Global Strategic Assessment of IKEA’S Case Study (Article Sample)

Global Strategic Assessment of IKEA’S case study
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History.
IKEA is a privately held multinational home goods retailer with stores all over the world selling flat-pack furniture, accessories, bathroom, and kitchen items. Ingvar Kamprad founded IKEA when he was 17 years old in 1943 in Sweden, and it is now owned by a Dutch-registered foundation run by the Kamprad family. Ingvar Kamprad's initials, the farm where he grew up, and the nearby village of Agunnaryd are all incorporated into the name.
The company, which has its roots in Småland, Sweden, sells its goods through retail stores. Initially, Kamprad used the mail-order system to sell a variety of items such as pencils, nylon stockings, wallets, and watches. IKEA began selling furniture in 1948, and the first edition of the IKEA catalog was published three years later. In 1958, the first IKEA store opened in lmhult, Sweden. The company grew rapidly from 1958 to 1963, when it opened its first store outside of the United States. IKEA has 433 stores in 50 countries, employing 211,000 people, and producing annual sales of more than 41.3 billion euros in 2019 (IKEA, 2020). The majority of the stores are located in Europe, North America, Asia, and Australia. IKEA is a global company with a passion for home furnishings and a compelling shared vision: "to create a better everyday life for the many people" (IKEA, 2020). This vision, as well as its simple business concept, shared values, and a society built on the spirit of togetherness, guide IKEA's activities.
 
IKEA's business model is to "provide a wide range of well-designed, functional home furnishing products at prices that are affordable to as many people as possible." The company's mission statement reads, "To offer a wide range of well-designed functional home furnishing products at prices so low that as many people as possible can afford them." IKEA's business concept, according to Ingvar Kamprad's "will," published in 1976, is as follows:
“We shall offer a wide range of well-functioning good designs at prices affordable to as many people as possible ... Our basic range shall have its profile, be simple and as straightforward as we are. The furniture shall express good shape, color, and joy and have a youthful touch to all those young at heart, regardless of age.”
An assessment of IKEA's global position and marketing standing
IKEA is the 39th most valuable brand in the world, valued at $15.3 billion. IKEA uses franchising, which allows the company to expand globally while maintaining an entrepreneurial spirit, protecting the underlying idea, and serving the best interests of the company and its customers. They own and run stores in only 24 countries; the rest are franchised, accounting for 3% of franchisees' annual net sales (IKEA, 2020).
 
The franchising system allowed IKEA to constantly expand, develop their idea, lay a solid foundation for their brand, increase their sales to 41.3 billion Euros in 2019, capitalize on economies of scale, and manage and maintain IKEA's attractive prices and global reach. Furthermore, IKEA has a robust supply chain that includes 1,800 vendors in 50 countries and 42 trade service offices globally.
 
IKEA’s global climate
To better understand IKEA's business position, we will employ market audit techniques such as Ansoff's matrix, SWOT analysis, and PESTLE to better understand how external factors affect organization activities. 
* The Ansoff matrix
Ansoff's matrix is a marketing planning tool that assists a company in determining its product and market growth and explains how a company gains and maintains market share through one or a combination of four different strategies. Ansoff Matrix (Ansoff Matrix, 2018)
 
Ansoff'smatrix used to analyze IKEA's marketing strategies.
Penetrationof the market
IKEA dominates markets by leveraging its strong brand name and selling low-cost, high-quality, standardized products. They provide a diverse range of innovative designs while capitalizing on economies of scale and a vast distribution network (IKEA, 2020). 
 
Product creation
IKEA is constantly developing new products to sell in their current markets; they have a 12,000-product range and add 2000 new products each year. IKEA invests heavily in R&D, employs a novel franchising model, and forms strategic alliances (IKEA, 2020).
 
Market growth
Market growth IKEA invests heavily in technical solutions and consumer engagement to
gain a competitive advantage (IKEA, 2020). IKEA invests heavily in technical solutions and consumer engagement to gain a competitive advantage (IKEA, 2020).
 
Diversification is important.
IKEA
is developing new goods to sell to new customers, and IKEA restaurants,
children's play areas, and day-care centers within furniture retail stores are
examples of diversification. 
 
* SWOT analysis
SWOT analysis is a list of a company's strengths, weaknesses, opportunities, and threats that can be used to help companies understand all of the factors that go into making a business decision. The following is a SWOT analysis of IKEA's current position.
 
Strengths
Innovative and functional designs; product standardization; long-term planning, massive automated distribution centers; ability to furnish the entire home; adapting to local market tastes; aggressive approach to sustainability; cost leadership; economies of scale; strong franchising system; long-term relationships with suppliers; strong global brand; direct interaction between design and manufacturing.
 
Weaknesses
Weak marketing-advertising-promotional techniques; poor balance of low-cost and high quality goods; limited visibility, distant locations; relatively complex furniture assembly; high delivery and assembly costs.
  
Opportunities  
Improved brand visibility; enhanced marketing activities; improved online shopping experience; development of a platform for furniture assembly training; global demand for greener products; increased demand for low prices; potential global expansion; R&D and innovation opportunities.
 
Threats
Emergence Substitute products; increased competition; increased trade barriers; shifts in consumer tastes; shortage of skilled workforce; damaged reputation as a result of a series of events, lack of differentiation, rising raw material costs; global economic and financial crisis; economic effects of COVID-19.
 
* PESTLE analysis 
PESTLE refers to the political, economic, scientific, technical, legal, and environmental aspects of a situation. It's an analytical tool that businesses can use to figure out how external factors affect their activities and improve their market competitiveness” (Hall, 2020).
 
The following is a PESTLE presentation of IKEA's external environment.
 
Political 
Exporting foreign goods in friendly/hostile and stable/unstable countries; country attitudes toward foreign brands, corruption levels, bureaucracy, decision-making process and decision-makers mindsets, and political events and initiatives. Political problems in Taiwan and China, India's "Make in India" strategy for foreign investors and BREXIT are just a few examples.
Economic 
Exporting foreign goods in friendly/unfriendly and stable/unstable countries; countries attitude towards the foreign brands, corruption levels, bureaucracy, decision-making process and decision maker’s mind-sets and political events and initiatives. Examples are Taiwan and china political issues, Indian approach “make in India” for foreign investors and BREXIT. 
Social 
Culture, unlike products, cannot be standardized; standardized culture cannot be forced on other cultures. Acceptance of homosexuality, the use of women in marketing in Islamic countries, and the translation of marketing materials are all serious issues to consider. 
Technological 
To core companies, there is a demand for online sales and customer interaction platforms, mobile applications, artificial intelligence, cognitive intelligence, and robotics. 
Legal 
Each country has its laws and legal system, with varying degrees of global integration of common interest topics such as safety, labor laws, and human rights in national laws and regulations. Things like the Indian requirement to source 30% of origination inventories from local sources, as well as poor labor conditions, must be taken into account.
Environmental 
Environmental issues and sustainability is a hot topic in today's business world. People's awareness is growing, as is their demand for companies to change their behavior and hold them accountable for environmental issues such as pollution, climate change, and the use of recycled materials and renewable energy sources.
IKEA's marketing strategy (4Ps).
According to the 4P theory, the marketing mix (the sum of the 4Ps) is greater than the sum of its components. To put it another way, all elements work together to position a product in the minds of customers, consumers, and other stakeholders, resulting in action.
The followi...