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IKEA Case Solution
IKEA is a globally renowned international home products retailer, operating in more than 35 countries. It was founded in 1943 by a young entrepreneur, Ingvar Kamprad. It was founded on the philosophy of providing well-designed furniture to as many people as possible at affordable prices. With time, the furniture brand expanded its operations from Scandinavian countries to countries in Asia. Its marketing proposition revolves around three important aspects: lower price, functional value, and design. The retail stores operated by IKEA provides an attractive display of its products and services, and its retail space is an important advantage for IKEA (Jonsson & Foss, 2011). The retail brand is also developing environmentally sustainable ways to play a constructive role in overall community development. This report aims to look at the internal dynamics of the organization to ascertain how they can respond to various opportunities and threats in the external environment, and that will be done in the form of a SWOT analysis.
Following questions are answered in this case study solution
Case Analysis for IKEA
2. Macro Environment
A macro-environment is the condition that considers the general situation of the whole industry, rather than a particular organization. There are a number of factors that influence a particular industry. This includes political, economic, technological, social, environmental, and legal (Hultman, et al., 2012). These factors determine the performance of the industry to a great extent. The industry needs a stable economic environment and legal framework, within which it can operate to generate revenue for different organizations part of the industry. The technological innovations taking place in the industry are also important for these organizations to adopt, to take into account the modern developments taking place in the industry. For instance, in this case, IKEA needs a suitable framework, which can help in the progress of the overall furniture industry.
This is the environment in which a firm operates. It has an immediate impact on the function and operation of the organization. In macro-environment, factors impacting the whole industry are considered, whereas, in micro-environment, factors impacting the firm in that industry are considered. Micro-environment pertains to the influence of the various important stakeholders like competitors, customers, suppliers, employees, media, and shareholders on the organization. Micro-environment is important to consider as it has a direct bearing on the performance of the organization, and so the organization has to consider these factors to perform effectively in the competitive landscape (Jonsson & Foss, 2011). In this case, for example, IKEA will have to adapt to the modern and evolving trends within the industry to maintain its competitive advantage in the highly competitive market of home retail products.
4. SWOT Analysis
The biggest strength of IKEA is to offer high-quality furniture at a reasonably low cost. It has an effective and integrated supply chain framework that allows the company to source its products at low cost, from either neighbouring European countries or other developing countries, which have facilities for low-cost manufacturing. This eventually results in customers enjoying lower price options. It also excels in coming up with innovative ways to reduce costs; at the same time, it strives for incorporating environmentally sustainable ways in its business and manufacturing processes. For instance, using post-consumer plastic waste in producing a model of chair, known as OGLA (IKEA, 2009). This also improves its image as a brand name that strives for not only offering low-cost products but also ensuring that it is doing not at the expense of social cost.
Another strength of IKEA is its strong brand value and market presence. It has a unique marketing positioning that attracts a mass audience towards the vision of the organization. The message revolves around the proposition to offer well-designed and functional products at the lowest possible cost so that as many people as possible will be able to afford the furniture. IKEA is operating in more than 35 countries, which shows that it has a vibrant market presence (IKEA, 2009). Moreover, the diversified product range offered by IKEA also provides it with a great competitive advantage. This is apart from the fact that customers are given flexible options to assemble the products according to their needs and preferences.
It is recommenced that IKEA can further use its strength to develop a premium category for its product. At the same time, it should contribute more towards corporate social responsibility measures. Premium category can offer products, more in line with modern designs and superior functional value, which is targeted towards the higher societal class.
IKEA is criticized for producing highly standardized products. This is also because the main concentration of IKEA is towards reducing overall costs for the end-consumers. Although it offers flexibility to customers to decide the assembly of the products, there is a lack of variety in terms of the designs and quality that it offers to its customers. This has often deterred various customer segments from buying the products from IKEA. This is because there are many customers that prefer high-quality products, in line with their status (Lim, et al., 2013).
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