ikea a furniture dealer case study

IKEA: A Furniture Dealer

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

The case can be used to teach the key elements of business strategy, including mission, scope, organizing logic, and sources of competitive advantage. It shows how the company organizes itself to create value for specific customer segments while maintaining a competitive cost structure. It also illustrates how organizational culture can be a source of competitive advantage.

core competence
activity systemculture
competition
multinational
European Competitiveness
Best Practices

How IKEA’s Strategy Was Formed

By Quy Huy , Michael Jarrett , Lisa Simone Duke

Quy Huy

Michael Jarrett

Lisa Simone Duke

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Published 28 Sep 2011

Length 11 page(s)

Topic Strategy

Region Global

Industry Consumer Goods , Furniture

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How IKEA Evolved Its Strategy While Keeping Its Culture Constant

If you’re leading your team through big changes, this episode is for you.

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The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, the company was at a crossroads. Its beloved founder had died, and the exponential rise of online shopping posed a new challenge.

In this episode, Harvard Business School professors Juan Alcacer and Cynthia Montgomery break down how IKEA developed, selected, and embraced new strategic initiatives, while fortifying its internal culture. They studied how IKEA made big changes for the future and wrote a business case about it.

They explain how the company reworked its franchise agreements to ensure consistency among its global stores. They also discuss how IKEA balanced global growth with localization, developing all-new supply chains.

Key episode topics include: strategy, growth strategy, disruptive innovation, emerging markets, leadership transition, competitive strategy, company culture, succession.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

Listen to the original HBR Cold Call episode: IKEA Navigates the Future While Staying True to Its Culture (2021)
Find more episodes of Cold Call
Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, they were at a crossroads. Their beloved founder had died, and the exponential rise of online shopping posed a new challenge. Today, we bring you a conversation about how to develop, select, and embrace a new strategic initiative – with Harvard Business School professors Juan Alcacer and Cynthia Montgomery. They studied how IKEA made big changes for the future while fortifying its internal culture and its external identity. In this episode, you’ll learn how the company reworked its franchise agreements to create a more managerial and modern culture, and ensure consistency among its global stores. You’ll also learn how they balanced global growth with localization – including new supply chains. This episode originally aired on Cold Call in June 2021. Here it is.

BRIAN KENNY: For some of the world’s most celebrated founders, the entrepreneurial drive kicks off at an early age. Mark Zuckerberg developed Facebook in his Harvard dorm room at the age of 18. Michael Dell made $200,000 upgrading computers in his first year of business, he was 19. Before Jack Dorsey founded Twitter, he created a dispatch routing platform for taxis in his hometown of St. Louis, while he was in middle school. But then there’s Ingvar Kamprad who began selling matches at the age of five to neighbors in his rural Swedish homestead. By the age of seven, he was buying matches in bulk in Stockholm and selling them at a profit back home. Ingvar learned early on that you can sell things at a low price and still make a good profit. A philosophy that fueled the success of his next business venture, IKEA. Today on Cold Call , we welcome professors, Juan Alcacer, and Cynthia Montgomery to discuss their case entitled, “What IKEA Do We Want?” I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network. Juan Alcacer’s research focuses on the international strategies of firms in the telecommunications industry and Cynthia Montgomery studies the unique roles leaders play in developing and implementing strategy. They are both members of the Strategy unit at Harvard Business School. And thank you both for joining me today. It’s great to have you on the show.

CYNTHIA MONTGOMERY: Thanks Brian.

JUAN ALCACER: Thank you for having us.

BRIAN KENNY: You’re both here for the first time, so we’ll try and make it painless so we can get you to come back on. I think people are going to love hearing about IKEA and getting an inside view. Most of us have had that experience of being like mice in a maze. When you go into an IKEA store, you are compelled to walk through the whole place. It’s really brilliant, so many of the touches and things that they’ve done. And this case helps to shine a light, I think, on some of those decisions and how they were made. I had no idea how old the company was. So just starting with its history, it’s going to be good to hear about that. Juan, I want you to start, if you could, by telling us what would your cold call be to start this case in the classroom?

JUAN ALCACER: I like to start the case, bringing in the emotions of the students and their relationship with IKEA. So most of our students have had some experience with IKEA. So I’d just start asking how many of you have been in IKEA, and then I’d start asking why? Why did you go to IKEA? And this time telling you all the things that you just mentioned, for instance, walking through the maze, going to eat the meatballs. So they started bringing all these small, decisions that were made through the years, that made IKEA, IKEA.

BRIAN KENNY: Who doesn’t love the meatballs? Cynthia, let me ask you, you’re both in the Strategy unit at Harvard Business School, there’s a lot of strategy underlying this whole case. I’m curious as to what made you decide to look at IKEA and sort of, how does it relate to your scholarship and the things that you think about; the questions you try to answer?

CYNTHIA MONTGOMERY: I’m really interested in the choices firms make about who they will be and why they will matter? The core questions at the identity of a company. In 1976 Kamprad laid out very, very carefully. What IKEA would do, who it would be. He identified its product range. The customers it would serve, the company’s pricing policy, all in a document called, The Testament of a Furniture Dealer. And he described it as, “the essence of our work.” And 45 years later, it was still required reading for all of the IKEA’s employees. It’s probably the most compelling statement of corporate purpose I’ve ever seen.

BRIAN KENNY: Remarkable in a company that’s based on furniture. It was a very, sort of powerful thing. There’s an exhibit in the case that shows the whole Testament. Maybe we can dig a little bit into the history here. I alluded to the fact that it’s been around for a long time. Cynthia, just tell us a little bit about how the company came to be and how it evolved over time.

CYNTHIA MONTGOMERY: IKEA started actually as a mail-order business in Sweden and in the late 1940s Kamprad noticed that despite a lot of demand for furniture, agreements between the furniture manufacturers and retailers were keeping furniture prices real high. He was interested in a different set of customers. And he decided that to attract farmers and working class customers, he needed to be able to offer quality furniture at lower prices.

BRIAN KENNY: What were some of the early challenges that they faced. I’m also curious a little bit about the Swedish culture and how that sort of factors in here. Because there was definitely undertones of that factoring into the way they set this up.

CYNTHIA MONTGOMERY: It’s a virtue to be frugal and to be very careful about how you spend your money. And that made a huge impression, particularly given his background, growing up on a farm for Kamprad, he decided he really wanted to lower the prices of furniture and began to do so. And it turned out that there was a very, very strong response from other furniture manufacturers who basically said that they were going to boycott him. They wouldn’t allow him into their furniture fairs, him personally, as well as his company. And so in turn, what happened was that they also pressured local suppliers not to sell to a IKEA anymore, basically trying to force him out of the market. And what happened was that that actually drove Kamprad to Poland as a source of supply because local firms wouldn’t supply him anymore. And in the process, he discovered that Polish manufacturers could actually make furniture at far, far lower costs than Swedish manufacturers. And that essentially gave IKEA a cost structure that was more like a difference in kind, than a difference in degree. And that proved enormously important to building almost insurmountable competitive advantage for IKEA.

BRIAN KENNY: He was also really keen with innovations early on that things like the restaurant area and the childcare space, what were some of the insights that drove him to make those kinds of decisions?

CYNTHIA MONTGOMERY: One of the things that he decided quite early on is that he wanted to have the stores located out of town. And the reason is because land there was much, much cheaper. So he built these ,as you described earlier, Brian, these gigantic stores on the outskirts of town and they had lots and lots of square footage and lots and lots of merchandise, but you know, it took time to get there. It took time to shop there and what he wanted to do was make it worth it for the customers to make the trip, worth it for them to spend a lot of time in the stores. So he decided to add restaurants and the now famous meatballs, which come in several flavors, actually around the world, and to add childcare centers that would care for young children while the parents shopped. On the low cost front, he was innovative in other ways, he actually borrowed the idea of flat pack from another innovator, but he’s the one that actually brought it to life in such a big way. Then he discovered that if you let the clients go in and pick off the furniture packs themselves, they could even save more money and lower the costs in the store.

BRIAN KENNY: So they have a pretty complicated org structure, when we start to dig into some of the nuance of the case. Juan, could you describe for us, how they’re set up from an org structure standpoint?

JUAN ALCACER: You have to realize that coming from Sweden, which is one of the countries with the highest taxation for corporations in the world. So early on, they decided to find some organization structure and legal structure that would allow them to lower taxes. And that created basically an ownership based on foundations, based in the Netherlands. And they decided, early on, to separate the company into pieces. One is the franchise store, which is basically running the brand and running the management image of the brand. And then the operational part of the company, which is a franchisee. And for many years, those two things were separated. The franchisee was also in charge of manufacturing and so forth. So it was a very strange structure, that was put in place in part by the charisma and the leadership style of Ingvar Kamprad. If I can go back to your question about the Swedish culture. One of the things that, at least for me, is very striking is that when you look at multinationals, there’s a thing called the liability of being a foreigner, which means that when you go to another country, you have some disadvantages. And you try to mitigate that liability of being a foreigner, by pretending to be of that particular country. IKEA went with a totally different approach, they’re totally Swedish. Names of their products are impossible to pronounce. The fact that they have meatballs, they have their Swedish flags all over the place. They embrace the Swedish spirit as a part of the brand. You don’t see many multinationals with that. That makes IKEA what it is today.

BRIAN KENNY: I definitely think that’s part of the appeal here in the US, for sure, is people being exposed to the Swedish culture in a way they never had before. What is the culture of the company like, what’s it like to work there?

JUAN ALCACER: We went to both the Netherlands and to Sweden and we had a great time. It’s a very egalitarian culture. All the VP’s, high-level managers, none of them have an assistant. Only the CEO has an assistant. They don’t have offices, so everybody shares an open space. The whole place is decorated with IKEA furniture, everybody talks to each other by their first name. It’s very collegial, very friendly.

CYNTHIA MONTGOMERY: I would add to that. I think IKEA was incredibly generous to us, in the sense that they shared all kinds of confidential, internal documents and were really willing to talk in a very open and forthright way, about both their strengths and their challenges, which was incredibly refreshing. And as Juan said, that it was very egalitarian, and not surprisingly IKEA was one of the first companies to embrace democratic design. And that spirit was everywhere in the company.

BRIAN KENNY: Cynthia, what would you say are some of the keys to their success over the years?

CYNTHIA MONTGOMERY: I’d say that IKEA basically picked a lane and stuck with it. They had clarified, as I said at the top of the show, very, very carefully about what they wanted to do, who they wanted to be. And what they said is, look, this is what we’re going to be about. We’re going to offer an extensive range of practical, well-designed furnishings at low prices. And we’re going to serve the many, not the few. And the many are those with limited financial resources. When you have such clarity about what you want to do, then you can set out and try to maximize how you approach that. Essentially IKEA built a system, to do exactly that, extremely well and their distinctiveness made them truly an iconic firm. And it’s great when you talk with students about, what’s the purpose of your business?, What are you doing? What’s interesting is that oftentimes they can describe much more carefully what IKEA is doing, than what their own businesses doing. The last thing I would add, is that as Juan one said, they’re really synonymous with Sweden and they put that right out there. It’s almost like the way that Coca-Cola is synonymous with the US. And that has been a big part of their advantage.

BRIAN KENNY: Okay. So we’ve painted a very rosy picture for IKEA, but it’s an HBS case. So there’s tension, inevitably. So let’s dig in a little bit to where the case brings us. I’m going to mispronounce his name. I hope I don’t, but Torbjörn Lööf is that close?

CYNTHIA MONTGOMERY: Yeah.

BRIAN KENNY: He is the protagonist in the case. And he is stepping into a leadership role here really after an iconic leader has stepped back and that’s a challenge. Any time that happens, and a leader has to step in. And as he starts to sort of peek underneath the hood a little bit, he starts to see some of the challenges that IKEA is facing in this now seventh decade, I guess, of their existence. So Juan, maybe you can set that up for us a little bit.

JUAN ALCACER: It’s not only that he is stepping in the shadow of a leader that created the company. It’s that the company is still controlled by the family. So this is not a public firm, this is a private firm. So, he had to basically walk a very, very thin line, trying to take IKEA towards the future, but still preserving the past. And he had basically two main tasks, one is short term, that organization restructure that we were talking about, that was very complicated was created products. As I said before, the franchisee, which is basically the one that was running all the operations, was also the manufacturer. But there were other franchises. So for instance, the operations in Middle East are run by another company. So they wanted to create a system of transparency, that all the franchises are run the same way. When you have a franchisee that has basically represented 80% of your sales, and the ones that are representing 2% or 3%, there is an imbalance of power. So they tried to create a structure that is more managerial, that is more modern, that will allow to create incentives for new franchisees to come into the system. So that transaction was basically transferring production and transferring the functions that were in the franchisee back to the franchisor. There were 25,000 people that have to move from one place to another.

BRIAN KENNY: Wow.

JUAN ALCACER: They didn’t move physically, but in terms of the legal status they shift around. And the second is to bring IKEA to the world. What they observed is that there were some changes in demographics, they were targeting the low-income, what they call the thin wallets of the world, but it turned out that people that would go to IKEA are not thin wallets anymore. These people have already moved towards the middle-class and they also have this whole, to increase the number of consumers to three billion, and that meant that they have to basically grow globally, at a rate that they have never done, before they had two or three markets, like China and India. They also have the issue of eCommerce, to pick up and every retailer in the world is dealing with that. So, it’s two steps. One, getting the house in order, and second one, creating a path for the future for IKEA to become an icon for the next 75 years.

BRIAN KENNY: Yeah. And I also think at some level it’s hard to sustain that original mission that they set out with, when you’re trying to expand so rapidly and bring in a much larger audience. Cynthia, I don’t know if you have other observations about these changes they were facing.

CYNTHIA MONTGOMERY: Absolutely. Because one thing is that you can look at the challenges that came from expanding into new geographies. But the other thing that they found in a large study that they did, is that there were challenges in their core business as well, that the countries they’d been in for a number of years, and what I’ll call the big blue box stores, mostly in developed countries. What they found is that increasingly many of their customers in those markets wanted new conveniences. They wanted stores that were located closer to city centers because a number of people say in their late twenties, early thirties are not driving and don’t have cars. And they found that there was an increasing demand for delivery and assembly services for shopping online. These trends are worrying to a huge number of retailers, but particularly a challenge to IKEA because low price, low, low price, so low that that people can recognize the difference. That being at the heart of their strategy. And customers’ willingness to spend time getting to the store, hauling furniture about, ultimately assembling it. Those are at the very, very heart of their low-cost strategy and their very distinctive value proposition. It was a big challenge within the developed markets as well.

BRIAN KENNY: And depending on where they went in the world, a different set of challenges pops up almost everywhere. Juan, you mentioned earlier that they pushed back against localization, but is that a sustainable strategy? When you’re trying to go into entirely new markets like China and India.

JUAN ALCACER: The beauty of IKEA is that they found a segment across different cultures that was very similar. College students the United States, that needed to have furniture for a few years only, it could be young couples that are opening a new house, in some places it’s immigrants that are moving from one country to another country that need to buy furniture, but they don’t have the money to do so. So there was this very common segment across the world that they were able to then define, that allows them to have basically 80% of their line, of their range, is common across countries. And they have around 10% to 20% that varies by country. Now, when they go to China, and they go to India, they find that the changes have to be of a higher scale for three reasons. One, the tastes are different, also the materials, when you are going to India and you are going to houses that are in a high humidity environment, the type of wood that you can use is different. Now you start, not only changing the look of the product but you also have to change how you made it. And the third big challenge is when you look at what is defined as thin wallet, in these markets, is really thin. It’s not thin wallet in Sweden, it’s not thin wallet in the United States. So, you have to go to prices that are really, really low. And that means that you are already a low cost producer but you have to go even lower. That means that you have to change your supplier, so it starts changing the fundamental parts of the business model that they created through the years.

BRIAN KENNY: And it could probably, pretty easily, get away from you. So this does call for a strategy. Cynthia, can you describe for us what the three roads forward are? This was sort of underpinned their strategy going forward and how they were going to deal with some of these challenges.

CYNTHIA MONTGOMERY: Basically, the three roads, the first was affordability, as Juan said, this isn’t affordability in the way that they, at the level at which they’ve traditionally thought about it. This is affordability for wallets that are either very thin or actually where the willingness to pay just isn’t as high, because they’re accustomed to having goods that are at very low prices. So they wanted to attack affordability for people who could not afford IKEA today. They cared a lot about accessibility. They’ve got to reach and interact with people where they are. And the last is sustainability, and they felt really, really strongly about this. And I think much in line with what you see with a number of other countries in Europe, that they cared a lot about the sustainability of the products and wanted to make a positive impact for people, society and the planet. And they’re taking on all three of these aspirations at once.

BRIAN KENNY: You have written many cases, I’m sure that parallel this, what are some other firms that have faced similar challenges and maybe figured out a way to deal with the same sets of challenges?

JUAN ALCACER: The challenge of going overseas, we didn’t write cases about multinationals for many years. They always have this tension between coordination in headquarters and adaptability in each one of the subsidiaries. So IKEA was very good at playing that game for many, many years. In a way they were going to countries that were somehow similar to Sweden. Now that they are venturing to countries that are farther away in many dimensions, not only physically, but also in terms of economic distribution, in terms of taste. They are seeing this tension to be amplified. We have seen that in many companies, Procter and Gamble has been doing that for years and years, Unilever has been doing that for years and years. IKEA has done it for 75 years. They went overseas very early on. But now the challenge is a little bit higher. The other challenge is that Cynthia also mentioned, which is basically adapting to new technologies and new demographics. Every retailer is facing that. Any supermarket, any chain that has been selling in brick and mortar is facing those challenges. So, what is interesting about IKEA is that they are facing these all at the same time and they’re facing this during the process of transition from the leader that created the company to a new set of managers that are more professional and are not part of the family.

