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IKEA
Submitted by :Yin Phyu Phyu Thin
Student ID :16438689
[BUSINESS PROJECT OF IKEA]
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“To create a better everyday life for the many people”
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Content
1. Introduction 3, 4
2. Area (A)
SWOT Analysis 4, 5
Porter Generic Theories 5, 6, 7
Porter Five Forces Theory 7, 8
3. Area (B)
PESTEL Analysis 9, 10, 11
CAGE Framework 11, 12 13
4. Recommendation 13, 14, 15, 16
5. Conclusion 16, 17
6. List of references
Page Numbers
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1. Introduction
Most people may assume IKEA as a Swedish word or nonsense word. Actually, it is
just an acronym which means to the ngvar amprad (the founder), lmtaryd (the I K E
firm he grew up) and gunnaryd (the village he grew up). The founder of IKEA is A
dyslexic and classifies furniture's names by avoiding numbers (Diaz, 2014). IKEA was
founded in Sewden since 1943 by 17 years old Ingvar Kamprad as a mail-order sales
business (Hill, 2011) and opened the first IKEA store in Almhult, Smaland after five
years later (1958). Instead of product codes, made specific names on their he
products because code numbers are difficult to remember to manage inventories
(Harness et al., 2011). It is a kind of multinational group and headquartered in the
Netherlands. As of 2016 December, IKEA owns and operates 392 stores in 48
countries (Bender, 2017) such as Germany, Japan, Australlia, Singapore, United
State, United Kingdom, etc. which sell about 12,000 products. They sell designs and
ready-to-assemble furniture, kitchen appliances and home accessories. It can say
IKEA is the world's largest furniture retailer. Germany, the United State, the United
Kingdom, France and Italy markets got highest revenues according to IKEA annual
report 2015. When compare 2014, total sales reached €32.7 billion in 2015 different
€3.4 billion.
Furniture is one of the important things in people daily life. Basically, people must
need chairs, tables to provide human activities and at least comfortable beds are
necessary to reset the fatigues temporary at the end day.
Among the varieties of furniture companies, IKEA Company is provided in this
research paper. As customers' demands are increasing, furniture companies are
increasing such as West Elm (home decoration and furniture store), Wayfair which
operates mainly in USA and West Europe, Dot & Bo (online boutique retailer), Ashley
Furniture store and etc. which can be regarded as primary competitors for IKEA.
Secondary competitors are American Furniture Warehouse, Walmart which is known
as retail corporation and which does not sell only home furnishings but quality and
designs are produced similar to IKEA. IKEA focus to offer worldwide middle class to
upper class and aim to appeal every ages, sexes at an affordable price with satisfied
qualities of well-designed home furnishing products. They catch the customers'
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interests by designing their product as realistic room settings and real life homes to
showcase the products of IKEA. It also put kids' playroom for their customer at the
entrance of store. By serving with safe equipment, they make their customers to
shop in a leisurely manner. There have IKEA Store application which will make
smooth in finding or shopping. People can review product list and range and putting
to the shopping list in app make easy to remember when buying. It can also find
nearest IKEA store from current location and get right direction to there.
IKEA have two strong strengths- products are stylish and reasonable prices (Malmo,
2011). Every country has ban deforestation and how they do their furniture business
from those barriers. Doing business always have to watch market needs to compete
in each respective industry. There have no IKEA store in Myanmar. These facts make
interest to study about IKEA Group.
2. Area (a)
SWOT analysis means to the summary of Strength, Weakness, Opportunity and
Threat of organisation. It is a basic step to clear that IKEA's strategic options and
assess of future courses of action (Johnson et al. 10 ed., 2014). SWOT analysis is
th
carried out to make a success of some of the IKEA's generic strategies which are
provided in below.
Strength
Knowing their customers' wants is their strength. Designers usually produce creative
and stylish design products to depend on customers' likes. They also make flat-pack
products which are easy in transporting and ready to assemble. If they have not
extensive customer knowledge and cannot apply on that knowledge, IKEA cannot be
able to compete its current competitors (Jurevicius, 2013). Their innovative products
which are either sustainable environment or reduce costs with newest ways of
packaging styles. As IKEA is the largest valuable furniture retailer brand in the world,
it reached $US 12.8 billion according to 2012 Interbrand.
Weakness
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On the other side of making low costs, quality of products and services are caused
customers unpleasant. According to the Verdict's UK Customer Insights report on
IKEA, UK customers less contented on IKEA products and services quality than other
furniture brands. This is the evil result of IKEA low cost strategy. The consequence
of that strategy is they just achieved standardised products and inability to offer
better quality in customized products (Jurevicius, 2013).
Opportunities
IKEA usually have in a lot of developed countries but haven't in developing countries
except China (Jurevicius, 2013). Malaysia, Brazil, Indonesia are the great
opportunities for IKEA to increase market share in future. On the other hand, IKEA
online sales are increasing with 870 million visitors (Jurevicius, 2013) and this is
benefit for low costs.
Threats
Organisation has to reduce threats and get more favourable conditions from the best
opportunities. Walmart and Tesco are well known low cost retailers which are usually
enter to IKEA markets. Those products are also low costs and good supply chain and
huge market presence. On the other hand, consumer incomes are directly impact to
IKEA revenues. Increasing consumers' incomes is look good for company and has
chance to buy but actually, IKEA low cost strategy will destroy because of that.
Consumers will prefer to other higher quality home ware brands to upgrade their life
style.
There are three approaches in Generic strategies set out by Michael Porter book of
"Competitive Advantage: Creating and Sustaining Superior Performance" in 1985.
These are Cost Leadership, Differentiation and Focus.
Cost leadership strategy is one of the ways of competitive advantage in the
market. The main target of this strategy is to increase profits and market share by
reducing costs. As an international company, IKEA has a limit of success in furniture
market. Most competitors are local and they make similar designs with IKEA. In this
situation, IKEA is stronger in financially, market share and existing customers than
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local competitors. IKEA's low price strategy, great quality, knight service and creative
designs by modern technology make IKEA to occupy the market quickly. Goods in
IKEA store are almost at the same price in globe. Exchange rate is a big gap between
RMB with Euro. This changes the result of sales in China because most of Chinese
customers cannot afford to buy them. This is seemed as a weakness but this is the
logistics strategy of IKEA. Changes from traditional methods give new opportunity
sometimes. In Generic Strategies, cost leadership strategy can be regard as main
strategy of IKEA.
Differentiation strategy is making unique and creative products or services to get
the attraction than competitors. But they are usually late in expanding countries than
other competitors (Zhi Li, 2010). To make creative and innovative products, well
research and development is the basic need. As written in cost leadership strategy,
great quality in low cost is IKEA's vivid strength. Producing product with good quality
and having low price by reducing production costs are easy to have but both of them
at the same time is not easy. IKEA products list is long but they don't display all IKEA
products in their store and putting product styles are different depend on local
situations. For example, IKEA make bed scales bigger than Europe because of
complaints that beds are not fit for Americans. IKEA had tricked out 12 bus stops and
decorated with IKEA products for a week throughout the centre of Paris which is
heavily traffic area during the holiday season as an advertising campaign. Effective
sales and marketing processes are also important for differentiation strategy to get
the market understanding of differentiated offerings.
Focus strategy
IKEA mainly focus cost leadership strategy by finding differentiated characteristics
with low-cost products (Suarez, 2006). IKEA use focus strategy on differentiation by
making a lot of Chinese traditional designs in China IKEA stores (Kristin, 2016). They
also use cost focus as written in Low Cost Strategy and these separates of the
Strategies into different business aspects make a huge success in the furniture retail
industry.
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By using those above three Porter's Generic Strategy flexibly, IKEA is getting
competitive advantages than competitors as a world's largest furniture retailer.
Porter's Five Forces model analyse company's structure into five underlying
competitive forces in the industry. These five forces are underlying competitive rivalry
of IKEA Group. As shown in introduction, there have so many competitors in furniture
industry. Among them, IKEA is playing in major role in this industry as a market
leader (Soundarya, 2015). Company procedures and strategies are might be flexible
in the local market but in going global, these traditional strategies will not be suitable
for every different country. But it can be used as guidelines and have to adjust with
respective government's policies and country's culture.
Bargaining power of suppliers is lacking strength. There have 1002 IKEA suppliers
around the globe according to the Yearly Summary 2014, IKEA Group. They
introduced IWAY in 2000 as the IKEA supplier code of conduct. They aim that all
suppliers and transport service providers to comply with the requirements in IWAY.
It provides requirements which relating to the environment, social and working are
conditions such as Child Labour. When they invent their new product, they think
about designs with low price firstly. After that, they try to find most appropriate
supplier all over the world because suppliers are one of the important parts of their
unique products (Mr. Karlsson, 2010). IKEA have 28 distribution centres (Warehouse)
in 16 countries in 2010 according to the Mr. Karlsson who is the staff office of Gavle
IKEA store. He said that Shanghai distribution centre is the biggest in Asia and these
centres control the goods between factories and stores.
Bargaining Power of customers is huge. Selling furniture with high quality in low
price makes a unique among the competitors. On the other hand, this low price
strategy is the IKEA's unique attraction to customers' needs. Bargaining power of
customers is strong enough but have to aware of local furniture producers and other
global furniture retailers (Soundarya, 2015). Furniture market is intense and there
are so many furniture retailer lists people can buy. IKEA transport their goods to the
customers by reducing cost of transport and keeping the low price on the other hand.
As written in above, they already transport their goods to the distribution centres
from suppliers (factories). From that main distribution centre, they transport ready
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to assemble products to IKEA stores all over the world. Stores are collet customers'
orders and send the information to the respective distribution centre. In China, IKEA
does not exist at the low price because of exchange rate and most Chinese people
cannot afford to buy (Zhi Li, 2010).
Competitive rivalry is high although threat of substitute products and new entrants
are low condition. IKEA have a lot of competitors and some are as shown in
introduction. Walmart is regarded as a competitor from U.S though which is not
selling only furniture. China and Japan furniture markets have largest competitions
(Caplan, 2006). Everybody knows China is like the largest economic factory in the
world after their open up policy. Most of businesses have their factory there because
of labour costs and production costs are lower than other countries. Globally, Home
Depot, Walmart, Argros and etc. are main competitors of IKEA. They make similar
strategies with IKEA such as low cost, good quality, better services and appeal with
advertisings and promotions.
Threat of new entrants is low and IKEA has strength of budget and strong market
as an existing global furniture retailer in a global scale. IKEA is holding 25% market
share in Sweden and there have potential entrants to the furniture market (Caplan,
2006). Existing players and high investment make decrease attraction to new
entrants in furniture retail industry.
Threat of substitute products and services are relatively low because of IKEA's
unique low cost strategy in a high quality and customers can feel quite different with
competitors' products and services. Substitute products are similar in appearance or
characters but not exactly the sam Consumers are unwilling to switch another e.
alternative because of stiff furniture market (Martin, 2014).
Above Porter five forces identified bargaining power of customers and suppliers, low
injury of new entrants and substitute products in furniture market by researching
IKEA furniture group.
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3. Area (b)
Trading through geographic must have the ability to obtain sources of international
competitive advantage. Multinational companies are using different international
strategies to control forces between global integration and local responsiveness.
Polices, disposable incomes, life styles, rate of technological changes, weather and
laws differ across countries. As a multinational company IKEA have to balance locally
responsive, adapt to local demand and meet the requirements and satisfactions of
each national markets.
Each country has attractions which are not same types. Countries can be compared
by using standard environmental analysis techniques which are identified in PESTEL
framework. is a strategic analytical tools used to assess the impact of PESTEL
external factors on businesses. There have six external factors that may impact the
performance and affect the strategic development of the organisation.
Political factors depend on different governments. IKEA planned to build a store in
Ukraine but cancelled after a year later because of Ukraine economy minister stated
that it should be opened to help in destroying the perception of corruption. There is
no IKEA store in Africa where most nations are not politically stable. IKEA entered
into Canada in 1976, the USA in 1985 and China in 1998 (Hill, 2011). After 1978
reforms and open up policy in China, IKEA got the opportunity to enter into the
Chinese market as western retailer. IKEA made first step into Shanghai as a furniture
retail store which is the main area of land of a country. For store location, they have
to rent land from Chinese government by joining local partner according to Chinese
government policy (Josson, 2017). IKEA faced problem with some non-governmental
organisations because of suppliers from developing countries. They revealed that
some IKEA suppliers are using child labour and hosting terrible working conditions.
Also they have already known child labour is banned, they used children 14 aged and
below in their works because of IKEA's strong pressure to cut costs. IKEA told that
they didn’t know of such practices and objected to them. Suppliers from other
developing countries which are less strict in maintaining labour laws than Sweden
and IKEA cannot be blamed for that. IKEA Singapore was reopened in 1978 and
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Singapore tax rate is lower than Hong Kong. As a foreign investor, IKEA was attracted
by this scheme (Sigh, 2012).
The power of economic growth is effecting on the sales of the company (Mamady,
2014). The main keys of economic factors: GDP which is used to measure the health
of a country's economy, disposable income which indicates the potential size of the
market and global recession which is one of the biggest challenges facing by
multinational companies. Rising the economy in the country also provide people living
standards high. At the same time, disposable income of the consumers will increase
which will give rise to purchasing power (Mamady, 2014). As a global company, IKEA
revenues are directly affected by exchange rates such as euro, U.S dollars and other
major currencies due to the global business operations. Interest rates, tax rates,
employment rates are additional economic factors that multinational companies
usually face. Rise and fall irregularly in costs of IKEA raw materials also impacts the
business notably. Since they made products in China, their strategy of low price with
satisfied quality is more succeed.
IKEA contributed much in the society and maintained a fair standing. People social
life styles, buying habits and social classes are affecting to the sales of furniture.
Furniture industry has weakness in environmental and social factors which is the use
of toxic chemicals used in production process. Consumers' health consciousness,
emphasis on safety, career attitudes are some of social barriers for company which
effect on the demand for the firm's products. In Japan and Germany, there have
aging population and less likely to buy modern furniture (Mamady, 2014). These are
the changes of demographic variables such as age, family size, population, etc. By
watching trends, cultural factors, people life styles, behaviours and tastes, can control
demands.
In these modern days, technological advancement and innovation are necessary to
have and use effectively. They have taken advantage of technology by providing IKEA
store app. Customers can get detailed information of the products through the
internet. Putting to the shopping list in application make easy to remember when
they are buying. There is no need to explain detailed about product by staff.
Customers have to go to the warehouse to pick up products and it waste the times
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of customers and also staffs. But now, they put computer operated lif - customer ts
has to order and then has to put the code of product on the computer operated lifts.
This advancement of technology save the time of customers and staffs. Using modern
technologies seem cost increase but in reality, it reduces cost for long term and it
also give a limit of standard. Not only product qualities are important but also first
impression (design and development) of furniture is an essential element.
Consumerism and environmentalism are trending nowadays. IKEA supplies product
in flat packing process and they use recyclable products when packaging. By UK strict
policy of maintaining green, they joined with WWF to make a project environment
which is focusing on sustainable forestry, cotton manufacture and climate change.
They follow low emission and products are transported by rail, road or ship. Most of
products are eco-friendly to have less impact on environment and they try to use
recyclable materials in their products. They focus on climate change and low emission
of fuel energy (encourage its staff to use public transports). According to the IKEA
vision, they are doing to make the world better care of the environment as one of
the part of process.
Legal and political environment of host countries effects marketing strategy of
company. Although market has strength to penetrate, IKEA face difficulties in some
countries government policies. Every country has laws to protect their people.
Controlling prices, promoting fair trade and regulate monopolise. As a multinational
company, IKEA has to comply with various laws and regulations of different countries
which are customer rights, minimum labour wages, labour laws, interest rates, credit
card, etc. They also accompany to prevent child labour. The founder of IKEA, Mr
Kamprad was claimed of using child labour in Asia and buying feathers which are
pulled out of live geese. According to Journalists revealed, he apologized in an open
letter (Malmo, 2011).
Multidimensional CAGE framework of IKEA group will provide to analyse the border
barriers on trade. CAGE distance framework point out Cultural, Administrative,
Geographic and Economic differences depend on various countries as a global
furniture company. These distances can give not only risks but also great
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opportunities. Company may have to learn from their weakness and change into
challenges and get success by accomplishing different challenges.
Cultural distance
Analysing cultural distance is one of the tools of CAGE Framework. Cultural
differences can make big problem multinational companies. Firstly, managing cultural
conflicts between employees is essential to keep workplace. After the internal
management is flawless, company can make well for external. Adaptation the
different culture is necessary to solve the cultural conflicts as a multinational
company. IKEA observed carefully about what cultural adaptations need to fit with
its corporate culture (Vasteras, 2010) for opening IKEA first store in Thailand in 2011.
They faced the cultural varies between Western and Eastern such as languages,
values, beliefs and tradition. As a multinational company, employees are also
different nationals who work together. There have both weaknesses which are culture
barriers and strengths which are having different points of view. In China and most
Asia countries, every apartment has balconies and they put a balcony section in their
stores. Staff of IKEA, Smedberg said that Chinese people are usually spending their
times in their living rooms and they also put dining table there. He told that bedroom
furniture and accessories are least sellers in China. So, they do not put that unpopular
furniture in their stores depend on countries' cultures. By this case, this can be regard
that they deal with different cultures by adapting. They not only service their
customers but also provide a relax condition by uniforms. There have no different
between with manager and basic employees.
Administrative distance
By looking PESTEL analysis above, there have some legal implications when IKEA
enter to the China market. According to IKEA Group corporate site, IKEA started
trading across borders such as Norway in 1963, Denmark in 1969, and Switzerland
in 1973 and Germany in 1974 and so on. It entered to attractive Japanese market in
1974 and there had distances varies between expected and actual according to Asian
info. They made second round re-enter to Japan in 2002. There is no political hostility
between India and Sweden.
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Geographical distance
As a multinational company, geographic distance plays in an important role in IKEA's
expansion strategy. Local resources are strong in India and IKEA have advantages of
costs and time by using them. Transportation linking is bad across borders in India.
IKEA have 6,800 co-workers and a lot of factories around the world. From those
factories, they transport IKEA distribution centres and send to the respective stores.
Economic distance
IKEA is focusing to get 50billion euros sales in 2020 (Reuters, 2015). IKEA entered
into China since 1998 and opened store in the mainland of China, Shanghai. At first,
IKEA products are expensive because of import tax and exchange rates. But prices
are slightly fair with international IKEA prices now. In average, Chinese customer
usually earns around $399 per month and they usually buy about $36 per visit
(USCBC, 2004). Although economic size is quite big, there have low capital per
income in India.
4. Recommendation
After researched about IKEA, there is so much knowledge about IKEA such as
company's competitive position in its various markets, factors and distances when
IKEA make trading across borders. This knowledge found from their official website,
company sustainable reports, others interviews and online news and journals articles.
IKEA target everybody. Actually, target segments are different depend on the part of
house such as sofa, bedroom, kitchen and etc. As a student who is staying her
parents' house. She needs neither kitchen nor some accessories but bookshelf and
desk are essential for her which are relating with studies. After 10 years later, her
needs will be change like the kitchen, bathroom and some home furnishing products
for her own place. There are no changes from IKEA target although her life situation
is changed. All different ages of people are target customers and products are
different depend on their need of life situation because home furnishing products are
one of the essential products for people daily life.
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In these modern days, there can be seen furniture as luxury products by market
needs. They use furniture as decoration to look their home or office more attractive
without essential or luxuries products which are enjoyable but not very essential for
daily life.
As a world largest furniture retailer, IKEA's way of success is having a smart strategy.
Among the Porter's Generic strategies, they deep focus on cost leadership. In delivery
process, IKEA should remove transporting to the distribution centre. This way of
direct delivered to the stores may reduce cost and also support to their low cost
strategy. They also use flat packaging process to reduce the transportation costs (Zhi
Li, 2010). This may also seek differentiation cost of standardising products.
IKEA target everybody and they have to find out each of segment what they really
need. Knowing what customers really need is main part and drawing unique designs
is the next step. Depend on the local customers' needs, IKEA have to put their
products in stores which can maintain the cost of transportation. As a foreign
company, IKEA need flexible strategies to win the heart of customers.
Firstly, SWOT analysis was written which is a way of drawing together an
understanding of strengths, weaknesses, opportunities and threats that IKEA faces.
Base on the SWOT analysis, researched Generic Strategies of IKEA which is a great
starting point for strategic decision makings and used Porter Five Forces to
understand the company nature.
Having factories in developing countries have advantages for IKEA cost leadership
strategy. For example, as a country's economy is reforming and opening up policy in
Myanmar, there does not have strict laws and regulations on labours and others. This
way is help to reduce the production costs and this is the one of reason that foreign
factories are slightly increasing in Myanmar. Labour costs are also lower than other
countries. Employees are playing in a core of company and have to retain them as
much as possible to fulfil company's goals.
Customers are holding high bargaining power because of stiff furniture market and
wild rivalry. IKEA have a lot of stores in many different countries. They also put online
store application. IKEA should research to attract the customers who could not give
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time on the heavy traffic to go shops with their daily schedules. Instead of shopping
with online application by rolling catalogues, viewing products have more strength
and can have close relationship with customers by knowing their desires. IKEA can
expand grocery stores in its current furniture retail store because they already have
market and having market is easier than penetrating to new market.
IKEA achieve cost leadership strategy by forcing down costs and maintaining costs
which make profit increase. They also meet differentiation strategy by good qualities
in a low costs. Spending in advertisings, increasing research and development kill the
small players and increasing bargaining power of customers also likely to hurt them.
They can't make counterattack with larger players and can be squeezed out.
PESTEL factors can analyse by the macro-environment and the developments of
those key drivers are alternative situations for the future of IKEA. They usually face
with host country's government political differences. They should be prepared and
researched either their market or host country's cultures before they enter. This
makes less political problems and decrease wasting costs. IKEA foundation should
cooperate in making environment green more by making a small green garden where
people can relax in their holidays. This does not like supporting to the children
education programs in India with UNICEF. But this can give people feel better
temporary in their free times.
Providing IKEA store app give advantages for not only customers but also company.
Customers can get reviews and product detail descriptions easily. On the other hand,
company can know their strengths and weaknesses from customers' reviews easily.
Additionally, this does not make costs as surveying outdoor and they can also make
advertising and online promotions activities easily. But they should try to accompany
with Alibaba, Amazon and Taobao which are largest online stores in the world. They
already have online market and technologies.
As a global furniture company, IKEA should never ignore providing functional and
innovative styles and products depend on country's cultures, economic growth, laws,
demographic and geographic structures to wrap up high market share.
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IKEA should have more cooperation with local suppliers to get more competitive
advantages. IKEA should make more adaptation and adjustment in China market.
Target segments are also varies depend on geographic, demographic and others. In
the same way, competitive forces are different for each target segments and markets.
5. Conclusion
This study focus to find out the competitive strategies of IKEA in various markets and
factors that IKEA considered and have to consider when trading across borders. IKEA
target every ages, sexes at an affordable price with great qualities of well-designed
home furnishing products. All different ages are target customer and IKEA have to
consider each segments' needs with well design in a low price to create a better
everyday life for many people. Firstly, SWOT analysis of IKEA was provided for each
generic strategy. And then, Porter five forces was used in Area (A) to analyse the
competitive environment with five main heads which are bargaining power of
suppliers and customers, competitive rivalry, threat of new entrants and threat of
substitute products. In Area (B), PESTEL analysis of IKEA was provided to obtain the
sources of international competitive advantage. And then CAGE framework was
researched to measure the distances between various countries' culture,
administrative, geographic and the last important one is economic distance.
Taking up of corporate social responsibilities can bring the positive publicity of
business. IKEA motivate their customers to accompany in campaigns and activities.
They usually sell soft toy for one euro at the end of each year in IKEA stores. As an
IKEA foundation, they split that sales money between Save the Children and UNICEF
projects. It supports programs which improve the lives of children in need through
health, human rights and education in Africa, Asia and Europe. They also provide
financial support for child protection, education and health programs for children from
India, Pakistan and China by cooperating with UNICEF. They gave help more than
$200 million in both cash and in-kind donations to UNICEF community educational
project in India (IKEA, 2006). They sold UNICEF greeting cards and made cause-
related marketing promotions activities by participations of IKEA customers and
employees around the world.
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IKEA can keep their reputation by stemming positive brand image in the furniture
industry. There have no perfect business and every strong business have lack of
process as their weakness. To fill them, making research efficiently is the best way.
IKEA make their customers by meeting good quality products in a low costs and that
help to get competitive rivalry. This report would give the research of comparative
analysis of IKEA in its various markets factors that they consider when trading and
across borders. In addition to them, there was provided things and discussions that
company have to consider to enhance their business.
6. List of References
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MA, 02163. 1996
“Loeb, Walter. “IKEA Is A World Wide Wonder”.-
“Topic: IKEA” .www.statista.com. Retrieved 2017-01-14.
Chunhua He, (2009), The rhythm of IKEA in China, China Academic Journal
Electronic Publishing House, p.36- 39.
Diaz, J. (2014) What the hell do all those IKEA names mean? Here are all
their secrets. Available from: http://sploid.gizmodo.com/what-the-hell- -do
all-those-ikea-names-mean-heres-the-s-1572392546 (Accessed: 11
February 2017).
Harness, J. and JIzzle (2011) 10 things you didn’t know about IKEA.
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didnt-know-about-ikea/ (Accessed: 6 March 2017).
IKEA (2013). About IKEA. Available from:
http://www.ikea.com/ms/en_GB/about_ikea/index.html (Accessed date: 19
March 2017)
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IKEA. (2014). More news and inspiration from IKEA. Available from:
http://www.ikea.com/us/en/ (Accessed date: 18 March 2017)
Inter IKEA Systems (2010), Welcome to IKEA.com, viewed 14 February
2011, <http://www.ikea.com/ >.
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IKEA
Submitted by :Yin Phyu Phyu Thin Student ID :16438689
[BUSINESS PROJECT OF IKEA]
“To create a better everyday life for the many people” 1 Page Numbers Content 1. Introduction 3, 4 2. Area (A) SWOT Analysis 4, 5
Porter Generic Theories 5, 6, 7
Porter Five Forces Theory 7, 8 3. Area (B) PESTEL Analysis 9, 10, 11 CAGE Framework 11, 12 13
4. Recommendation 13, 14, 15, 16 5. Conclusion 16, 17 6. List of references 2 1. Introduction
Most people may assume IKEA as a Swedish word or nonsense word. Actually, it is
just an acronym which means to the Ingvar Kamprad (the founder), Elmtaryd (the
firm he grew up) and Agunnaryd (the village he grew up). The founder of IKEA is
dyslexic and classifies furniture's names by avoiding numbers (Diaz, 2014). IKEA was
founded in Sewden since 1943 by 17 years old Ingvar Kamprad as a mail-order sales
business (Hill, 2011) and opened the first IKEA store in Almhult, Smaland after five
years later (1958). Instead of product codes, h
e made specific names on their
products because code numbers are difficult to remember to manage inventories
(Harness et al., 2011). It is a kind of multinational group and headquartered in the
Netherlands. As of 2016 December, IKEA owns and operates 392 stores in 48
countries (Bender, 2017) such as Germany, Japan, Australlia, Singapore, United
State, United Kingdom, etc. which sell about 12,000 products. They sell designs and
ready-to-assemble furniture, kitchen appliances and home accessories. It can say
IKEA is the world's largest furniture retailer. Germany, the United State, the United
Kingdom, France and Italy markets got highest revenues according to IKEA annual
report 2015. When compare 2014, total sales reached €32.7 billion in 2015 different €3.4 billion.
Furniture is one of the important things in people daily life. Basically, people must
need chairs, tables to provide human activities and at least comfortable beds are
necessary to reset the fatigues temporary at the end day.
Among the varieties of furniture companies, IKEA Company is provided in this
research paper. As customers' demands are increasing, furniture companies are
increasing such as West Elm (home decoration and furniture store), Wayfair which
operates mainly in USA and West Europe, Dot & Bo (online boutique retailer), Ashley
Furniture store and etc. which can be regarded as primary competitors for IKEA.
Secondary competitors are American Furniture Warehouse, Walmart which is known
as retail corporation and which does not sell only home furnishings but quality and
designs are produced similar to IKEA. IKEA focus to offer worldwide middle class to
upper class and aim to appeal every ages, sexes at an affordable price with satisfied
qualities of well-designed home furnishing products. They catch the customers' 3
interests by designing their product as realistic room settings and real life homes to
showcase the products of IKEA. It also put kids' playroom for their customer at the
entrance of store. By serving with safe equipment, they make their customers to
shop in a leisurely manner. There have IKEA Store application which will make
smooth in finding or shopping. People can review product list and range and putting
to the shopping list in app make easy to remember when buying. It can also find
nearest IKEA store from current location and get right direction to there.
IKEA have two strong strengths- products are stylish and reasonable prices (Malmo,
2011). Every country has ban deforestation and how they do their furniture business
from those barriers. Doing business always have to watch market needs to compete
in each respective industry. There have no IKEA store in Myanmar. These facts make
interest to study about IKEA Group. 2. Area (a)
SWOT analysis means to the summary of Strength, Weakness, Opportunity and
Threat of organisation. It is a basic step to clear that IKEA's strategic options and
assess of future courses of action (Johnson et al. 10th ed., 2014). SWOT analysis is
carried out to make a success of some of the IKEA's generic strategies which are provided in below. Strength
Knowing their customers' wants is their strength. