
design and value and keeping sustainability at the core of the organization (Thomsen
2018). From their design and sourcing to packaging and distribution, the whole of the
company is built in a way that will support their core values. Their business aim to
enable people to live a better quality life.
The reason that IKEA has adopted this concept in order to increase their cost
benefit. IKEA offers customized luxury furniture in an affordable rate. The other
competitors in the market that make customized furniture provide their products at
much higher price. Their concept helps them to capture the mass market that the other
businesses have not been able to do (Gong, Jiang and Liu 2019). The reasonable price
enables them to be competitive in the market. The company has developed their core
competencies and organizational operation in such a way that will support this motto.
Mission statements of companies are not created in a whim. Rather, behind the
creation of the mission and vision statement there are much thought and deliberation
that goes on. The mission statements consist of the core values along with the present
motto of the company (Bowen 2018). Companies create missions so that they have a
guidance for their day-to-day work. The core values of IKEA includes humbleness,
leadership, will power, being different, sustainability, ethical business, collaboration
and enthusiasm and cost-effectiveness. These core values contribute to the formation
of their mission statement.

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The vision statement of a company too, is not just and attractive one liner or
claim. The companies take this seriously. The vision statement and mission
statements of organizations might seem alike but they are in fact quite different
(Dimitrova and Petrova 2016). While the mission statement describes what the
company is doing now or what their motto is, the vision statement shows the place
that the organization wants to be in the next five or ten years. This is their long term
goals which also include their philanthropic views and goals.
The mission statement for IKEA is to offer their customers a large range home
furnishing products that are well designed and functional in so low a price that mass
people are able to afford them. The vision statement of IKEA is to make everyday life
better for as many people as possible through their business. Evidently, the mission
statement is customer centric, meaning to serve the customers better while the vision
statement is more philanthropic and includes not only the customers but their
stakeholders, community and environment.
The mission and vision statement of the company influences the strategic
course and review that they undertake. They also guide the behavior and culture of the
organization itself. Moreover, the company also creates their annual goals and five
year plans aligning the mission and vision statements.
b) Discuss how organisations use SWOT analysis for their strategic review.
There are four elements of a company SWOT analysis, the strength of the
company, the weaknesses that it has, the opportunities that the company has in the
environment that they are competing and the threats that it has in that same
environment (Gürel and Tat 2017). Along with the input taken from SWOT analysis,
the strategists need ask questions regarding their aims and objectives, their long term

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vision and expectation of the company’s future. In a SWOT analysis, the capabilities
and the available resources of the company create the strengths of the company as
they work as aids for generating profit and create competitive advantage of the
organization. The strength of organizations vary. Some organizations might have their
unique product range as their strength while some may have exceptional customer
service. Even the interval features like organizational culture, structure, human
resource management could be the strength of an organization.
Weaknesses of a company are the hurdles or barriers that the company might
face in the business world. They could be a bureaucratic organizational structure,
constrictive culture, high labor and production cost and everything that constitutes the
strengths of a company. It depends on how the company performs on each aspect that
determines it (Phadermrod, Crowder and Wills 2019). Opportunities are the scopes of
performance that the company has in macro world. These are sometimes calculated
beforehand while some arise suddenly. The threats of an organization may be
controllable or uncontrollable. These are entities, organizations and groups that pose a
risk of reducing the competitive advantage of an organization.
A strategic review is a process which helps the managers and executives to
identify the opportunities that creates value for the business. Strategic review might
involve improvement of existing activities and departments, targeting a new market
opportunity. Strategic reviews can happen quarterly, half-yearly or annually. Strategic
reviews often become important in crisis scenarios or when companies go through a
change. Appointment of new CEO, expansion to a new market, merger and
acquisition and entry of new competition in the market calls for a strategic review
where managers and executives revise the existing strategy and create new ones
(David and David 2019).

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SWOT analysis is an integral part of strategic planning and review of an
organization (Haile and Křupka 2016). Organizational strategic planning involves
many stages and SWOT is among the very first steps that is taken to create the
background for planning. Organizational strategic planning is created in organizations
so that they can achieve the missions and visions that they have created. Due to
globalization business environments are changing constantly and companies too need
to keep up with those change (Jasiulewicz-Kaczmarek 2016). Competition has
increased so much there is no industry which does not face overcrowding. In this kind
scenario, the managers and strategists need to understand the micro and macro
environments of the company and determine the chances that the company has
depending on its present condition. SWOT analysis also helps in understanding the
organizational opportunities and weaknesses. The managers can use these information
to develop recommendation based business plan.
c) Prepare a SWOT analysis of the company (IKEA)
SWOT analysis is created after the company has been analyzed on the light of
macro and micro environments. The macro and micro environmental analysis helps in
determining the strengths and weaknesses of the company. These factors determine
the strengths, weaknesses, opportunities and threats of an organization and determines
the readiness of the organization in the international market and the competitive edge
that it has in the market (Bull et al. 2016). PESTEL is a useful tool for the analysis of
the external factors that affect the country. The Political, Economic, Social,
Technological, Environmental and Legal factors make up the PESTEL analysis. For
conducting a successful SWOT, a detailed PESTEL analysis is needed. The following
is the SWOT analysis of IKEA that incorporates both the macro and micro
environmental factors:

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Strengths Weaknesses
 IKEA has clear vision and mission
which helps them in serving the
customers better.
 They have a well-defined business
strategy which focus on targeting
the effective customer bases
(Muhr and Aytekin 2016).
 They continuously invent new
designs and makes them available
to the customers.
 The products that they sell are
easy to assemble and thus is
preferred by the customers.
 Cost effective pricing as labour
cost is less.
 Cost leadership approach.
 Renewable resources for products
makes them leaders in the market.
 Resource management is done
effectively to reduce waste.
 Long-term relationship with the
suppliers.
 IKEA has many locations across
all over the world which makes it
difficult for the organization to
maintain the standards of quality
of product and service.
 Due to the mass availability and
online stores, the designs are
easily replicable which makes it
difficult for them to maintain
their uniqueness.
 Due to the importance given to
cost leadership, sometimes, the
quality is compromised which
affects the business especially
when the costs of raw material
and other inputs increases.
 Some environmental concerns are
still present. The greatest problem
is its inability to communicate
their sustainability policy to their
customers, shareholders and
community.

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 Ethical business policy to avoid
child labour and unethical labour
accusations.
 They are unable to tap the
premium market properly.
Opportunities Strengths
 They are shifting towards a green
business model which is effective
in capturing the premium market.
 Ethical consumerism is becoming
popular and consumers are
becoming more concerned with
the sourcing and processing of the
products that they buy (Nilsson
and Müller 2017).
 Balancing cost leadership with
business will ensure that they are
able to keep more customers loyal
and happy.
 Keeping a minimum standard
across all locations.
 Expansion to untapped markets
will enable them to earn more
profit.
 Their business model and core
values are available easily and
can be copied by other
competitors.
 Lack of innovation may lead to
the organization losing their
competitive edge.
 Due to the popularity of online
retailers who do not have any
physical presence, IKEA is losing
their cost leadership position.
These companies do not have
establishment cost and thus are
able to provide products at lesser
price.

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References
Bowen, S.A., 2018. Mission and Vision. The International Encyclopedia of Strategic
Communication, pp.1-9.
Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C.,
Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E., 2016. Strengths,
Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services
framework. Ecosystem services, 17, pp.99-111.
David, F.R. and David, F.R., 2019. Strategic management: A competitive advantage
approach, concepts and cases. Pearson.
Dimitrova, S. and Petrova, E., 2016. Mission and Vision of the Organization and Their
Relations with Corporate Social Responsibility. Plovdiv/BULGARIA, p.57.
Gong, Z., Jiang, X. and Liu, L., 2019. The influence of brand culture on Enterprises: a case
study of IKEA. In International Academic Conference on Frontiers in Social Sciences and
Management Innovation (IAFSM 2018). Atlantis Press.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research, 10(51).
Haile, M. and Křupka, J., 2016. Fuzzy evaluation of SWOT analysis. International Journal of
Supply Chain Management, volume 5, issue: 3.
Jasiulewicz-Kaczmarek, M., 2016. SWOT analysis for Planned Maintenance strategy-a case
study. IFAC-PapersOnLine, 49(12), pp.674-679.
Muhr, S. and Aytekin, K., 2016. Woven steel mesh for usage in beds: A case study for IKEA.

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Nilsson, A.H. and Müller, E., 2017. Internal Benchmark of IKEA's Sourcing Assignment
Processes and Documents Across Business Areas and Categories: A Multiple Case Study.
Department of Industrial Management and Logistics, Division of Engineering Logistics,
Lund University.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis
based SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Thomsen, S., 2018. Foundation Ownership at IKEA. Available at SSRN 3243347.