BRIAN KENNY: You mentioned technology. I’m just curious, the role that the internet plays in this, because now everybody can see, you know, through YouTube and other things, what the experience is like from one place to the other, and how important is consistency across all those geographies, versus a little bit of localization to make it feel a little bit more like this is the China version of IKEA versus the European version of IKEA. Cynthia, do you have thoughts on that?

CYNTHIA MONTGOMERY: That’s the real challenge here in the sense that, how do you take this whole model that has been developed over so many years? And it’s very, very hard to imitate, which has given them a lot of strength over the years, but when the environment changes, instead of responding in a piecemeal way to all kinds of external stimuli, it’s how do you take this whole model and evolve it in some coherent way that stays true to the iconic sense of who IKEA is? I really see it fundamentally, as an existential question for IKEA.

BRIAN KENNY: Such a great point. Look, I want to thank both of you. This has been a really interesting discussion about a brand that we all know and have experienced many times firsthand. I have one more question for each of you before we part ways. And that would be if there’s one thing you want people to take away from this case, what would it be? Juan, let’s start with you.

JUAN ALCACER: What I would like listeners to take from this, is we have this mentality of growth, growth, growth, and expanding and doing different things, and when you look at IKEA, you have to wonder, is it better that IKEA stays doing what they do well, or do they have to keep growing and entering all these markets and adapt to overseas. We have this basic assumption that growth at any cost should be the goal. I would like the listeners, when they look at the case and think about the cases, to question that very basic assumption.

BRIAN KENNY: Cynthia?

CYNTHIA MONTGOMERY: One of the things about IKEA that I think it’s really, really important to know is that they really brought something different to the world and they did it in a very compelling way. So at the heart, to do something that’s distinctive, that adds value. It comes through really strong in the IKEA story. At the same time, when the environment changes, how do you evolve, is really challenging. And so the fact that they’re being so open in how they’re confronting this, I think there’s a lot to learn there. It’s a challenge. I think it’s really important to remember what’s at the heart of this company, is that they’re really bringing something that’s very unique and they need to continue to do that.

BRIAN KENNY: Juan Alcacer, Cynthia Montgomery, thank you so much for joining me. The case is called, “What IKEA do we want?” Thanks again.

JUAN ALCACER: Thank you.

HANNAH BATES: You just heard Harvard Business School professors Juan Alcacer and Cynthia Montgomery in conversation with Brian Kenny on Cold Call . We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review. If you want more podcasts, articles, case studies, books, and videos like this, find it all at HBR dot org. This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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Ikea: a furniture dealer description.

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

Case Description IKEA: A Furniture Dealer

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Case Analysis of IKEA: A Furniture Dealer

IKEA: A Furniture Dealer is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. IKEA: A Furniture Dealer is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. IKEA: A Furniture Dealer case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. IKEA: A Furniture Dealer will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

IKEA: A Furniture Dealer case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of IKEA: A Furniture Dealer, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The IKEA: A Furniture Dealer case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

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Step 1 – Problem Identification of IKEA: A Furniture Dealer - Harvard Business School Case Study

The first step to solve HBR IKEA: A Furniture Dealer case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Ikea's Ikea is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Ikea's Ikea, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the IKEA: A Furniture Dealer. The external environment analysis of IKEA: A Furniture Dealer will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in IKEA: A Furniture Dealer case study. PESTEL analysis of " IKEA: A Furniture Dealer" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with IKEA: A Furniture Dealer macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for IKEA: A Furniture Dealer

To do comprehensive PESTEL analysis of case study – IKEA: A Furniture Dealer , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact IKEA: A Furniture Dealer

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ IKEA: A Furniture Dealer ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Ikea's Ikea is operating, firms are required to store customer data within the premises of the country. Ikea's Ikea needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. IKEA: A Furniture Dealer has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Ikea's Ikea in case study IKEA: A Furniture Dealer" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Ikea's Ikea in case study “ IKEA: A Furniture Dealer ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Ikea's Ikea in case study “ IKEA: A Furniture Dealer ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ IKEA: A Furniture Dealer ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Ikea's Ikea can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at IKEA: A Furniture Dealer case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Ikea's Ikea needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact IKEA: A Furniture Dealer

Social factors that impact ikea: a furniture dealer, technological factors that impact ikea: a furniture dealer, environmental factors that impact ikea: a furniture dealer, legal factors that impact ikea: a furniture dealer, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: ikea: a furniture dealer case study solution.

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Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.

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Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:

Single people not living at home
Newly married couples
Families with the youngest child under six
Older married couples with dependent children
No children families
Labor force
Professionals

Thus, it uses the following types of product positioning :

Mono-segment positioning. It appeals to the needs and wants of a single customer segment that is cost-conscious and prefers value for money.
Adaptive positioning. It believes in periodically repositioning products and services to adapt to changes in customer preferences. Its Swedish furniture chain considers the dynamic nature of customer preferences. For instance, its latest products reflect increasing minimalism on the global scale.

Ikea utilizes the power of the following marketing channels:

Mobile Application
WebEngage: Email, SMS, and Whatsapp Marketing
Social Media
Telecalling
Commercials

The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.

A Creative, Consistent Brand Theme

From the Swedish national colors on its buildings to rich meatballs in its store cafeterias, Ikea's marketing strategy reflects its cultural heritage proudly. It infuses all elements of their identity with a sense of self-assuredness that maintains their identity in the market of stiff competition.

Emphasizing Affordability and Sustainability

Understanding that a simple tiered strategy won't encourage repeat business, Ikea extends customization, flexibility, and mix-and-match furniture modules. It effectively combines the elements of affordability and sustainability in its marketing strategy to ensure success.

While the furniture options don't pledge a lifelong guarantee, the products are built to last. Even its reusable shopping bags reflect its commitment to sustainability.

Sponsorship and Influencers

IKEA-sponsored comedic series Easy to Assemble. Its innovative content marketing was way different from a furniture product demo. Incorporating sponsored digital marketing campaigns and social media influencers have boosted the Ikea marketing strategy.

Ikea’s Easy to Assemble Series

Exceptional In-store Experience

Ikea brilliantly displays products employing the best lighting systems to generate more sales. It strategically arranges best-matched items in mock rooms to encourage impulse purchases and inspire decor. The company also extends excellent customer service to provide a memorable experience and incite customers to come back for more.

Ikea’s Store Decor for Inspiration

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Website and Mobile Application Marketing

Ikea ensures an optimal mobile website's speed, button displays and gesture controls on its website and mobile app to retain and attract individuals to the site. It carefully invests in its UI/UX , enquiry-based chatbot, and regular updates on new offers, discounts, and promotions.

One of the most successful marketing moves includes downloading its 3D modeling app to envision a dream home. It's one of its most successful marketing moves that allows IKEA to upsell its low-demand items by creating a desire in its customers to revamp the room.

Ikea’s Website With Engaging Content

Ikea's SEO (Search Engine Optimization)

Ikea's marketing strategy aims at enhancing the site's visibility for relevant searches to attract the attention of new and existing customers. It includes the right product-specific keywords and Google advertisements to further augment its organic ranking .

Ikea Ranking for Bookcases on Google’s First Page

Ikea's SMM (Social Media Marketing)

Ikea's handles are very active on digital marketing platforms like Facebook, Instagram , Twitter, and Youtube . Their digital presence is impressive, with more than 30 Million likes on Facebook, 1 Million followers on Instagram, 5.3k followers on Twitter, and 41.2k subscribers on YouTube.

Ikea’s Instagram Profile

Its Instagram bio links to its website. The website also has links to its various social media posts. Its 'view shop' and 'call' options for product catalog and direct assistance, respectively, are a testament to a well-crafted Ikea marketing strategy.

Ikea’s Youtube Advertisements

IKEA also conducts free online workshops that lure lots of enthusiastic customers, resulting in gaining leads.

Ikea’s Online Workshop Ad

Content Marketing

Ikea relies on its content marketing strategy to create a distinguished presence amongst furniture brands. Its commercials, print ads, social media, and website stands out with attention-grabbing content. It combines innovation and humor to present the brand's core values and inspire people.

Ikea’s Captivating Commercial

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IKEA: A Furniture Dealer Harvard Case Solution & Analysis

Home >> Management Case Studies >> IKEA: A Furniture Dealer

IKEA: A Furniture Dealer Case Solution

This case explains IKEA's method, intending to demonstrate how the Swedish business has actually established and kept its challenging benefit over years while broadening its organisation world wide.

Pedagogical Goals:

The case might be utilized to guide the crucial elements of company method , consisting of objective, capacity, arranging reasoning, and sources of competitive benefit. It demonstrates how the business arranges itself to produce worth for particular client sections while keeping a competitive expense structure. It likewise shows how organizational culture may be a source of challenging benefit.

This is just an excerpt. This case is about Strategy

published: 28 Sep 2011

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IKEA Case Study| History of IKEA| IKEA Business Model

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August 31, 2019

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Ikea Case Study- (Business Model)

2 Minute Summary

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943. Everybody knows that Ikea offers the products at a very lower price than any retail shop. Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries. the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India. the company is a non-profit. IKEA employs about 135,000 people. Because of tax rules for non-profits, IKEA pays about 33 times fewer taxes than their for-profit competitors. The Ikea trademark and the concept is owned by another private company named Inter Ikea Systems. It acquired TaskRabbit on Sep 28, 2017. IKEA has many mobile apps. But the most popular app is IKEA STORE. The app is having almost 9,60,333 monthly downloads. IKEA is the lead investor in 4 companies. Full Detail in Blog.

Everybody knows that Ikea offers the products at a very lower price than any retail shop.

In this blog, we’ll talk about Ikea Case Study(Business Model) as the Swedish furniture company opened its first retail store in India.

Like Walmart acquired Flipkart and entered the Indian Market. Ikea can destroy the Whole Furniture Market in India.

Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries.

According to CNN , the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India.

But have you ever wondered? How does Ikea work?

What is the meaning of IKEA?

How IKEA works?

How IKEA business model earns ?

You must have many questions regarding IKEA, like What is the meaning of IKEA?

What is IKEA?

How IKEA earns?

This will be the most detailed case study on IKEA.

I will be answering all of your questions.

Let’s START WITH

WHAT IS IKEA?

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

IKEA is a globally renowned furniture retailer that sells ready-to-assemble furniture, kitchenware and home accessories.

The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

After five years into the business, IKEA brought in the furniture. Since then furniture has been the mainstream for the business.

IKEA furniture is now a well-known multinational brand.

IKEA MEANING

You must be wondering that what is the story behind the unique name the brand has.

The name IKEA isn’t just a fun.. it stands for – Ingvar Kamprad Elmtaryd Agunnaryd.

Short-form is cooler to pronounce right? But it actually has a deeper meaning.

The first two letters of IKEA i.e. I and K are the initials of the name of the founder Ingvar Kamprad.

While ‘E’ comes from the name of the farm he grew up on – Elmtaryd.

And the last letter ‘A’ comes from the Swedish village, Agunnaryd,

where the farm was located.

HOW IKEA EARNS? – IKEA BUSINESS MODEL

They follow Price-leadership model. Low prices are the main concern stone of the IKEA vision, business idea and concept.

In the world of IKEA furnishings, the products are named after Swedish towns like Aneboda, Akurum and Anordna.

But the costumers worry less about the names and care more about how much they cost.

Ikea furniture is a beacon for bargain hunters. Its whole business model evolves around selling their product at the lowest price possible.

IKEA business model revolves around their vision which is – offering a very wide range of well-designed, functional home furnishing products at so low prices that as many people as possible will be able to afford them.

Anybody can make a high-quality product for a high price, or a poor-quality product for a low price.

IKEA follows a different approach, they have developed methods that are both cost-efficient and innovative. Before designing the product… they decide the price tag.

Their designers begin with designing of the product after keeping the price in mind. The IKEA Group has 31 distribution centres in 16 different countries, supplying goods to IKEA stores. It has about 45 trading service offices in 31 countries.

They have very close relationships with their 1,350 suppliers in 50 countries.

IKEA’S SMART SECRET

Is IKEA – a Non- profit organization. ?

You must be having a lot of questions by now, like if IKEA is a non

profit organization then –

How do they manage their running cost?

Where all the money goes away?

Where does all this money earned is utilised?

You will get all your answer right away as you continue reading.

I would say a big YES,

IKEA has a little known secret: the company is a non-profit

They grew with a vision that states ‘to create a better everyday life for as many people as possible. And on a mission to offer a wide range of home furnishing products at a price so low that as many people will be able to afford them.’

Besides the vision and mission, the main motive of showing itself a non profit organization could seem as business-driven.

IKEA employs about 135,000 people. Because of tax rules for non- profits, IKEA pays about 33 times fewer taxes than their for-profit competitors.

There is one more big hole in this whole IKEA non-profit organization.

Money is not trapped inside Ikea’s foundation.

The Ikea trademark and the concept is owned by another private a company named Inter Ikea Systems.

So, to operate Ikea stores and use the brand name, the non-profit Ikea have to make payments each year to the private company – Inter Ikea Systems.

This clearly means money is paid directly from IKEA profits to the owners of this private company to license the trademark.

The beneficiaries or we can say owners of this private company are not publicly recorded, but it’s not hard to speculate that the Kamprad family is on the receiving end of this loophole.

HISTORY – STARTING AND GROWTH OF IKEA

Let’s talk about the exciting history timeline of IKEA.

From the of how it is started to the story of how it evolved exponentially.

It all started in 1926 when founder Ingvar Kamprad is born in Småland

in southern Sweden.

The 1940s-1950s

In the year 1948 – Furniture was introduced into the IKEA range.

Local manufacturers produced the furniture for IKEA in the forests close

to Ingvar Kamprad's home.

In the year 1956 – IKEA came up with the idea of designing furniture for

flat packs. It started focusing on self-assembling furniture models.

In the year 1980s – IKEA expands dramatically into new markets such

as the USA, Italy, France and the UK.

In the year 1984,

Ikea family was introduced a new club for the customers was launched.

Today, Ikea family is in 16 countries (over 167 stores) and has about 15

million members.

FINANCIAL FACTS AND FIGURES

Categories – Consumer Electronics, Furniture, Retail, Shopping, Smart Home.

Headquarters – European Union (EU)

Founded Date – 1943

Founders – Ingvar Kamprad

No. of Employees – 10001 +

Legal Name – IKEA BV

Digital links

Website – www.ikea.com/

Facebook- www.facebook.com/IKEAIndia

LinkedIn – www.linkedin.com/company/ikea-group/

Twitter – https://twitter.com/IKEAUSA

Till now IKEA has only 1 acquisition.

It acquired TaskRabbit on Sep 28, 2017

Mobile app and its downloads

IKEA has many mobile apps. But the most popular app is IKEA STORE.

The app is having almost 9,60,333 monthly downloads.

Website and its monthly traffic IKEA is ranked 166 among websites globally.

And having almost 146,040,680 monthly visitors.

Investments

IKEA is the lead investor in 4 companies. Those are –

XL HYBRIDS – IKEA announced its investment in this company on

October 12, 2017

MAT SMART – IKEA announced its investment in Massmart on Jan

TRAEMAND – IKEA announced its investment in Traemand on Dec

LIVSPACE – IKEA announced its investment in Livspace on Dec 19,

MANAGEMENT AND THE CORE TEAM

CEO – Jesper Brodin

CFO – Alistair Davidson

FOUNDER – Ingvar Kamprad

HEAD OF CORPORATE FINANCE & TAX – Krister Mattsson

HEAD OF DIGITAL – Christian Moehring

HEAD OF E-COMMERCE, SOUTHEAST ASIA – Koen Besteman

HEAD OF UK MARKETING PROCUREMENT – Maria Malpartida

HEAD OF INNOVATION – Jens Heitland

8 IKEA Marketing Strategy

Many people confuse marketing with promotion. People believe that marketing is something you do to sell your product. But, this is not completely true. Marketing begins even before the production stage, as designing a product based on the demand and needs of the customers is also a part of marketing. This is what IKEA Believes in. Everything in IKEA is from a customer’s point of view. Let’s dive deep into learning different strategies of IKEA.

1. Amazing Customer Experience

Have you tried shopping from IKEA? If not, then I would strongly recommend you to try IKEA next time you need a piece of furniture.SHopping at an IKEA store is a different experience than shopping from any other furniture store. Whenever adults go out shopping with their kids, both the kids and parents face issues.

IKEA has got an amazing solution for this where none of them would feel any type of burden and in fact, both of them would like to spend more time at the IKEA store. Yes, I am talking about the free childcare facility provided by the IKEA stores. You can just leave your child safely with them and enjoy hustle free shopping and the child will also spend some quality time playing and making new friends.

Another amazing thing is that instead of standing and having a long discussion about which product to buy and calculating your cost, you can have a seat ad enjoy your paneer butter masala meal while discussing the furniture.

These little things not only add a value to the customers shopping experience but also give them a reason to visit again and even suggest others to visit the store.

2. Brand Identity

In such a competitive environment, is it very important to stand out or be unique and creative to survive? You have to build your brand in such a way that customers prefer you over other companies.IKEA is very strongly working with this. Its goal is to become the leader of every home.

IKEA focuses more on the product and the customers which a lot of companies fail to do. If you create what your customers want then you can build a good brand identity. Your every action should be a signal of your brand.IKEA uses this technique in its advertising. If you have been following IKEA for a while then you will not have to think a lot you can recognise directly that this is an IKEA ad.

3. Content Marketing

With the growing digital environment, the content has become an important element of the digital industry. Content is used by most of the companies to promote their product digitally. From a picture art to a long written blog anything can be used as content in digital marketing.

One of the best strategies you can use in this digital era is to interact with your customers directly.IKEA uses all types of contents to reach out to their customers. From images, videos to textual content IKEA has it all. To reach your customers digitally, it is very important to identify your potential audience, basically defining who your customers are. Then the most important step is defining how your potential customers can find you?IS is through your social media handles or is it through your website or a combination of all these. And then you need to target them both organically and by paid promotion techniques.

4. Social Media

Social media is something which cannot be avoided. Everyone nowadays uses social media, thanks to the internet revolution and jio revolution in India. Your presence on every social media platform is must, it doesn’t matter if you are an old company or a new one. Social media allows you to be in constant touch with your customers. You can use various strategies across your social media platforms that can help you create trust and a good brand image in front of your customers and also develop new customers.

There are a few strategies which you can follow.

If you follow a consistent posting schedule, then you can have a good content interaction as regular posts can make your customers think about you.
You can also use promotional strategies provided by social media companies to reach a new audience and attract them by telling them about your new products and offers.
Another important feature of social media that you can use is to understand your audience. Understanding your audience is important because they are the ultimate consumers and having clarity about the consumers makes it possible for a brand to plan its products and marketing accordingly.

5. Innovation

IKEA is very famous for new designs and products. It keeps on constantly adding a new design or a new to product to its collection. This allows customers to visit the store even if they do not want to buy anything so that they can check the latest trends and products. If you check their social media handles, you will find a lot of different types of content that displays new and innovative products. This is a very good strategy as your customers stay updated with your products. Even if they do not add the products to their cark at the moment, they still add it to their wishlist. Which indirectly gets converted into sales. Thus, innovation in products and making innovation reach your customers is very important.

6. Creative Marketing Campaigns

IKEA is very creative when it comes to marketing. Their posts are so engaging that you want to click on it and see them that what is there. The example given below demonstrates how one will swipe right to see what they have for you. Isn’t it creative? If you observe, they have made good use of the present condition in a creative way. Similarly, a humorous and creative content strategy can help you get more engagements.

7. Amazing Use of Technology

Living in the 21st century, you can make amazing use of technology to provide a great experience to your customers. Augmented reality and virtual reality are some great examples of technology can you can use especially in such industries.IKEA makes use of both these augmented realities and the virtual reality

What is Augmented Reality?

This is the most amazing use of technology that IKEA could have done. With this, you can use your mobile phone to see how a piece of particular furniture would look at your home. You can also use this to decide at which corner of the house that particular furniture would look good. This is like a trial technology where you can try the products virtually at the comfort of your home without actually buying it. It is similar to something used by Lenskart.

What is Virtual Reality?

Yet another amazing use of technology. Where most of the people are busy using virtual reality for gaming purposes, IKEA has its smart use. Through virtual reality technology, IKEA allows its customers to feel the look of the furniture. For example, say you want to buy a modular kitchen, you can try the kitchen before actually buying it in a virtual reality headset. The most amazing part is that you can try cooking and get real experience.

8. Payments Methods

Consumers have become a lot more advanced than before. Customers need comfort. Since the evolution of the digital era, there are a lot of different methods of payment. Every consumer has different payment options. It becomes important to have all the options available so that the customers get a hustle free shopping experience. As already, IKEA is a price dominant company, best price with all modes of payments is like a cherry on the cake.

Unknown Facts About IKEA

Ikea is the third-largest wood consumer on the planet. Being the leading furniture company it should not be shocking.
IKEA is claimed to print more copies of its annual catalogue each year than the bible.
IKEA has very good food sales. Being known for its furniture has a very good taste when it comes to their restaurant. This can be a great contribution to their revenue as they have an approximate sale of 2 billion annually.
As in 2014, they have 716 million visitors to their store. This is a very huge number.
The first IKEA restaurant was launched in 1956 to feed its customers that would feel hungry after spending the whole day shopping.

SWOT Analysis of IKEA

* Its vision – ‘to create a better everyday life for many people’

* Economies of scale

* Lowest Price

* Countless designs

* Bad press

* Low quality

* Difficulty to control standards across locations.

OPPORTUNITY

* Solutions for a sustainable life at home

* Developing social responsibility

* The recession slows down consumer spending

* More competitors entering the low price household and furnishings

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

IKEA KEY VALUES

They are very strict about their values.

They firmly believe that every individual has something valuable to

Let’s look at some of there core values –

1. Cost – Consciousness

Their first priority is to make their product affordable to as many

people as possible. They challenge themselves constantly to make

the product more affordable without compromising on quality.

2. Renew and Improve

They always challenge themselves to try something new and to find a

a better way out.

3. Caring for People and Planet

They believe in caring for people as well as for the environment.

They act as a force for a positive change.

IKEA IN INDIA

In 2006, Ikea first displayed an interest in the Indian market but back then

the Indian laws allowed only 51 per cent foreign ownership.

With the government of India relaxing the norms for foreign direct

investment (FDI) in single-brand retail, IKEA announced in October

their intention to open stores in India.

IKEA opened its first store in India on Aug 9, 2018.

It took IKEA 12 long years to enter the Indian market.

The first store in India was opened in Hyderabad.

Hyderabad, the southern Indian city gave it a roaring welcome.

So far, more than 3 million customers have visited IKEA Hyderabad

store and about 8 million have visited IKEA’s India website

In the year 2016, Ikea purchased land in Mumbai and said that it planned

to open stores in Bengaluru and Delhi too.

After Hyderabad, in 2019 IKEA has launched its first online store in

Mumbai is offering more than 7,500 products.

It will provide delivery to most of the locations in Mumbai and will have

a delivery time of four to seven days, subject to availability and distance.

In India, IKEA currently has more than 55+ suppliers.

Also, have more than 45,000 direct employees and 400,000 people in the

extended supply chain.

Now, the company plans to have more than 25 stores in India by 2025.

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IKEA A Furniture Dealer Case Study Solution

Posted by John Berg on Feb-16-2018

Introduction

IKEA A Furniture Dealer Case Study is included in the Harvard Business Review Case Study. Therefore, it is necessary to touch HBR fundamentals before starting the IKEA A Furniture Dealer case analysis. HBR will help you assess which piece of information is relevant. Harvard Business review will also help you solve your case. Thus, HBR fundamentals assist in easily comprehending the case study description and brainstorming the IKEA A Furniture Dealer case analysis. Also, a major benefit of HBR is that it widens your approach. HBR also brings new ideas into the picture which would help you in your IKEA A Furniture Dealer case analysis.

To write an effective Harvard Business Case Solution, a deep IKEA A Furniture Dealer case analysis is essential. A proper analysis requires deep investigative reading. You should have a strong grasp of the concepts discussed and be able to identify the central problem in the given HBR case study. It is very important to read the HBR case study thoroughly as at times identifying the key problem becomes challenging. Thus by underlining every single detail which you think relevant, you will be quickly able to solve the HBR case study as is addressed in Harvard Business Case Solution.

Problem Identification

The first step in solving the HBR Case Study is to identify the problem. A problem can be regarded as a difference between the actual situation and the desired situation. This means that to identify a problem, you must know where it is intended to be. To do a IKEA A Furniture Dealer case study analysis and a financial analysis, you need to have a clear understanding of where the problem currently is about the perceived problem.

For effective and efficient problem identification,

A multi-source and multi-method approach should be adopted.
The problem identified should be thoroughly reviewed and evaluated before continuing with the case study solution.
The problem should be backed by sufficient evidence to make sure a wrong problem isn't being worked upon.

Problem identification, if done well, will form a strong foundation for your IKEA A Furniture Dealer Case Study. Effective problem identification is clear, objective, and specific. An ambiguous problem will result in vague solutions being discovered. It is also well-informed and timely. It should be noted that the right amount of time should be spent on this part. Spending too much time will leave lesser time for the rest of the process.

IKEA A Furniture Dealer Case Analysis

Once you have completed the first step which was problem identification, you move on to developing a case study answers. This is the second step which will include evaluation and analysis of the given company. For this step, tools like SWOT analysis, Porter's five forces analysis for IKEA A Furniture Dealer, etc. can be used. Porter’s five forces analysis for IKEA A Furniture Dealer analyses a company’s substitutes, buyer and supplier power, rivalry, etc.

To do an effective HBR case study analysis, you need to explore the following areas:

1. Company history:

The IKEA A Furniture Dealer case study consists of the history of the company given at the start. Reading it thoroughly will provide you with an understanding of the company's aims and objectives. You will keep these in mind as any Harvard Business Case Solutions you provide will need to be aligned with these.

2. Company growth trends:

This will help you obtain an understanding of the company's current stage in the business cycle and will give you an idea of what the scope of the solution should be.

3. Company culture:

Work culture in a company tells a lot about the workforce itself. You can understand this by going through the instances involving employees that the HBR case study provides. This will be helpful in understanding if the proposed case study solution will be accepted by the workforce and whether it will consist of the prevailing culture in the company.

IKEA A Furniture Dealer Financial Analysis

The third step of solving the IKEA A Furniture Dealer Case Study is IKEA A Furniture Dealer Financial Analysis. You can go about it in a similar way as is done for a finance and accounting case study. For solving any IKEA A Furniture Dealer case, Financial Analysis is of extreme importance. You should place extra focus on conducting IKEA A Furniture Dealer financial analysis as it is an integral part of the IKEA A Furniture Dealer Case Study Solution. It will help you evaluate the position of IKEA A Furniture Dealer regarding stability, profitability and liquidity accurately. On the basis of this, you will be able to recommend an appropriate plan of action. To conduct a IKEA A Furniture Dealer financial analysis in excel,

Past year financial statements need to be extracted.
Liquidity and profitability ratios to be calculated from the current financial statements.
Ratios are compared with the past year IKEA A Furniture Dealer calculations
Company’s financial position is evaluated.

Another way how you can do the IKEA A Furniture Dealer financial analysis is through financial modelling. Financial Analysis through financial modelling is done by:

Using the current financial statement to produce forecasted financial statements.
A set of assumptions are made to grow revenue and expenses.
Value of the company is derived.

Financial Analysis is critical in many aspects:

Decision Making and Strategy Devising to achieve targeted goals- to determine the future course of action.
Getting credit from suppliers depending on the leverage position- creditors will be confident to supply on credit if less company debt.
Influence on Investment Decisions- buying and selling of stock by investors.

Thus, it is a snapshot of the company and helps analysts assess whether the company's performance has improved or deteriorated. It also gives an insight about its expected performance in future- whether it will be going concern or not. IKEA A Furniture Dealer Financial analysis can, therefore, give you a broader image of the company.

IKEA A Furniture Dealer NPV

IKEA A Furniture Dealer's calculations of ratios only are not sufficient to gauge the company performance for investment decisions. Instead, investment appraisal methods should also be considered. IKEA A Furniture Dealer NPV calculation is a very important one as NPV helps determine whether the investment will lead to a positive value or a negative value. It is the best tool for decision making.

There are many benefits of using NPV:

It takes into account the future value of money, thereby giving reliable results.
It considers the cost of capital in its calculations.
It gives the return in dollar terms simplifying decision making.

The formula that you will use to calculate IKEA A Furniture Dealer NPV will be as follows:

Present Value of Future Cash Flows minus Initial Investment

Present Value of Future cash flows will be calculated as follows:

PV of CF= CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + …CFn/(1+r)^n

where CF = cash flows r = cost of capital n = total number of years.

Cash flows can be uniform or multiple. You can discount them by IKEA A Furniture Dealer WACC as the discount rate to arrive at the present value figure. You can then use the resulting figure to make your investment decision. The decision criteria would be as follows:

If Present Value of Cash Flows is greater than Initial Investment, you can accept the project.
If Present Value of Cash Flows is less than Initial Investment, you can reject the project.

Thus, calculation of IKEA A Furniture Dealer NPV will give you an insight into the value generated if you invest in IKEA A Furniture Dealer. It is a very reliable tool to assess the feasibility of an investment as it helps determine whether the cash flows generated will help yield a positive return or not.

However, it would be better if you take various aspects under consideration. Thus, apart from IKEA A Furniture Dealer’s NPV, you should also consider other capital budgeting techniques like IKEA A Furniture Dealer’s IRR to evaluate and fine-tune your investment decisions.

IKEA A Furniture Dealer DCF

Once you are done with calculating the IKEA A Furniture Dealer NPV for your finance and accounting case study, you can proceed to the next step, which involves calculating the IKEA A Furniture Dealer DCF. Discounted cash flow (DCF) is a IKEA A Furniture Dealer valuation method used to estimate the value of an investment based on its future cash flows. For a better presentation of your finance case solution, it is recommended to use IKEA A Furniture Dealer excel for the DCF analysis.

To calculate the IKEA A Furniture Dealer DCF analysis, the following steps are required:

Calculate the expected future cash inflows and outflows.
Set-off inflows and outflows to obtain the net cash flows.
Find the present value of expected future net cash flows using a discount rate, which is usually the weighted-average cost of capital (WACC).
If the value calculated through IKEA A Furniture Dealer DCF is higher than the current cost of the investment, the opportunity should be considered
If the current cost of the investment is higher than the value calculated through DCF, the opportunity should be rejected

IKEA A Furniture Dealer DCF can also be calculated using the following formula:

DCF= CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + …CFn/(1+r)^n

In the formula:

CF= Cash flows
R= discount rate (WACC)

IKEA A Furniture Dealer WACC

When making different IKEA A Furniture Dealer's calculations, IKEA A Furniture Dealer WACC calculation is of great significance. WACC calculation is done by the capital composition of the company. The formula will be as follows:

Weighted Average Cost of Capital = % of Debt * Cost of Debt * (1- tax rate) + % of equity * Cost of Equity

You can compute the debt and equity percentage from the balance sheet figures. For the cost of equity, you can use the CAPM model. Cost of debt is usually given. However, if it isn't mentioned, you can calculate it through market weighted average debt. IKEA A Furniture Dealer’s WACC will indicate the rate the company should earn to pay its capital suppliers. IKEA A Furniture Dealer WACC can be analysed in two ways:

From the company's perspective, it can be analysed as the cost to be paid to the capital providers also known as Cost of Capital
From an investor' perspective, if the expected return on the investment exceeds IKEA A Furniture Dealer WACC, the investor will go ahead with the investment as a positive value would be generated.

IKEA A Furniture Dealer IRR

After calculating the IKEA A Furniture Dealer WACC, it is necessary to calculate the IKEA A Furniture Dealer IRR as well, as WACC alone does not say much about the company’s overall situation. IKEA A Furniture Dealer IRR will add meaning to the finance solution that you are working on. The internal rate of return is a tool used in investment appraisal to calculate the profitability of prospective investments. IRR calculations are dependent on the same formula as IKEA A Furniture Dealer NPV.

There are two ways to calculate the IKEA A Furniture Dealer IRR.

By using a IKEA A Furniture Dealer Excel Spreadsheet: There are in-built formulae for calculating IRR.

IRR= R + [NPVa / (NPVa - NPVb) x (Rb - Ra)]

In this formula:

Ra= lower discount rate chosen
Rb= higher discount rate chosen
NPVa= NPV at Ra
NPVb= NPV at Rb

IKEA A Furniture Dealer IRR impacts your finance case solution in the following ways:

If IRR>WACC, accept the alternative
If IRR<WACC, reject the alternative

IKEA A Furniture Dealer Excel Spreadsheet

All your IKEA A Furniture Dealer calculations should be done in a IKEA A Furniture Dealer xls Spreadsheet. A IKEA A Furniture Dealer excel spreadsheet is the best way to present your finance case solution. The IKEA A Furniture Dealer Calculations should be presented in IKEA A Furniture Dealer excel in such a way that the analysis and results can be distinguished to the viewers. The point of IKEA A Furniture Dealer excel is to present large amounts of data in clear and consumable ways. Presenting your data is also going to make sure that you don't have misinterpretations of the data.

To make your IKEA A Furniture Dealer calculations sheet more meaningful, you should:

Think about the order of the IKEA A Furniture Dealer xls worksheets in your finance case solution
Use more IKEA A Furniture Dealer xls worksheets and tables as will divide the data that you are looking at in sections.
Choose clarity overlooks
Keep your timeline consistent
Organise the information flow
Clarify your sources

The following tips and bits should be kept in mind while preparing your finance case solution in a IKEA A Furniture Dealer xls spreadsheet:

Avoid using fixed numbers in formulae
Avoid hiding data
Useless and meaningful colours, such as highlighting negative numbers in red
Label column and rows
Correct your alignment
Keep formulae readable
Strategically freeze header column and row

IKEA A Furniture Dealer Ratio analysis

After you have your IKEA A Furniture Dealer calculations in a IKEA A Furniture Dealer xls spreadsheet, you can move on to the next step which is ratio analysis. Ratio analysis is an analysis of information in the form of figures contained in the financial statements of a company. It will help you evaluate various aspects of a company's operating and financial performance which can be done in IKEA A Furniture Dealer Excel.

To conduct a ratio analysis that covers all financial aspects, divide the analysis as follows:

Liquidity Ratios: Liquidity ratios gauge a company's ability to pay off its short-term debt. These include the current ratio, quick ratio, and working capital ratio.
Solvency ratios: Solvency ratios match a company's debt levels with its assets, equity, and earnings. These include the debt-equity ratio, debt-assets ratio, and interest coverage ratio.
Profitability Ratios: These show how effectively a company can generate profits through its operations. Profit margin, return on assets, return on equity, return on capital employed, and gross margin ratio is examples of profitability ratios.
Efficiency ratios: Efficiency ratios analyse how efficiently a company uses its assets and liabilities to boost sales and increase profits.
Coverage Ratios: These ratios measure a company's ability to make the interest payments and other obligations associated with its debts. Examples include times interest earned ratio and debt-service coverage ratio.
Market Prospect Ratios: These include dividend yield, P/E ratio, earnings per share, and dividend payout ratio.

IKEA A Furniture Dealer Valuation

IKEA A Furniture Dealer Valuation is a very fundamental requirement if you want to work out your Harvard Business Case Solution. IKEA A Furniture Dealer Valuation includes a critical analysis of the company's capital structure – the composition of debt and equity in it, and the fair value of its assets. Common approaches to IKEA A Furniture Dealer valuation include

DDM is an appropriate method if dividends are being paid to shareholders and the dividends paid are in line with the earnings of the company.
FCFF is used when the company has a combination of debt and equity financing.
FCFE, on the other hand, shows the cash flow available to equity holders only.

These three methods explained above are very commonly used to calculate the value of the firm. Investment decisions are undertaken by the value derived.

IKEA A Furniture Dealer calculations for projected cash flows and growth rates are taken under consideration to come up with the value of firm and value of equity. These figures are used to determine the net worth of the business. Net worth is a very important concept when solving any finance and accounting case study as it gives a deep insight into the company's potential to perform in future.

Alternative Solutions

After doing your case study analysis, you move to the next step, which is identifying alternative solutions. These will be other possibilities of Harvard Business case solutions that you can choose from. For this, you must look at the IKEA A Furniture Dealer case analysis in different ways and find a new perspective that you haven't thought of before.

Once you have listed or mapped alternatives, be open to their possibilities. Work on those that:

need additional information
are new solutions
can be combined or eliminated

After listing possible options, evaluate them without prejudice, and check if enough resources are available for implementation and if the company workforce would accept it.

For ease of deciding the best IKEA A Furniture Dealer case solution, you can rate them on numerous aspects, such as:

Feasibility
Suitability
Flexibility

Implementation

Once you have read the IKEA A Furniture Dealer HBR case study and have started working your way towards IKEA A Furniture Dealer Case Solution, you need to be clear about different financial concepts. Your Mondavi case answers should reflect your understanding of the IKEA A Furniture Dealer Case Study.

You should be clear about the advantages, disadvantages and method of each financial analysis technique. Knowing formulas is also very essential or else you will mess up with your analysis. Therefore, you need to be mindful of the financial analysis method you are implementing to write your IKEA A Furniture Dealer case study solution. It should closely align with the business structure and the financials as mentioned in the IKEA A Furniture Dealer case memo.

You can also refer to IKEA A Furniture Dealer Harvard case to have a better understanding and a clearer picture so that you implement the best strategy. There are a number of benefits if you keep a wide range of financial analysis tools at your fingertips.

Your IKEA A Furniture Dealer HBR Case Solution would be quite accurate
You will have an option to choose from different methods, thus helping you choose the best strategy.

Recommendation and Action Plan

Once you have successfully worked out your financial analysis using the most appropriate method and come up with IKEA A Furniture Dealer HBR Case Solution, you need to give the final finishing by adding a recommendation and an action plan to be followed. The recommendation can be based on the current financial analysis. When making a recommendation,

You need to make sure that it is not generic and it will help in increasing company value
It is in line with the case study analysis you have conducted
The IKEA A Furniture Dealer calculations you have done support what you are recommending
It should be clear, concise and free of complexities

Also, adding an action plan for your recommendation further strengthens your IKEA A Furniture Dealer HBR case study argument. Thus, your action plan should be consistent with the recommendation you are giving to support your IKEA A Furniture Dealer financial analysis. It is essential to have all these three things correlated to have a better coherence in your argument presented in your case study analysis and solution which will be a part of IKEA A Furniture Dealer Case Answer.

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IKEA A Furniture Dealer Case Solution

Posted by Adam Hudson on Dec-20-2017

1. INTRODUCTION OF IKEA A Furniture Dealer CASE SOLUTION

The Harvard business review has published the IKEA A Furniture Dealer Case Study. Like all HBR case studies, the IKEA A Furniture Dealer Case is designed and drafted in a manner to allow the reader to experience a real-world problem and solve it accordingly. The case study, like other HBR case studies, will help the reader and students develop a broader, and a clearer understanding of the business world and dynamics.

The IKEA A Furniture Dealer Case is based on a current managerial and strategic problem being faced by the organization, which must be solved tactfully to allow progression, as well as maintain a competitive position. This paper is written to facilitate the case solution for the IKEA A Furniture Dealer Case Study.

The case solution for the IKEA A Furniture Dealer Case Study first identifies the central issue that is elaborated on throughout the case. The case solution then analyses the case through relevant strategic models and tools including the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. This analysis is to help in the identification of a feasible strategy and solution for the IKEA A Furniture Dealer Case Study. Alternative solutions are also proposed in the case solution, primarily because alternative solutions often act as contingency plans.

2. PROBLEM IDENTIFICATION

2.1. harvard business school case studies.

All case studies published by the Harvard business review comprise of a central problem that is faced by the protagonist. This problem mostly holds implications for managerial and strategic directions of the company. For readers and students of HBR case studies, it is critical to identify the problem that the IKEA A Furniture Dealer faces. This problem is usually hinted towards in the introduction of the case and develops along the way.

2.2. Solving HBS case studies

As a result, for solving the IKEA A Furniture Dealer case, it is essential to read the case study thoroughly. The identification of the problem correctly is vital for undergoing the analysis rightly, and for developing relevant solutions for the IKEA A Furniture Dealer Case Study. It is also essential to identify all the appropriate parties that are being impacted by the problem as well as the decision. The correct problem identification will ensure that all the solutions developed during the case analysis of the IKEA A Furniture Dealer Case Study are applicable and pragmatic.

EXTERNAL ENVIRONMENT ANALYSIS

The external environment analysis is needed for the IKEA A Furniture Dealer Case Study to make sure that it actively, and proactively responds to the macro-environment. The macro environment or the external environment for the IKEA A Furniture Dealer Case includes those factors which are not in control of the business or the company directly. As a result:

The IKEA A Furniture Dealer cannot influence these factors in its favour, and in contrast, these factors directly affect the operations and workings of the company.
As a result, IKEA A Furniture Dealer must make sure to continually assess and review the external environment to make sure that it responds to external factors, and take them into account, during strategic decisions, and strategy devising. Businesses like IKEA A Furniture Dealer make use of strategic model tools continually to make sure that they are aware of the external environment.
These include tools like the pestle analysis and Porter’s five force model, as well as strategic group analysis and pentagonal analysis, to name a few. The external analysis for the IKEA A Furniture Dealer Case Study will assess and will apply the strategic models and tools to review the business environment for the company.PESTEL Analysis

3.1.1. Political

Political factors and elements can have a direct and indirect impact on the business. This is seen through the IKEA A Furniture Dealer Case Study.

3.1.1.1. Policy Makings

Policymakers for the IKEA A Furniture Dealer Case are in all likelihood to intervene in the business surroundings.
Commercial restrictions and political stability are additionally integral factors that will determine the success or failure of IKEA A Furniture Dealer.

3.1.1.2. Taxation

Tax policy will influence the cost of doing business for IKEA A Furniture Dealer.
An increase in organization taxation (on business profits) has a similar impact as an expansion in expenses.
Organizations can pass a portion of this increase on to shoppers in more expensive rates, yet it will likewise influence the bottom line of the business.

3.1.1.3. Government Support

The government helps organizations in two primary ways: monetary help and regulatory.
IKEA A Furniture Dealer can use government assistance and grants for purposes of growing the business, advancement, exporting, and innovative work.
IKEA A Furniture Dealer can also be impacted by when Governments modify regulations and laws.

3.1.1.4. Political Stability

Lack of political stability in a country impacts business tasks. Political stability is particularly essential for the organizations which work globally, such as IKEA A Furniture Dealer.
A forceful takeover could oust a legislature. The takeover could prompt mobs, plundering and general issue in nature. These disturb business tasks for IKEA A Furniture Dealer.
Purchasing political risk insurance is a way for IKEA A Furniture Dealer to oversee political hazard. Organizations that have worldwide activities utilise such as insurance to lessen their risk presentation.
The soundness of a political framework can influence the attractiveness of a specific nearby market for IKEA A Furniture Dealer.

3.1.2. Economic

The economic factors are one of the most important of PESTEL factors and can influence IKEA A Furniture Dealer in several ways.

3.1.2.1. GDP

Economic components have the most evident effect on the profitability and overall appeal of IKEA A Furniture Dealer.
Even though GDP per capita is a useful economic factor, GDP per capita gives just a fractional perspective on the economic factors that may influence IKEA A Furniture Dealer.
Higher GDP leads to higher disposable income and hence higher sales for IKEA A Furniture Dealer.

3.1.2.2. Inflation

Higher inflation will disintegrate the purchasing power of the consumer and the shopper
Higher inflation will also harm the costs of raw materials and other inputs that are utilised by IKEA A Furniture Dealer.

3.1.2.3. Interest Rates

Fluctuations in interest rates may translate into higher or lower costs for the purchase or sale of items and administrations provided by IKEA A Furniture Dealer.
Higher interest rates hurt the disposable cash of consumers.

3.1.2.4. Unemployment Rate

A high unemployment rate is also unadvisable as it dissolves dispensable income of consumers, and will harm IKEA A Furniture Dealer ’s position.
The high unemployment rate will lead to lower sales for IKEA A Furniture Dealer and impact its overall profitability and revenues.

3.1.2.5. How can the IKEA A Furniture Dealer decrease the risk of economic instability?

IKEA A Furniture Dealer can work towards building economies of scale
Maintaining business costs and controlling the final price of the product can also help IKEA A Furniture Dealer fight economic instability
IKEA A Furniture Dealer can also work towards building a sustainably managed workforce

3.1.3. Social

Social influences will stem from social components of the macro environment. Under the PESTEL Analysis, they can influence IKEA A Furniture Dealer in several ways:

3.1.3.1. Social patterns and consumer behaviour

Social patterns affect work trends and patterns and are directly related to the behaviours of consumers.
Social patterns also have a direct influence on buyer tastes and inclinations, and the specific kind, structure, and volume of interest for an item or service.

3.1.3.2. Social patterns and changing consumer needs

The checking of social patterns will enable IKEA A Furniture Dealer to reposition its items or administrations to meet the changing desires and needs of consumers.

3.1.3.3. Social trends in education

Social trends of higher education have allowed firms like IKEA A Furniture Dealer to have access to a pool of higher skilled talent – but at the same time, also face a more criticising consumer base.
Higher education has also made consumers more aware of different product offerings by companies like IKEA A Furniture Dealer.
consumers are also more educated and knowledgeable of different substitutes of a product, as well as become more readily available at different touchpoints.

3.1.3.4. Social patterns make companies more consumer-centric

Companies like IKEA A Furniture Dealer are expected to become more consumer-centric than product-centric.
Similarly, Market segmentation and consumer grouping are dynamically moving towards measures of psychographics and lifestyles to understand the consumer more.

3.1.3.5. How can IKEA A Furniture Dealer use social aspects for growth?

Use consumer-centric means of segmentation and targeting.
Use consumer-oriented and consumer-based marketing – which use emotional appeals to influence consumers.
Make products more accessible at different touch points common to target consumers socially.

3.1.4. Technological

The technological factors can influence IKEA A Furniture Dealer in several ways:

3.1.4.1. Innovation

The quick pace of technological change at IKEA A Furniture Dealer may be driven through innovation.
Business leadership at IKEA A Furniture Dealer tries to push the limits of present limitations.

3.1.4.2. The advent of the internet and online retailing

The expansion of the Internet and online business has discarded many intermediaries. IKEA A Furniture Dealer can communicate and retail directly to the consumers now, or through modern intermediaries such as eBay as well, for example.
IKEA A Furniture Dealer may also use current social networks to retail and use e-commerce to boost sales.

3.1.4.3. Social media and business growth

IKEA A Furniture Dealer can make use of social media to interact and reach with consumers
Social media can also be used to reach the target market audience more effectively
Social media is cost-effective and strategically more influential for IKEA A Furniture Dealer

3.1.4.4. Improved value chain network

For IKEA A Furniture Dealer, technological innovation can be utilised to build on competitive advantage through several different ways.
IKEA A Furniture Dealer can incorporate less expensive production, improved access to clients, improved marketing, improvement in product quality, and increased levels of business intelligence than the competition.

3.1.4.5. Managing technology and the future for IKEA A Furniture Dealer

To flourish in a business world that is quick paced and receptive to innovative change, IKEA A Furniture Dealer must stay cautious.
It must be always be updated on any technological developments in the business and industry.
IKEA A Furniture Dealer should weary of how the company are probably going to influence its future attractiveness and profitability.

3.1.5. Environmental

For IKEA A Furniture Dealer, the environmental aspects of the PESTEL analysis may include:

3.1.5.1. Environmental stability and business standards

IKEA A Furniture Dealer may be expected to incorporate maintainability standards into their business methodologies and to help resource allocation choices.
IKEA A Furniture Dealer may also be subject to environmental laws – which will impact and guide its operations to become more environmentally friendly.

3.1.5.2. Environmental stability and budget allocation

Leadership in the IKEA A Furniture Dealer must measure the connection between natural activities and budgetary execution.
IKEA A Furniture Dealer also strategically decides and assesses if the organization have been estimating the monetary effect of natural and social activities.

3.1.5.3. Environmental sustainability

IKEA A Furniture Dealer also distinguishes and differentiates explicit zones of concern and impediments to the coordination of environmental sustainability into corporate performance and strategy
IKEA A Furniture Dealer also gives explicit direction concerning how organizations can push toward a superior reconciliation of ecological and social activities in their basic leadership procedures and tasks.

3.1.5.4. Environmental sustainability and business growth

IKEA A Furniture Dealer may use environmental issues to adjust financial, natural and social performance.
Concerns towards the environment will enhance the business image for IKEA A Furniture Dealer.
Environmental sustainability within business goals and strategy will also reflect corporate responsibility on the part of IKEA A Furniture Dealer.

3.1.5.5. Environmental sustainability and improved consumer relations

Consumers will be more inclined towards the use of environmentally sustainable products.
Environmental sustainability in operations works towards improving the bottom line and overall profitability for the business of IKEA A Furniture Dealer.
Improvement of cost management and operations will be observed in the business as well.

3.1.6. Legal

Legal components can influence IKEA A Furniture Dealer directly, and can likewise influence the instruments through which an organization buys its stock or connects with the client. The IKEA A Furniture Dealer should be mindful, for example, of the following legal aspects:

3.1.6.1. Labour law

Labour law refers to the guidelines in regulations that set up minimum and benchmark conditions.
These include identifying with the work of people.
Labour laws include aspects of minimum working age, least time-based compensation, etc.
IKEA A Furniture Dealer must be mindful of these laws in routine business tasks such as hiring, for example.

3.1.6.2. Discrimination law

Under the discrimination law, IKEA A Furniture Dealer must ensure to avoid episodes of unequal or uncalled for treatment based on an individual's age, inability, sex, national source, race, religion, and sexual orientation.
Unequal hiring
Discrimination in recruitment
Internal discrimination in talent management
Bias in training opportunities
Unfair compensation systems
Prejudiced promotions and succession management

3.1.6.3. Health and safety laws:

Under this, IKEA A Furniture Dealer is required to give a protected work environment to their workers.
Working environment security and wellbeing laws build up guidelines intended to dispense with individual wounds and injuries from happening in the work environment.
all operations of IKEA A Furniture Dealer should be designed to physically and emotionally safeguard and protect the employees and the labour force employed

3.2. Porter’s five forces

The five forces identified in Porter's model can effect IKEA A Furniture Dealer ’s ability to serve its clients and make a profit.
A change in any of the five forces may regularly require a business unit from IKEA A Furniture Dealer to reassess the market place given the general change in industry data and dynamics. The general industry appeal and attractiveness.
IKEA A Furniture Dealer should apply and centre their skills, plan of action or business models to accomplish profits above the business average. This may be done in multiple ways, each distinguished in their application to the forces individually as is elaborated below:

3.2.1. The threat of new entrants

3.2.1.1. market and industry share.

New entrants to an industry bring new potential and a choice to increase the market share and overall share of the pie that puts pressure on price, costs, and the investment price essential to compete.
For IKEA A Furniture Dealer, particularly while new entrants are diversifying from different markets into the chief industry, they will be able to leverage existing talents and cash flows to shake up the opposition.

3.2.1.2. Limitation on earning expectation and capability of firms in an industry

The threat of entry in the industry, consequently, puts a cap at the earning capacity and profit capability for IKEA A Furniture Dealer.
While the threat of new entreaty is high, IKEA A Furniture Dealer should maintain their prices or increase funding and investment to discourage new competition.

3.2.1.3. The risk to new entrants because of high entry barriers

The risk of entry in an industry depends upon on the peak of entry barriers and limitations that are a blessing for players such as IKEA A Furniture Dealer and on the response that new entrants can count on from existing players.
If entry barriers are low and novices count on little retaliation from the entrenched competition, the chance of entry is high, and profitability for IKEA A Furniture Dealer will be moderated.
It is the danger of entry, not whether the entry of new players takes place that holds down profitability.

3.2.1.4. Some barriers to entry for new entrants in favour of IKEA A Furniture Dealer :

Capital requirements: a strong barrier to entry as new entrants will require strong financial and resource cushioning for operations to take off and be sustained.
Economies of scale: a strong barrier to entry as existing players in the industry operate with high economies of scale, which new entrants will take time to achieve.
Product differentiation: the strong barrier of entry if products within the industry have high levels of differentiation on which they operate and approach customers.
Access to distribution: a standard barrier to entry since new entrants will have equal access to the retailers and distributing agents within the industry.
Customer loyalty to established brands: a strong barrier to entry since customer loyalties and perceptions are emotionally built and strongly enforced as long as the brand continues to deliver on its core promise and quality.

3.2.1.5. What can IKEA A Furniture Dealer do to face this challenge?

Build and invest in marketing to distinctly establish a point of differentiation in customer perception as well as strengthen customer loyalty.
Invest in research and development to make sure that it continues to have competitive differentiation from other players at all times.
Focus on building economies of scale in production and sales.

3.2.2. The threat of substitute products or services

3.2.2.1. substitute form.

There are always different alternatives or substitutes for various products that lead an industry.
These substitutes may be direct or indirect– the direct substitutes are the same category products. produced by different players; indirect substitutes are the ones from different product categories that can replace the product for IKEA A Furniture Dealer.

3.2.2.2. Switching cost to substitutes for consumers

Switching costs for direct substitutes is not very high for consumers.
The per-unit-volume prices may be higher or lower.
This makes the threat of substitute high.

3.2.2.3. Substitute and product benefit

Alternatives to the product or substitutes may not be able to provide the same benefits
May often lead to additional costs incurred.
Switching costs towards alternatives becomes higher, and consumers may not switch to substitutes.
This, in turn, will make the threat of substitutes low.

3.2.2.4. Substitutes and consumer behaviour

From the point of view of the consumer, there are some differences between the ways different products of the same or similar category are used, but many consumption decisions are a matter of personal taste - this makes products vulnerable to the threat of other substitutes.
Overall, the threat of substitutes is assessed to be moderately high.

3.2.2.5. How can IKEA A Furniture Dealer combat the threat from substitute products?

Focus on delivering consistently high quality.
Focus on maintaining strong consumer relationships.
Integrate strategic marketing to form an emotional connection with the consumers and strengthen consumer loyalty.
Invest in pop up stores owned by the company to stock the IKEA A Furniture Dealer brand exclusively, and integrate it with brand characteristics and personality to attract consumers.

3.2.3. Bargaining Power of Buyers

3.2.3.1. who is the buyer.

The buyer for IKEA A Furniture Dealer is not necessarily the group that consumes the product – but rather refers to the group of customers that purchases the product from IKEA A Furniture Dealer to either distribute further, retail it, or even consume it.
Hypermarkets and supermarkets, as well as independent retailers and distribution agents to end consumers, are the core buyers for IKEA A Furniture Dealer that make up the market’s volume.
Supermarkets and hypermarkets, along with many food chains that are concentrated, which increases the buyer power.
Products are stocked with buyers and retailers by IKEA A Furniture Dealer based on consumer demand.

3.2.3.2. Buyer power and costs

IKEA A Furniture Dealer will not experience switching costs for switching buyers.
Multiple product offerings by buyers also increase buyer power.

3.2.3.3. Retail product differentiation

Products offered by retailers are differentiated based on several characteristics – not only reliant upon product characteristics but also consumer segment characteristics. Because of this, retailers are expected to offer a wide range of the same product category. This works towards negating and weakening the overall buyer power.
Buyer power is assessed to be moderate to high.

3.2.3.4. What can IKEA A Furniture Dealer do to ensure risks against high buyer power?

IKEA A Furniture Dealer can focus on differentiating its product and increasing its demand with the end consumers through different marketing tactics, this will increase the demand of the product with different buyers, and will work towards moderating buyer power.
IKEA A Furniture Dealer should employ economies of scale to manage costs of production. If it offers products at moderate prices to buyers, it will again be able to attract a large number of buyers for its product, and in this way, will be able to break off the high bargaining power.

3.2.4. Bargaining Power of Suppliers

3.2.4.1. who is the supplier.

Supplier power refers to the power that is held by the suppliers in terms of pricing of the raw materials and inputs used for the business.

3.2.4.2. Sources of production for IKEA A Furniture Dealer

The main sources for production are the following:
Supplies from vendors – sourcing from independent suppliers.
Own manufactured equipment and resources: this model is practised by companies that are well integrated backwards and forwards.

3.2.4.3. Independent suppliers

For IKEA A Furniture Dealer, there are numerous independent suppliers within the industry, and all comprise of a few pretty small operations that lead to weakened overall supplier power.
Independent sellers and suppliers, however, can locate different opportunities and invest in alternative markets – which can be a challenge for IKEA A Furniture Dealer.

3.2.4.4. Supply quality and business dynamics

Suppliers can integrate forward into the decision making and business dynamics themselves as well.
Also, to the buyers, the quality of the supplies and the raw materials is of utmost importance.
However, in an industry with a high number of suppliers, IKEA A Furniture Dealer can switch to different suppliers at any time without experiencing any costs of the business.
Overall bargaining power of suppliers is assessed to be moderate.

3.2.4.5. How can IKEA A Furniture Dealer deal with the challenge?

Get contracts with multiple suppliers and get resources and raw materials from them accordingly.
Invest in manufacturer controlled production facility to maintain consistency in quality.

3.2.5. Competitive Rivalry among Existing Firms.

3.2.5.1. nature of fragmentation.

The market is highly fragmented, which makes it more competitive.
The market is never too concentrated, and as a result, it has players of varying size of operation – from very small to big players.

3.2.5.2. Brand management

Producers have begun to make use of brand management techniques and contemporary merchandising by launching bold brands, label designs and marketing campaigns to become more identifiable to the public.

3.2.5.3. Diversification

Purchasers and buyers have a wide range of products to choose from, with relatively low switching costs. These factors tend to intensify rivalry.
Though players in the industry may off niche or premium products, they also continue to operate in the mass markets at large, which again leads to high competition.

3.2.5.4. High business costs

The high fixed cost and the high bargaining power of the buyers, which can lead to the lowering of the prices from manufacturers add to the highly competitive nature of the industry.
The overall rivalry is assessed to be high.

3.2.5.5. How can IKEA A Furniture Dealer combat rivalry and competitive forces of the industry?

Focus on research and development to identify market niche as well as to be able to add differentiating factors t its products. This will increase its shield against influence from competitive forces and their actions.
Build a strong and loyal consumer base by focusing on quality and marketing strategies.
Focus on capturing new markets – in the same region as well as new regions to avoid saturation of resources in one market only.

3.3. Pentagonal analysis

3.3.1. the threat of new entrants, 3.3.1.1. restriction into industry.

The ease of entry into the industry is restricted.
There are high barriers to entry.
These are government policies, consumer loyalty, brand differentiation etc.

3.3.1.2. Switching costs for consumers

The high number of direct and indirect alternatives available also make IKEA A Furniture Dealer vulnerable to the high threat of substitutes.
Low to negligible switching costs experienced on the part of the consumers and buyers.

3.3.1.3. Profitability

New entrants are attracted to the industry because of high profitability.
If there are high barriers to industry, the industry will continue to maintain high profitability
Low barriers to entry will result in a lower average of industry profits.
Lower entry barriers will also lead to higher operational costs because it will increase the intensity of competition within the industry.

3.3.2. The threat of substitute products/services

3.3.2.1. increased competition.

High threat of substitutes.
This is because of higher competition.
The higher competition leads to imitation of products and systems.
This imitation makes substitute products similar to each other – as much as possible.

3.3.2.2. The offering of similar benefits

Consumers readily adopt alternative and substitute products.
They offer similar benefits.
They have similar functional benefits and features.

3.3.2.3. Low costs of switching

Consumers often experience a low cost of switching between substitute products.
Low switching costs are also developed because competition often produces at lower operational costs.
Low switching cost results in lower overall product prices for the consumer.
Industry players, therefore, also start competing on aspects of price.

3.3.3. Bargaining power of buyers

3.3.3.1. market fragmentation.

The industry in which IKEA A Furniture Dealer operates is highly fragmented.
It has numerous local and international players.
It is not very likely for players in the industry to integrate forward into on-trade or retail businesses.
This results in the players experiencing high bargaining power of the buyers from the market.

3.3.3.2. The concentration of retailing agents

It also results in a high concentration of individual retailing agents.
Retailing is also done through hypermarkets and supermarkets.

3.3.4. Bargaining power of suppliers

3.3.4.1. backward integration by producers.

Backward integration from producers is more commonly observed and seen,
Many players in the industry have their own production facilities for raw materials as well.
The industry has seen a large number of players needing to outsource resources and raw materials.

3.3.4.2. Outsourcing raw materials

This outsourcing is done by third-party manufacturers.
A large number of suppliers present lowers the bargaining power of suppliers.
Players in the industry have low switching costs between suppliers.
Suppliers usually are contracted by producers.
Producers may change suppliers frequently.

3.3.5. Industry rivalry

3.3.5.1. intensity of competition.

There are strong competition and rivalry in the industry.
There is a high number of players.
All players provide similar products.
Switching costs for consumers is low, which increases competition.

3.3.5.2. Differentiation

Platers try to differentiate products on different aspects.
Functional aspects and appeals for all products across the industry remain the same.
Competitors and players use emotional appeals, and modern brand management techniques for differentiation.
Industry players try to gain consumer loyalty by developing strong emotional bonds and ties.

Figure 1 Pentagonal analysis for IKEA A Furniture Dealer

3.4. Placement of the business along the industry life cycle

3.4.1. identifying where ikea a furniture dealer is on the industry life cycle curve.

Identification of the place and placement on the industry lifecycle is important as it will help IKEA A Furniture Dealer make important decisions and strategies for the future.

3.4.1.1. Strategic decision making

Expansionary plans and investment decisions.
Decide on various marketing strategies and tactics for targeting different consumer segments to establish and establish the product.
Selection of new geographic regions for expansion and exploration of new consumer bases.

3.4.1.2. Budget allocation

Resources and alternative routes for future growth and establishment.
Exploration of different diversification options.

Figure 2 PLC Placement along the Industry Lifecycle curve

3.4.2. Introductory stage

3.4.2.1. firm strength.

The industry is in the infancy stage.
Firms are generally small, entrepreneurial and compact during this stage.
IKEA A Furniture Dealer will be focused on research and development during this phase.

3.4.2.2. Financial Position

Looking for investment and funds for growth.

3.4.2.3. Nature of product

Products offered during this stage re doubtful as success and life of the product is unproven and not known.
IKEA A Furniture Dealer will use a focused strategy during this phase to emphasise the uniqueness of the product.
The product or the brand will have a small market of consumers – known largely as early adopters
Marketing strategies adopted by the company will focus on generating awareness of the product and therefore, will largely use a functional appeal.

3.4.3. Growth stage

3.4.3.1. financial position.

IKEA A Furniture Dealer will require high capital during this stage.
IKEA A Furniture Dealer will need investment and funds for launching strategic marketing campaigns.
Funds will also be required for fuelling physical growth of the company in the form of investment in equipment and property to facilitate growth.

3.4.3.2. Growth factors

Companies may increasingly encourage economies of scale because of standardisation experienced during this stage.
Consumer feedback from the introductory phase will be incorporated, and research and development will be conducted to make appropriate changes in the product design and offering.
Success in this stage for IKEA A Furniture Dealer will lead to growing demand, which in turn will fuel sales demand.

3.4.3.3. Nature of Product

Products in this stage have high growth and high market share.
There is also increasing competition and rivalry in the market – new entrants will enter and compete looking at the success of products during this stage.

3.4.4. Maturity stage

3.4.4.1. sales and growth.

IKEA A Furniture Dealer will experience slowing growth during this stage of the industry life cycle.
Sales will be expanding, and earning will be growing – however, the rate will be slower than the growth stage.
Competition from late entrants will be present, and obvious during this stage – who will all try to fight for IKEA A Furniture Dealer ’s share of the market.

3.4.4.2. Strategic Marketing

The marketing strategies must now focus on building loyalty.
Marketing tactics must be strong and should focus on the uniqueness of the product. Increasingly emotional appeals may be used.

3.4.4.3. Firm size

Firm size is generally larger and is more dominant over players if successful- compared to growth stage.
Innovations continue but are stable and not radical.

3.4.5. Decline stage

3.4.5.1. industry changes.

New technological changes and upgrades may make an industry obsolete.
Players within an industry may also fall back and lose on market share if they do not keep up with innovations, and investment in research and development.

3.4.5.2. Sales and Competition

Sales during this phase are decreasing at a high rate.
Competing players also exit the industry because of the changes and low demand.

3.4.5.3. Surviving in the decline cycle

IKEA A Furniture Dealer may also experience mergers and acquisitions during this phase.
Diversifications are also most common during this phase as a means of survival.

3.5. Strategic Group Analysis

3.5.1. ikea a furniture dealer and strategic group formation.

The strategic group analysis will look at an industry’s players' situations in focused conditions and scenarios.
It will assess different players competing with IKEA A Furniture Dealer through the basic strategic factors that will decide an organization's profitability, similar to how the profitability will also be impacted and influenced by the competitive nature of the industry.
The strategic group analysis will describe the procedures of every single noteworthy competitor of IKEA A Furniture Dealer along different strategic dimensions.
These dimensions of comparison differentiate players into strategic groupings and must be selected as the basis of comparison by taking into account industry structure, productivity factors, and the venture issues being tended to.

3.5.2. Different aspects of strategic grouping

Key strategic groupings of players within an industry can be made based on numerous different aspects, such as:

Specialization
Brand identification
Push versus pull strategies
Channel determination
Product quality
Technological position
Vertical joining
cost position
Price strategy
Financial or working influence
Parent organization relationship
Government relationship

Despite the various aspects available for comparison of competing players, it is often important to differentiate strategic groupings of players of aspects of how they compete with each other, and on aspects of where they compete as well

3.5.3. Procedure for strategic group analysis for IKEA A Furniture Dealer

Collect results of the player’s analysis.
Distinguish the players and pick the most important aspects that separate the players into strategic groups comparing to the issues being tended to.
Dimensions may include price strategy and product quality.
Group the players: position IKEA A Furniture Dealer and rivals along with the matrix.
Evaluate group mobility and direction. Assess the key purpose of individual organizations competing with IKEA A Furniture Dealer, similar to assessing industry patterns and barriers to entry/exit to be able to decide potential developments inside and between groupings.

3.5.4. How will strategic group planning help IKEA A Furniture Dealer

For IKEA A Furniture Dealer, strategic group analysis is important because it will:

3.5.4.1. Strategic industry dynamics

Help in reviewing the strategic dynamics and shifts in the industry.
Identify the closest competition and competing players for the business; help in assessing the strategic direction of these competing players; and lastly, aid in developing strategies to stay ahead of the competition.

3.5.4.2. Assessment of market position

The strategic group analysis is also important for IKEA A Furniture Dealer because it will assist in analysing the current market position of players, as well as help in assessing future strategic moves and directions of the competition in the market.
Assists in evaluating and identifying different underlying factors that will influence the company’s profitability.
Makes use of standard comparison aspects between different players in an industry to group them as per strategic directions as well as strategic dimensions.

3.5.4.3. Identification of barriers to entry in an industry

Different strategic dimensions along the matrix of strategic groupings are often characterized by barriers to entry and exit along the strategic groups’ dimensions, as well as by mobility barriers.
These barriers make it difficult for companies to move along, and in between different strategic dimensions – often forcing it to stay in place with the same competition.

3.6. Scenario planning

Scenario planning for IKEA A Furniture Dealer ’s strategic direction will take form through speculation and contingency form – methods used by the military for strategic planning and direction.

3.6.1. IKEA A Furniture Dealer ’s Utilization of Scenario planning

For IKEA A Furniture Dealer, scenario planning comprises of making suppositions of what's to come, of what will be and how the business condition will adapt, fluctuate, change, and respond to the future conditions, and changes in the futuristic strategic planning.

3.6.1.1.1. Identify the driving forces of the business:

Changes in the macro environment
Changes in technology
Changes in the economic trade system
Changes in production methods
Changes in consumer demands and tastes
changes in technology and economy

3.6.1.1.2. Identify basic vulnerabilities:

Changes in technological advancements and developments. These changes can be in the form that the industry has progressed to install more modern and contemporary technological developments.
Changes in consumer demands and needs.
These two uncertainties of the future are those that will have the largest impact and influence on the business.

3.6.1.1.3. Develop a scope of conceivable situations:

IKEA A Furniture Dealer will now be able to place these two uncertainties along a matrix.
Install new technology, or update current technology to be on par with new technology.
Do market research.
Engage in innovative marketing to influence consumers.
Change vertical and backward integrated systems to ensure in-house or out-house production of technology to stay ahead of the competition.

3.6.1.1.4. Discuss the suggestions:

Each scenario should be discussed in detail.
Possible strategic direction and responses for each scenario should be developed.
Realignment of business goals and direction, as well as a mission during each scenario, should also be done to ensure future resilience.

4. ANALYSIS OF RESOURCES AND COMPETENCES

This inner analysis and assessment of IKEA A Furniture Dealer decide the centre skills based on the resource based view (RBV) of the premium company.
Utilizing its core capabilities and capacities, IKEA A Furniture Dealer can maintain a competitive distinction, and leadership over other local as well as international players in the industry.
In the VRIN analysis and assessment, IKEA A Furniture Dealer makes use of its core capacities to strengthen its worth and the to continue to deliver the promise of consistent quality and taste to consumers – as well as guarantee futuristic and long term gains in the industry.

The following section presents a brief analysis of the VRIN strategic tool as it is applied to IKEA A Furniture Dealer and its impact on the strategic direction.

4.1. VRIN analysis

4.1.1. valuable, 4.1.1.1. international distribution network.

The company has an international distribution system with agents and contracts in countries across the world. This helps the company in making sure that its products are widely available and easily accessible to all consumers.

4.1.1.2. Experience in expansion to other countries

The experience of expansion to other countries directly as well as indirectly has allowed the company to gain exposure and experience in international business, culture and trades.

4.1.1.3. Marketing skills

The company has a unique blend of marketing skills, which allows it to reach consumers directly through various channels, in a creative way. This is a valuable resource for the company as it allows the company to ward off potential competition.

4.1.1.4. Market research

The company invests in market research regularly, which allows it to stay updated with market trends, consumer needs, demands, as well as the changes that take place in different markets and consumer groups. This is also valuable as it then allows IKEA A Furniture Dealer to make changes in product and service offering accordingly.

4.1.2. Rare

4.1.2.1. use of progressive technology.

The company makes use of progressive technology and invests in new technology to help it make the business more effective and efficient. This is important for maintaining competitive differentiation. The technology used by the company also allows lower chances of human error and increases precision.

4.1.2.2. Use of progressive harvesting methods

The company makes use of modern as well as new and innovative means of cropping and harvesting as well. The means of production are important for a business to maintain cost efficiency. This allows lower levels of spoilt raw materials and enhances the quality as well as the feel of the final product. Also, it allows the company to maintain the product quality in-house, and maintain consistency in the raw material.

4.1.2.3. Efficient use of economies of scale in production

The company’s effective and efficient use of resources has allowed it to maintain economies of scale. The company uses economies of scale as a rare resource available to maintain costs, enhance production, and increase sales – all the while maintaining a high focus on premium quality and consistency of taste.

4.1.2.4. The uniqueness of product portfolio

The company has a unique and diversified portfolio. This has allowed it to penetrate different consumer groups. And maintain income from different streams. Into urn, that gives a strong financial cushioning to the business.

4.1.3. Inimitable

4.1.3.1. human resource management.

The company has taken part in exemplified human resource management in all its function – from recruitment to training of talent management. This has allowed the company to develop an inimitable resource that is aligned with the organizational goals, and mission, and which is synonymous to the organization itself.

4.1.3.2. R&d - new product development

The company’s continued investment in r&d allows it to generate ideas for new products, as well as test these new products in limited market settings. This allows the company to assess the viability of new ideas, as well as generate feedback for improvement where needed. This is an inimitable resource for the company because it has become part of the company’s system and culture.

4.1.3.3. Innovation

The innovation at IKEA A Furniture Dealer is an inimitable resource that allows the company to stay ahead of the competition as well as maintain high leadership in the industry by having the first mover advantage in its product portfolio continuously.

4.1.3.4. Organizational culture

The organizational culture at IKEA A Furniture Dealer is supportive and innovative. Employees share information freely. The organizational hierarchy is flatter, which makes leadership and follower relation smooth and easy. This organizational culture and its aspects cannot be imitated by competition.

4.1.3.5. Cost control

The company has employed progressive means of controlling costs and maintaining economies of scale. In this way, prices of the products are maintained and controlled, and very few cost increases are passed to the consumers. This allows the product to be easily affordable by the company’s target audience.

4.1.4. Non-substitutable

4.1.4.1. brand recognition.

The brand value and brand recognition enjoyed by IKEA A Furniture Dealer is a non-substitutable resource. The high brand recognition across different consumer group’s in different countries allows the brand to enjoy high consumer ship, high sales, and a unique bond with the consumers. This cannot be imitated at all by the competition as the brand recognition and resonance has been built over the years through hard work and quality deliverance.

4.1.4.2. Brand equity

The IKEA A Furniture Dealer enjoys high brand equity. This has been developed through the different stages presented by Keller in his model for brand equity. The high brand equity also reflects a high emotional appeal that IKEA A Furniture Dealer has for the consumers.

4.1.4.3. Emotional affiliation with consumers

This means that the brand fulfils not only functional but also emotional and psychological needs of the consumers. Again, this is an inimitable resource which the company has developed because of its honest and trusted relationship with the clients over some time.

4.2. VRIO ANALYSIS

4.2.1. strong global presence, 4.2.1.1. valuable.

Having a strong worldwide presence is significantly valuable for an organization attempting to expand its size, deals, and piece of the overall industry. It is a competitive and sustainable method to acquire incomes from new and existing buyers.

4.2.1.2. Rare

IKEA A Furniture Dealer is one of the greatest company all inclusive. Even though there are other worldwide and international chains of competing companies, IKEA A Furniture Dealer has made a distinct name for its quality and offers.

4.2.1.3. Non-substitutable

For the time being, no competition of IKEA A Furniture Dealer could match such an enormous international presence in terms of quality and consistency. It would require critical investment and assets to achieve this.

4.2.1.4. Organized to exploit

IKEA A Furniture Dealer is effectively exploiting this capacity.

4.2.2. Claim to premium products

4.2.2.1. valuable.

IKEA A Furniture Dealer offers numerous exceptional and fulfilling products that different contenders don't offer all the time. IKEA A Furniture Dealer additionally incorporates information and detailed ingredients for its products to interest an assortment of clients.

4.2.2.2. Rare

Other competition also offers different products that are offered by IKEA A Furniture Dealer, which means that it is not a rare resource for the company. This is because other players also have access to similar products and portfolios.

4.2.2.3. Inimitable

Considering other businesses and players are now using this capacity as a means of expansion and penetration, it can, therefore, be imitated.

4.2.2.4. Organized out to exploit

By offering an assortment of choices and ceaselessly changing the portfolio through active innovation and new product development, IKEA A Furniture Dealer is exploiting this resource. With plenty of alternatives, the vast majority can discover something they like, and individuals who like to attempt new products and services every now and again can undoubtedly do as such with IKEA A Furniture Dealer.

4.2.3. Upscale brand name

4.2.3.1. valuable.

The IKEA A Furniture Dealer brand name enables clients to enjoy and feel a bond of association with the brand. This allows consumers to feel emotionally attached with the brand, and experience it as an extension of themselves as well. As such, this becomes a valuable asset for the company.

4.2.3.2. Rare

IKEA A Furniture Dealer is a contemporary brand name that has a premium touch to it and is upscale, modern and lively. Most other companies and competing brands don't have the quality and packaging to urge clients to engage in a way they do with IKEA A Furniture Dealer .

4.2.3.3. Non-substitutable

It would be generally simple for other companies to revamp their packaging and duplicate the plan of action of IKEA A Furniture Dealer. In this way, the upscale and comfortable promise of the offering by IKEA A Furniture Dealer could be imitated.

4.2.3.4. Organized out to exploit

IKEA A Furniture Dealer is effectively using this resource and enhancing the brand and the brand promise that numerous clients altogether appreciate. The organization is exploiting the stylish way of life that is right now present in numerous urban communities where the brand’s products are widely appreciated and consumed.

4.3. Porter’s value chain

4.3.1. ikea a furniture dealer: drawing value from vrin/vrio.

The core competencies and strengths of IKEA A Furniture Dealer are organizational sources and capacities that enable the business to flourish regardless of substantial challenge and strategic difficulties in local and international markets.
As the VRIO/VRIN analysis have shown and highlighted, the important core abilities depend on intellectual properties and related propriety data or related technological structures.
Different resources and abilities appeared in the VRIN/VRIO analysis and review that are non-core, and non-central skills but that help the business and its value chain.
IKEA A Furniture Dealer ’s core abilities are strong yet restricted.
In the resource based view, this constraint presents key difficulties, as the organization wards off competing players from local and international markets.
The core capabilities in the VRIN/VRIO analysis assume critical jobs in IKEA A Furniture Dealer ’s value chain. Considering the resource based view and Michael E. Doorman's value chain conceptualization, IKEA A Furniture Dealer ’s value chain gives reasonable and tasteful products to target buyers.
The accompanying outline shows the value chain for IKEA A Furniture Dealer and its situation in the bigger value arrangement of the industry:

Figure 3 Value chain for IKEA A Furniture Dealer

4.3.2. Value framework

IKEA A Furniture Dealer ’s value chain is a segment of the business' value framework. The value framework is made out of different other value chains of the speciality units of all associations included, for example, the organization's producers and the remainder of the inventory network. In the value chain representation, IKEA A Furniture Dealer works directly, as well as through contracted third parties.

4.3.3. Example from value framework for IKEA A Furniture Dealer

The organization has an internal transportation system of vehicles for making deliveries to other companies that are in business with stocking and serving IKEA A Furniture Dealer products – in the local markets.
In this value chain and value framework, IKEA A Furniture Dealer ’s competitive advantage and abilities are distinguished through the VRIO/VRIN assessment are huge in how the organization's procedures offer some incentive and advantage to the consumers.

4.3.4. Value chain activities

Brief details of IKEA A Furniture Dealer ’s value chain are discussed in the next section:

4.3.4.1. Primary activities

4.3.4.1.1. inbound logistics.

The inbound logistics for IKEA A Furniture Dealer refers to producers in different designated and appointed locations by the company. Also, it also refers to selecting the finest quality raw materials from in-house production as well as from third-party contractors. These are transported to the storage sites after which the raw materials are used for producing different products by the company.

4.3.4.1.2. Operations

IKEA A Furniture Dealer operates internationally directly or indirectly. The company has owned offshore shops, as well as stocks its products with other shops across different countries.

4.3.4.1.3. Outbound logistics

The company has contracted agents in offshore countries and sites to manage product selling. However, a majority of the products are sold directly to licensed sellers and shops locally as well as internationally.

4.3.4.1.4. Marketing and sales

IKEA A Furniture Dealer produces and invests in high quality and premium products. It also invests in a high level of customer servicing and marketing. All its marketing activities, however, are based on strong market research and market data.

4.3.4.1.5. Service

IKEA A Furniture Dealer invests in customer service to develop customer loyalty and build strong relations with its clients. The company invests in gaining and incorporating customer feedback and in solving customer queries effectively.

4.3.4.2. Support activities

4.3.4.2.1. infrastructure.

This includes different departments like management, finance, legal, etc. which are required to keep the company’s business running.

4.3.4.2.2. Human resource management

The company’s committed and trained workforce is considered to be a valuable and an inimitable resource that has played a vital role in the success and growth of IKEA A Furniture Dealer the employees of the company are motivated, professional, trained, and work alongside the company’s mission and goals.

4.3.4.2.3. Technology development

IKEA A Furniture Dealer has been commended and celebrated for the use of effective technology not only production but also to make the overall system of production and sale, as well as in house production more effective and efficient. Also, the company also uses technology to communicate and connect with its consumers effectively.

4.3.4.2.4. Procurement

This involves purchasing the raw material for the final product. The company has appointed agents that work for the company in different countries and regions to purchase consistently high quality raw material so that the company can produce the finest product qualities for delivering to the consumers.

4.3.4.2.5. Bottom line

The concept of the value chain for IKEA A Furniture Dealer helps in understanding how value is added in each process and stage of the value chain. It also helps to understand and separate useful activities from those that are not useful as such. This improves the overall bottom-line of the company and increases the profit margins for the company as well.

4.3.4.3. Virtual chain

4.3.4.3.1. customer-centrism.

Renewed and enhanced way of engaging with consumers.
Installation of sophisticated consumer data management systems.
Made use of artificial intelligence to enhance the value chain.

4.3.4.3.2. Improved technological use

Installed progressive technology for primary and support activities.
The overall purpose is to provide a better experience to consumers.
Allows the company to predict future market conditions, and prepare strategic contingencies accordingly.
Allows understanding of consumer behaviour and market movements.

4.3.4.4. Generic strategies

Managed to establish core competitive strategy in the market.
Competes in the premium sector.
Does not engage in competition with other cost groups.
Worked towards improving the service of premium target groups.
Consumers understand and perceive the brand as a high quality and premium.
The brand is appreciated for its focused strategy and standing.
The brand is appreciated and engaged in for its offerings.

5. INTERNAL ENVIRONMENT ANALYSIS

5.1. porter’s strategic options.

Leading organizations such as IKEA A Furniture Dealer have obtained sustainable competitive advantage and have had the option to achieve the strategic position.
There can be different sources of sustainable competitive advantage for IKEA A Furniture Dealer. A firm can depend on innovation to decrease its overall production costs and would then be able to pass this advantage on to its clients.
IKEA A Furniture Dealer can also concentrate on making a differentiated item or administration to increase its overall share of the pie.
IKEA A Furniture Dealer can generate considerable sustainable competitive advantage utilizing these systems. This is done through means of traditional as well as modern procedures embraced by IKEA A Furniture Dealer to competitive advantage hand and increase its share of the pie.

5.1.1. Differentiation strategy

5.1.1.1. organizational leadership.

IKEA A Furniture Dealer has made use of the differentiation factor to maintain higher leadership and differentiation from industry competition. Differentiation of effective leadership may be achieved through different forms and basis.

5.1.1.2. Broad product portfolio

5.1.1.2.1. product quality.

Moreover, this differentiation can fluctuate from item to item, market to market and industry to industry. Generally, the essential bases of differentiation are quality, durability, usefulness and in a few consumer loyalty, and brand image. IKEA A Furniture Dealer has differentiated its items and products dependent on the quality and set a completely different, and engaging consumer experience. Brand image

5.1.1.2.2. Brand Image

Aside from these things, it has developed a distinct and distinguished brand image which is additionally a premise of differentiation and encourages IKEA A Furniture Dealer to advertise, promote and market its products and brand better than the competing players in the local and international markets.

5.1.2. Focus strategy

5.1.2.1. overall quality of product and service.

The essential premise of differentiation for IKEA A Furniture Dealer is quality and premium taste. It serves just premium quality products, which enables it to charge a top notch and a premium cost. It has embraced the most astounding measures as far as the nature of its raw materials used for producing its products. At each progression, IKEA A Furniture Dealer puts forth an admirable attempt to guarantee that its product fulfils the most noteworthy quality guidelines.

5.1.2.2. Value addition at each step of the value chain

However, the account of value does not finish at getting incredible quality of raw materials. It goes more remote from that point. A great deal of contrast originates from the readiness. IKEA A Furniture Dealer prepares its product diligently to draw out the quality.

5.1.2.3. Human resource management

Rest of the credit goes to the human resource and employees at IKEA A Furniture Dealer. The brand carefully picks its raw materials - just when they in ideal condition. Products are tested from each cluster in any event thrice before endorsement. This is how IKEA A Furniture Dealer makes the quality that each client looks forward to, and is excited about.

5.1.3. Leadership and differentiation through cost

Porter’s traditional methodologies are methods for increasing and developing a sustainable competitive advantage for IKEA A Furniture Dealer - as it was, building up the "edge" that will get the company the ideal position and differentiates it from the industry rivals. There are two primary methods for accomplishing this inside a cost leadership methodology:

Increasing profits by decreasing expenses, while charging industry-average prices and costs from consumers
Increasing share of the overall industry by charging lower costs, while at the same time making a sensible profit on every trade since IKEA A Furniture Dealer has controlled and reduced expenses.

The cost-based strategy and system are that – it includes IKEA A Furniture Dealer being the pioneer regarding cost in the industry and market where it operates. Just being among the most minimal cost producers isn't adequate, as the company leaves itself wide open to aggressive attacks by other producers and players in the industry. These players may undermine IKEA A Furniture Dealer ’s costs and in this way hinder the company’s endeavours towards the expansion of its share of the overall market pie.

5.1.3.1. Achieving cost differentiation

Based on this, IKEA A Furniture Dealer should be sure that it can accomplish and keep up the leading position before deciding on choosing the cost leadership strategy. IKEA A Furniture Dealer will be able to become effective in accomplishing cost differentiation by having:

Access to the capital expected to put resources into innovation that will cut expenses down.
Very proficient coordination’s.
A minimal effort base (work, materials, offices), and a method for economically cutting expenses beneath those of different competing players.

5.1.3.2. Achieving cost leadership

However, IKEA A Furniture Dealer should ensure contingency for imitation by competition, as well as be prepared for competing payers to imitate its cost-effectiveness strategy to decrease and control their costs, and increase the overall share of the pie for their products as well. It is therefore important that IKEA A Furniture Dealer does not only settle for one means of cost leadership but continually improves. This can be done through several different methods:

Engaging and applying the Japanese technique of kaizen
High efficiency
High limit use
Use of dealing capacity to arrange the least costs for generation inputs
Lean production techniques (for example JIT)
Effective creation process
Effective dissemination channels

5.1.3.2.1. Overall Cost Effectiveness through Cost Leadership and Cost Differentiation

Cost differentiation and leadership strategy for IKEA A Furniture Dealer will be based on the nitty-gritty.
Cost initiative endeavours towards slicing expenses to a base to give clients lower costs and in this manner will help the company of IKEA A Furniture Dealer to reserve funds.
Cost leadership strategy requirements regularly identify with high specialized abilities and access to capital
The company should also resource into innovation and guarantee economies of scale.

5.2. SWOT Analysis

IKEA A Furniture Dealer maintains its competitiveness as one of the best and the most premium locally and internationally through inventive systems that use business strengths in overcoming the weaknesses present in the business inherently.
Also, they make use of these internal strengths and weaknesses to make use of opportunities and ward off potential threats, for example, the dangers in the business condition and market.
These factors can be distinguished, assessed, and analysed through the strategic SWOT tool.
The SWOT analysis and review for IKEA A Furniture Dealer talk about the strengths and weaknesses (internal core strategic components) intrinsic in tasks in the business, and for the IKEA A Furniture Dealer organization.
The assessment and analysis of SWOT likewise look at the opportunities and threats (external key variables) identified with the nature of competitiveness in the market and industry, which is mostly founded based on the level and intensity of competition and rivalry – as may be gauged through Porter's Five Forces analysis of IKEA A Furniture Dealer.

5.2.1. The need for SWOT because of expanded operations of IKEA A Furniture Dealer

IKEA A Furniture Dealer is present and operational in different markets, and each of the markets poses unique yet various difficulties in developing the business.
IKEA A Furniture Dealer and its portfolio in these many markets have expanded over time and as the organization grows, more items are added to its portfolio in addition to its pioneer product.
With regards to the SWOT analysis model, these circumstances of multiple operations and multiple presences in various markets make a difficult business situation where the organization needs to utilize various arrangements of skills that match different markets.
Core elements of different nature – both internal and external to the organization, can help increment IKEA A Furniture Dealer ’s accomplishment in contending with different companies and other businesses – both locally and internationally.
The SWOT analysis for IKEA A Furniture Dealer is presented below:

5.2.2. IKEA A Furniture Dealer Strengths (Internal Strategic Factors)

This section of the SWOT analysis model works with the inner variables that the organization can use as competencies and strengths to address shortcomings and ensure the business against rivalry. For this situation, IKEA A Furniture Dealer ‘primary qualities are:

5.2.2.1. Strong brand image

IKEA A Furniture Dealer is one of the world's most premium, well known and most famous brands.
The organization has a developing populace of steadfast clients, which adds to the soundness of the business.

5.2.2.2. International distribution network

In the SWOT analysis model, the global distribution network through directly owned subsidiaries, or contracts with third-party agents further strengths IKEA A Furniture Dealer by supporting activities.
For instance, the organization has a worldwide system of providers that are deliberately chosen dependent on criteria relating to quality, for example, of raw materials as has been discussed in the value chain - primary and supporting activities.

5.2.2.3. Strong investment in research and development, and high focus on innovation

The focus on innovation not only keeps the company apart but also facilitates its industry leadership.
The internal core strengths and competent variables recognized in this section of the SWOT analysis of IKEA A Furniture Dealer demonstrates that the business has qualities that advance strength through expansion and a worldwide production network.

5.2.2.4. Focus on market research

Additionally, the organization steadily expands its business
This is done through contracts with offshore agents and licenses. Also, the company continues to broaden its portfolio by adding new products based on market research and consumer data.

5.2.3. IKEA A Furniture Dealer Weaknesses (Internal Strategic Factors)

Business weaknesses or shortcomings are recognized in this part of the SWOT analysis. Shortcomings are inward factors that diminish or cut off business capabilities and strengths. IKEA A Furniture Dealer shortcomings are as per the following:

5.2.3.1. Premium prices for most portfolio products

IKEA A Furniture Dealer has a premium brand image attached, and thus all its products in the portfolio are priced highly
This expands overall revenues yet decrease the affordability of its items.
This internal key factor is a shortcoming since it confines the organization's share of the overall industry, particularly in territories with generally lower disposable earnings

5.2.3.2. Standard and benchmarked regulations and business procedures for all portfolio items

5.2.3.2.1. generalization.

Likewise, this SWOT analysis highlights that generalized standards for all portfolio products may be a weakness because it restrains the adaptability of these products and items in the business.

5.2.3.2.2. Imitability

What's more, numerous IKEA A Furniture Dealer items are imitable.
Several items in the portfolio have been imitated by completion, and are also being provided by them at different price points.
Though the quality is unique to IKEA A Furniture Dealer, the competing players have also developed close enough, and acceptable products.
This business condition engages competition, as has been highlighted already.

5.2.3.3. Fighting the challenge of imitation

The internal factors in this section of the SWOT analysis of IKEA A Furniture Dealer demonstrate that the business must create qualities to diminish the unfavourable impacts of impersonation and the impact of high value focuses on the organization's share of the overall industry in the international and local business.

5.2.4. Opportunities for IKEA A Furniture Dealer(External Strategic Factors)

This section of the SWOT analysis and strategic model focuses on external components that opportunities for business development and advancement. For this situation, the key opportunities accessible to IKEA A Furniture Dealer are:

5.2.4.1. Green business products

With an increased focus and awareness of health and wellness lifestyles by consumers, it is important that IKEA A Furniture Dealer recognizes this as a viable business opportunity.
Increased numbers of consumers are shifting to the green lifestyle of consuming environmentally friendly and organic products.
IKEA A Furniture Dealer should focus on the expansion of the product portfolio: inclusion of green products and environmentally sustainable services are suggested.

5.2.4.2. Expansion in emerging markets

IKEA A Furniture Dealer can expand its income streams through expansion and developing presence in emerging markets – such as Brazil, China and India.
This opportunity draws consideration far from the U.S. region, where the majority of the organization's incomes are created.

5.2.4.3. Business enhancement

Likewise noteworthy in this SWOT analysis of opportunities is the opportunity of business enhancement and further business development.
This can help improve the long term position of IKEA A Furniture Dealer.
For instance, through higher diversification of the portfolio and the overall business, the IKEA A Furniture Dealer organization can diminish its reliance on its present enterprises, and along these lines work towards improving its general income development.

5.2.4.4. Partnerships with different firms

5.2.4.4.1. diversification through partnerships.

Diversification is right now a minor strategy as can be observed from IKEA A Furniture Dealer ’s competitive strategy and its overall directive strategy as well.
The business environments likewise display the chance to enhance the organization's competencies and strengths
This will also increase its share of the overall industry through the association’s s with different firms. For example, a partnership with real retailers improves dispersion.

5.2.4.4.2. Development of corporate clientele

The company can also formulate new B2B relations and contracts with other companies and corporate entities.
The external key factors in this section of the SWOT analysis demonstrate that IKEA A Furniture Dealer can improve its industry position by building up its activities to make use of the opportunities in the international business markets.

5.2.5. Threats facing IKEA A Furniture Dealer(External Strategic Factors)

Threats against the IKEA A Furniture Dealer business are distinguished in this piece of the SWOT analysis. Threats are external components that decrease or breaking point of business execution. In this case of IKEA A Furniture Dealer, the following section looks at, and assesses threats that apply to the organization in question:

5.2.5.1. Price wars by competition

IKEA A Furniture Dealer competes with a wide assortment of firms in the local as well as the international market.
For instance, the organization competes against significant premium companies as well as against cheaper companies that offer cheap priced items and products.
This external but important factor in the SWOT assessment undermines IKEA A Furniture Dealer because such competing players can lessen the organization's share of the overall industry by competing based on low prices and overall low costs of production.

5.2.5.2. Increased competition

Additionally, this SWOT assessment also analyses increased competition as a noteworthy threat against the business.
In light of the organization's shortcomings, the risk of imitation includes firms that attempt to duplicate the taste, look and feel of IKEA A Furniture Dealer items.
Saturated market place and industry can also lower sales of the organization and shrink its share of the overall pie
Increased competition can also lead to the increased cost of doing business for the organization if they bring innovative processes, and implement novice systems to control costs

5.2.5.3. Independent players

The industry environment and profitability are liable to invite independent developments, and small-scale players.
These players may not have high levels of integration and may be retailers and marketers for items produced during backward integration.
Strategic marketing techniques and promotional communications are expected to neutralize the impacts of these patterns.
This section of the SWOT analysis of IKEA A Furniture Dealerrecognizes external key factors that force difficulties to international expansion and growth of the company as well as highlight market infiltration.

5.3. TOWS Matrix

TOWS analysis will allow IKEA A Furniture Dealer to identify and understand the strategic choices and future strategic options and directions available to the company. The TOWS matrix and analysis will help IKEA A Furniture Dealer to look at various possible future and long term situations, and ill force IKEA A Furniture Dealer to look at these options by questioning strategic directives such as:

How will IKEA A Furniture Dealer make the most of its strengths and core competencies?
How will IKEA A Furniture Dealer Circumvent its weaknesses and shortcomings?
How will IKEA A Furniture Dealer capitalize on the various opportunities present in the business environment?
How will IKEA A Furniture Dealer ward off, and manage the threats that are present in the external business environment?

The analysis of the SWOT and the subsequent assessment and development of the TOWS matrix will allow the IKEA A Furniture Dealer to be able to identify the following answers:

Strengths and Opportunities (SO) – How would IKEA A Furniture Dealer be able to utilize on its strengths to exploit the opportunities?
Strengths and Threats (ST) – How would IKEA A Furniture Dealer be able to exploit its strengths and core competencies to keep away from genuine and potential threats?
Weaknesses and Opportunities (WO) – How would IKEA A Furniture Dealer be able to capitalize on its opportunities to overcome the weaknesses that IKEA A Furniture Dealer is encountering?
Weaknesses and Threats (WT) – How would IKEA A Furniture Dealer be able to limit its weaknesses and evade threats?

5.3.1. TWOS matrix visual presentation

Table 1 TWOS matrix for IKEA A Furniture Dealer

TWOS Matrix

The TOWS Matrix is a moderately basic strategic tool used by IKEA A Furniture Dealer for producing key alternatives and identifying key strategic alternatives that may be pursued by IKEA A Furniture Dealer.
By utilizing it, IKEA A Furniture Dealer can take a look towards understanding that it can best exploit the opportunities present, while at the same time also limit the effect of shortcomings and ensure itself against threats.

5.4. ANSOFF Matrix

IKEA A Furniture Dealer has viably utilized this instrument to develop a procedure for accomplishing competitive advantage in the industry and various markets it operates in.
Market development
Market penetration
Product development
Product penetration

The following section highlights the various strategies that may be used through the Ansoff matrix. These strategies have been highlighted and identified through vigorous research methodologies, as well as through expert analyst data and opinion.

5.4.1. Market development strategies

5.4.1.1. advertising and promotion of products.

One of the most popular means of developing a market is to use marketing strategically.
By making use of advertising and marketing communications, the company will be able to disseminate information about its product, and the various benefits of consumption to its target market easily.
Also, the use of social media for marketing will, at the same time allow the company to communicate directly with the consumers, and answer their queries.

5.4.1.2. Education about product consumption.

The company can make use of widespread marketing campaigns using traditional means as well as means of social media to increase awareness of their product amongst the target market.
This task of educating the markets will give the company a first-mover advantage, as well as develop important functional appeals for the product.

5.4.2. Market penetration strategies

5.4.2.1. geographical expansion.

The company can expand into other markets through its previous experience, as well as through partnerships and contracts with other agents and parties.
The company can also develop subsidiaries, as well as offer its products through franchising as well as licensing.
The geographical expansion is suggested into emerging economies because of the favourable income levels of the consumers, as well as the growing infrastructure.

5.4.2.2. Increased number of retail outlets and retail presence

The company can penetrate existing markets by offering more shops or making its product more widely available.
This may be done through increasing the accessibility of the product at places where the target consumers are expected to purchase from, as well as improving the interaction of the product with consumers at different touchpoints.

5.4.2.3. Online retailing

Another means of improving market penetration is through online retailing. IKEA A Furniture Dealer can stock its products on online retailing sites locally and internationally.
This would help the company improve sales, accessibility, as well as reach higher levels of target consumers. All of this, in turn, would increase market penetration.
Besides, it would also help the company maintain and control costs for IKEA A Furniture Dealer, and thereby help it achieve cost leadership in the industry

5.4.3. Product development strategies

5.4.3.1. research and development.

To be able to develop new products, the company should have a focused interest and budget sending allocated to new product research and development.
This research would take a basis in the consumer market and the overall market trends, to identify the gap in consumer demands, and market availability of different products.
The new product would then generally be aimed towards fulfilling this gap.

5.4.3.2. New product development labs

The company should have dedicate incubation labs for the development of new products.
This means that this development should be a focused and separate entity that should focus on the company’s innovation.
The company should also hire the right talent for business development and innovation to be able to achieve targets and goals accordingly.

5.4.3.3. Market testing

New products should follow PD cycles for testing before launching in a market.
This will ensure that the company can fix any loopholes present in the product, as well as incorporate positive feedback.

5.4.3.4. Strategic Marketing

The company should also have a focused and strategic budget for marketing and communications allocated for new product development.
This is because the company will need to increase the appeal, as well as develop functional and emotional appeals and characteristics of the new product.
Communicate with the consumers to enhance sales as well as increase likeability and rate of consumption and trial.

5.4.4. Product penetration strategies

5.4.4.1. acquiring personally owned retail to strengthen its presence..

One way of increasing product penetration is that the company directly manages and controls sales operation through owned retail.
This will give the campy leverage over communication, as well as product stocking and placement.

5.4.4.2. Diversification of portfolio

The company can further expand its portfolio as a means of product penetration.
The expansion of the portfolio will allow the company to reach a different and diverse target group, thereby increasing the overall share of the pie for the company
This will also increase IKEA A Furniture Dealer ’s products’ accessibility to different consumers.

5.5. SAF criteria

5.5.1. how ikea a furniture dealer can strengthen its strategic position using saf criteria.

When IKEA A Furniture Dealer is deciding upon a certain strategic direction for the future, it will face challenges.
Choosing the right strategy at the right time can be a daunting task for managers.
It is therefore important that managers look at the strategy from aspects of its value and viability.
The principal thing the managers of IKEA A Furniture Dealer will have to do is settle on a foundation by which to evaluate the different strategic alternatives.
They will also need to choose a viable methodology is to assess the different strategies independently.
Strategies can be evaluated and assessed using criteria of suitability, acceptability and feasibility (SAF).
The following section weighs different strategies and possible future directives for IKEA A Furniture Dealer based on the SAF criteria.

5.5.2. Creation of a menu for high-income groups

5.5.2.1. suitability, 5.5.2.1.1. new market development.

This strategy is suitable because it will allow IKEA A Furniture Dealer to develop new markets by tapping into new consumer groups.
At the same time, it will allow the company to penetrate higher into existing markets.
Both these possibilities can be realized because IKEA A Furniture Dealer invests in consumer research and has a strong financial standing.

5.5.2.2. Acceptability

5.5.2.2.1. alignment with organizational goals.

The strategy is acceptable because it is in line with the company’s goals and mission.
Also, it is also in line with the internal marketing and culture of the organization.

5.5.2.2.2. Financial risk

As such, the strategy does not pose any risk – financially and otherwise and is also palatable for stakeholder reactions.
Lastly, the strategy promises to give high returns. Overall, the strategy appears to be highly acceptable.

5.5.2.3. Feasibility

5.5.2.3.1. market research and financial cushioning.

This strategy is highly feasible.
This is because the company already operates along with this mission, and has high levels of market research and information regarding high-income groups.
This information could be utilized for creating a suitable menu for high-income groups.
At the same time, the company also has the financial power to introduce premium menu items for the higher class – to expand its menu accordingly.

5.5.3. Creation of a healthy menu for existing target consumer groups

5.5.3.1. suitability, 5.5.3.1.1. diversification of product portfolio.

This strategy would require a high diversification of the product portfolio.
This is suitable because the company has the resources and the information to make strategic decisions about diversification.

5.5.3.1.2. Innovation

Moreover, the company also innovates regularly, which can be an added benefit for the suitability of the strategy.

5.5.3.2. Acceptability

5.5.3.2.1. risk of financial investment.

This strategy appears to be moderately acceptable.
This is because it poses a risk through diversification with high levels of finances invested, the company can never be too sure of the consumer reactions.

5.5.3.2.2. Risk of new product development

Therefore, the risk of new product development and consumer reaction would be there.
Also, the acceptability is also low because of stakeholder reaction – who might not all agree with the expansion of the portfolio horizontally – i.e. The broadening of the portfolio away from the core offerings.
Lastly, if the strategy works, it promises high returns, which make sit low to moderately acceptable.

5.5.3.3. Feasibility

5.5.3.3.1. market research and financial cushioning.

This strategy is also feasible for the company.
This is because of the company’s strong financial position, as well as its ability to researching into different market trends and patterns.
The identification of these trends and patterns is important for being able to decide which market and industry to diversify into for the company.

5.5.4. Increasing existing advertising expenditure

5.5.4.1. suitability, 5.5.4.1.1. focused budgeting.

This strategy is suitable because the company has high and focused budgeting for marketing and communications.
This would also allow IKEA A Furniture Dealer to withdraw from failing markets or markets that have a weak share, and gain access to rising markets.

5.5.4.1.2. Strategic marketing

The company will be able to exploit its research and development for strategic marketing
IKEA A Furniture Dealer will also make use of existing systems and products to reach new consumer groups through marketing.

5.5.4.2. Acceptability

5.5.4.2.1. return on investment.

The strategy is acceptable because it poses a low risk in terms of investment in strategic marketing.
Also, it promises high returns on investment in marketing through the promise of increased awareness, increased penetration, increased brand recall and brand recognition – all of which will translate into higher sales.
Lastly, stakeholders will also not frown upon this strategy, which makes it more acceptable to implement.

5.5.4.3. Feasibility

5.5.4.3.1. market research and financial cushioning.

The strategy is highly feasible because the company has a strong financial standing.
This means that the company can afford to increases budget for marketing purposes.
However, for the stagey to be successful, it is important that the company aces sure that all promotional campaigns developed are in sync with consumer needs, demands and behaviour.
This is again possible for the company because of its investment in research and development.

6. FINAL RECOMMENDATIONS

Based on the overall internal and external analysis done for IKEA A Furniture Dealer, this section will offer recommendations which will help the company take on strategic directions that will enhance its core competencies and capabilities, as well as reduce its chances for risks and threats? The following recommendations are thus made for IKEA A Furniture Dealer:

6.1. Strengthen distribution network

6.1.1. control.

This is an important strategic recommendation as it will allow higher control to the company over its products in different markets. The company will be able to control where its products are placed, and thereby, will also be able to enhance the accessibility and easy availability of its products.

6.1.2. Stronger relation with consumers

At the same time, the strengthening of the distribution network will allow the company to work more closely with end consumers by being able to reach them with the same high quality of products across different markets.

6.2. Develop unique marketing tactics

6.2.1. higher penetration.

This strategic recommendation will help the company reach a higher number of consumers and penetrate deeper into target consumer groups. Also, this strategy will allow the company to increase trial and consumption and sales of its products.

6.2.2. Forming a partnership with consumers

Unique marketing tactics will involve new and informed strategic means of communicating with the consumers and engaging them with the brand. One way that this can be done is by making consumer co-producers for the brand. Another way that IKEA A Furniture Dealercan do this is through co-branding with other similar, yet dissimilar brands and companies to enjoy higher market visibility amongst target consumers.

6.3. Adapt to different cultural aspects of different markets

6.3.1. identify different consumer group characteristics.

Each market and target group has distinct characteristics. This recommendation is suggested so that the company can connect better with different target groups in different markets.

6.3.2. Adapt to and respond to characteristics

By adapting to different cultural and regional characteristics, the company will be able to present itself better to target consumers – who would then feel a greater affinity, and more likeliness of consuming the product and the service.

6.4. Expand into new regions

6.4.1. market expansion.

Another strategic recommendation for IKEA A Furniture Dealeris to expand into newer regions and markets. This can be done by expanding into new markets, firstly. This expansion will give the company exposure to new consumer groups. Increase the overall consumption rate, as well as diversify income streams. Also, it will give the company related expansion exposure regionally as well as internationally.

6.4.2. Product diversification

Another means of expansion is through product diversification. By adding new products, the company will be Abe to penetrate deeper into existing markets bye exploring new consumer groups, and new target consumer groups. This will also diversify income streams for the company, and increase its overalls hare of the market.

6.5. Strengthen value network

By strengthening the value network further, and by adding quality and enhanced elements at different stages, the company will be able to maintain competitive advantage, as well as put off new players from the industry by increasing barriers to entry. This will allow the company to maintain sustainable competitiveness over other players, as well as maintain a possible leadership position in the local and international markets and industry.

7. References

Bierly, P. & Hämäläinen, T., 1995. Organizational learning and strategy. Scandinavian Journal of Management, 11(3), p. 209–224.

Cole, G., 2003. Strategic Management. Boston: Cengage Learning EMEA.

Collier, D. & Evans, J., 2009. Operations Management. Boston:MA: Cengage Learning.

Haron, A., 2016. Standardized Versus Localized Strategy: The Role of Cultural Patterns in Society on Consumption and Market Research. Journal of Accounting and Marketing, 5(1).

Hartline, M. & Ferrell, O., 2006. Marketing Strategy. Boston:MA: Cengage Learning.

Keller, L., 2006. Strategic Brand Management Process, in Perspective of Modern Brand management. s.l.:s.n.

Kotler, P., 1997. Marketing management: Analysis, planning, implementation and control. New Jersey: Prentice-Hall.

Kotler, P., 211. Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), pp. 132-135.

Kotler, P., Armstrong, G., Adam, S. & Denize, S., 2014. Principles of Marketing. Melbourne: Pearson, Australia.

Kotler, P. & Keller, K., 2009. Marketing Management. New Jersey: Prentice Hall.

Lehman, D. & Winer, R., 2005. Product Management. New Delhi: McGraw-Hill Education.

Murray, A., 1988. A contingency view of Porter's “generic strategies”. Academy of management review, 13(3), pp. 390-400.

Reddi, C., 2009. Effective Public Relations and Media Strategy. New Delhi: PHI Learning Pvt. Ltd.

Schivinski , B. & Dabrowski , D., 214. The Effect of Social Media Communication on Consumer Perceptions of Brands. Journal of Marketing Communications, Volume 12, pp. 1-26.

Thompson, J. & Martin, F., 2010. Strategic Management: Awareness & Change. Hampshire: Cengage Learning EMEA.

Weng, X., 2002. Local Brand Strategy. Hangzhou: Zhejiang People’s Publishing House.

Wirtz, J., 2016. Winning in Service Markets: Success through People, Technology and Strategy. Singapore: World Scientific.

Witcher, B. & Chau, V., 2010. Strategic management: Principles and practice. s.l.:Cengage Learning EMEA.

Witcher, B. J. & Chau, V. S., 2010. Strategic Management: Principles and Practice. Boston: Cengage Learning EMEA.

Warning! This article is only an example and cannot be used for research or reference purposes. If you need help with something similar, please submit your details here .

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Ikea a furniture dealer financial analysis.

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IKEA: A Furniture Dealer
Strategy & Execution / MBA Resources

Introduction to Blue Ocean Strategy

EMBA Pro Blue Ocean Strategy for IKEA: A Furniture Dealer case study

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

Case Authors : Quy Huy, Michael Jarrett, Lisa Duke

Topic : strategy & execution, related areas : competitive strategy, international business, leadership, organizational culture, emba pro blue ocean strategy approach for ikea: a furniture dealer.

At EMBA PRO , we provide corporate level professional Marketing Mix and Marketing Strategy solutions. IKEA: A Furniture Dealer case study is a Harvard Business School (HBR) case study written by Quy Huy, Michael Jarrett, Lisa Duke. The IKEA: A Furniture Dealer (referred as “Ikea's Ikea” from here on) case study provides evaluation & decision scenario in field of Strategy & Execution. It also touches upon business topics such as - Marketing Mix, Product, Price, Place, Promotion, 4P, Competitive strategy, International business, Leadership, Organizational culture. Our immersive learning methodology from – case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Strategy & Execution field, company, context, collaborators, competitors, customers, Marketing Mix factors, Products related decisions, pricing strategies and more.

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What is Blue Ocean Strategy and how it is relevant to "IKEA: A Furniture Dealer" case study?

Who invented blue ocean strategy and why it is called blue ocean strategy.

EMBA Pro Introduction - As a strategy concept Blue Ocean strategy was first introduced by Renee Mauborgne and W.Chan Kim, INSEAD Business School professors, in their book - "Blue Ocean Strategy - How to Create Uncontested Market Space & Make Competition Irrelevant"

It is called Blue Ocean Strategy (BOS) because it provides managers a toolbox to create, identify uncontested market space instead of competing in the prevalent market with cut throat competition and decreasing margins. BOS makes competitors irrelevant & creates new consumer value propositions.

What is the cornerstone of Blue Ocean Strategy?

The cornerstone of Blue Ocean Strategy is - "Value Innovation" . Value Innovation places equal emphasis on both Value and Innovation. Ikea's Ikea needs to not only redefine the value proposition it is providing to existing customers (clients) but also needs to create new value proposition for target segments (customers) that at present are not Ikea's Ikea's clients. Value innovation can open up new uncontested market space for Ikea's Ikea.

Four Critical Factors that Managers at Ikea's Ikea can use for Value Innovation are -

Buyer Utility - It underlines the core values, features or utility Ikea's Ikea's products or services deliver to the buyer. The benefits can be both perceived and real.

Price - In traditional scenarios competitors compete in the Strategy & Execution following traditional approach of pricing - ‘Offer customer more for less’. This can provide serious challenge to company’s bottomline (profitability).

Cost - Managers at Ikea's Ikea can use value innovation to overcome limitations suggested by Michael Porter (management guru, strategy guru) in his value cost trade-off as part of competition based strategy. Using Blue Ocean strategy Ikea's Ikea managers can pursue both differentiation and low cost simultaneously.

Adoption - When innovation is pursued in isolation of the value then it can lead to very low level of adoption no matter how significant technological breakthrough is.

Red Ocean Vs Blue Ocean Strategy

What is the difference between blue ocean strategy and red ocean strategy how can ikea's ikea break out of the red ocean of bloody competition.

In the current business environment , Red Ocean is often defined as a competitive environment where industry boundaries are clearly defined, and existing and new players are trying to out-perform each other using Value-Cost Trade Off. This leads to cut-throat competition and race to the bottom, resulting in lower profitability and higher cost structure as component of total price.

Factors that are leading to Red Ocean of bloody competition -

Consumer behavior in the Strategy & Execution is also fast evolving because of -greater access to information, market transparency, technological innovations and promotional incentives by competitors)

Various product categories in Strategy & Execution are becoming more similar, leaving firms to compete only through pricing strategy.

Niche markets and local monopolies that company’s like Ikea's Ikea able to exploit are fast disappearing. The firms in Strategy & Execution industry are required to continuously come up with new solutions.

Globalization has also opened doors to suppliers from China, India, Indonesia, Taiwan, Vietnam, Brazil, and other emerging economies to compete in the high cost market such as United States & European Union.

Growing trend of commoditization of the products and services have also put pressure on companies such asIkea's Ikea.

Accelerated technological innovations and advances are improving industrial productivity, enabling suppliers to create vast array of products and services.

Breaking out of Red Ocean of Bloody Competition

Examples of how blue ocean strategy can be used for ikea's ikea case study.

Ikea's Ikea can use following Blue Ocean Strategy (BOS) tools and techniques to overcome the red ocean of cut throat competition in Strategy & Execution industry.

What is Eliminate-Reduce-Raise-Create Grid?

Eliminate-reduce-raise-create, mapping ikea's ikea on blue ocean strategy canvas grid.

Which are the factors that Ikea's Ikea can eliminate that players in the industry has long competed on?	Which factors need to be improved well above the industry standards to provide enhanced value to the customers?
Which factors Ikea's Ikea can reduce well below the industry level to structure costs?	Which factors needs to be created by the Ikea's Ikea that had never been offered by competitors in the industry

Six Path Framework for Ikea's Ikea

	Red Ocean Competition	Blue Ocean Creation
Industry	Focuses on rivals within Strategy & Execution industry	Exploring opportunities & spot threats across alternative industries
Strategic Group	Focuses on competitive position within strategic group	Looks across strategic groups within Strategy & Execution industry
Buyer Group / Target Segments	Focuses on better serving the buyer group	Redefines the industry buyer group. It involves redefining the consumer segments.
Value proposition offered by Ikea's Ikea's products and services	Core objective is to maximize the value of product and service offerings within the established context.	Looks across to complementary product and service offerings
Functional-emotional Orientation	Strive to improve the price performance within the functional-emotional orientation under prevailing norms.	Rethinks or repurpose the functional-emotional orientation of the Strategy & Execution industry
Time	Spend energy & resources on adapting to external trends.	Actively strive to shape external trends over time

Strategy Alignment

Ikea's Ikea BOS should have three complementary qualities -- focus, a compelling tagline, and divergence .

The four actions of Ikea's Ikea strategy canvas should be guided toward enforcing these critical qualities. Without these critical qualities, Ikea's Ikea strategy is most likely to be muddled, undifferentiated, and hard to communicate with a significantly high cost structure. The four actions of creating a new value curve should be well guided toward building a company’s strategic profile with these characteristics. These three characteristics serve as an initial litmus test of the commercial viability of blue ocean ideas

Ikea's Ikea Needs to Avoid these Six Red Ocean Strategy Traps

Trap 1 - Treating Market-Creating Strategies as Niche Strategies

Trap 2 - Making Existing Customers Happier

Trap 3 - Confusing Technology Innovation with Market-Creating Strategies

Trap 4 - Equating Market-Creating Strategies with Differentiation

Trap 5 - Equating Creative Destruction with Market Creation

Trap 6 - Equating Market-Creating Strategies with Low-Cost Strategies

5C Marketing Analysis of IKEA: A Furniture Dealer

4p marketing analysis of ikea: a furniture dealer, porter five forces analysis and solution of ikea: a furniture dealer, porter value chain analysis and solution of ikea: a furniture dealer, case memo & recommendation memo of ikea: a furniture dealer, blue ocean analysis and solution of ikea: a furniture dealer, marketing strategy and analysis ikea: a furniture dealer, vrio /vrin analysis & solution of ikea: a furniture dealer, pestel / step / pest analysis of ikea: a furniture dealer, case study solution of ikea: a furniture dealer, swot analysis and solution of ikea: a furniture dealer, agile management solution of ikea: a furniture dealer, references books on blue ocean strategy.

W. Chan Kim and Renée Mauborgne (2017) Blue Ocean Shift: Beyond Competing - Proven Steps to Inspire Confidence and Seize New Growth, Sep 26, 2017 W. Chan Kim and Renée Mauborgne (2015) Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant, Jan 20, 2015 Quy Huy, Michael Jarrett, Lisa Duke (2018) , "IKEA: A Furniture Dealer Harvard Business Review Case Study. Published by HBR Publications.

Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications.

M. E. Porter , Competitive Strategy(New York: Free Press, 1980)

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IKEA: A Furniture Dealer
Quy Huy , Michael Jarrett , Lisa Simone Duke. Add to cart. Reference 5834. Published 23 Feb 2015. Length 14 page (s) Topic Strategy. Region Europe. Industry Banking. The case describes the spectacular rise of UBS in the period 2000-2008 and its decline in the aftermath of the global financial crisis.
IKEA: A Furniture Dealer
IKEA: A Furniture Dealer. By: Quy Huy, Michael Jarrett, Lisa Duke. This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide. Length: 17 page (s)
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IKEA: A Furniture Dealer case study is a Harvard Business School (HBR) case study written by Quy Huy, Michael Jarrett, Lisa Duke. The IKEA: A Furniture Dealer (referred as "Ikea's Ikea" from here on) case study provides evaluation & decision scenario in field of Strategy & Execution. It also touches upon business topics such as - Marketing ...
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Solved Porter Value Chain : IKEA: A Furniture Dealer Analysis
Step 2 - Compare firm in IKEA: A Furniture Dealer case study value chain to the industry's value chain. Present vs Alternative Value Chain - You should design an alternative value chain and map out areas where improvements can be made. Comparing two or more alternative value chains can provide a good insight into bottlenecks within the industry.
IKEA: A Furniture Dealer Strategy Case Study Solution
IKEA: A Furniture Dealer case study is a Harvard Business School (HBR) case study written by Quy Huy, Michael Jarrett, Lisa Duke. The IKEA: A Furniture Dealer (referred as "Ikea's Ikea" from here on) case study provides evaluation & decision scenario in field of Strategy & Execution. It also touches upon business topics such as - Marketing ...

IKEA: A Furniture Dealer

Quy Huy

Michael Jarrett

Lisa Simone Duke

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Case Description IKEA: A Furniture Dealer

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Case Analysis of IKEA: A Furniture Dealer

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Step 1 – Problem Identification of IKEA: A Furniture Dealer - Harvard Business School Case Study

Step 2 – External Environment Analysis

What is PESTEL Analysis? Briefly Explained

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

How to do PESTEL Analysis for IKEA: A Furniture Dealer

Political Factors that Impact IKEA: A Furniture Dealer

Economic Factors that Impact IKEA: A Furniture Dealer

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Dark Brown Leather Watch

Dining Chair

Creative Wooden Stand

Wooden round table

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Ikea Case Study- (Business Model)

WHAT IS IKEA?

IKEA MEANING

HOW IKEA EARNS? – IKEA BUSINESS MODEL

IKEA’S SMART SECRET

HISTORY – STARTING AND GROWTH OF IKEA

The 1940s-1950s

FINANCIAL FACTS AND FIGURES

MANAGEMENT AND THE CORE TEAM

8 IKEA Marketing Strategy

1. Amazing Customer Experience

2. Brand Identity

3. Content Marketing

4. Social Media

5. Innovation

6. Creative Marketing Campaigns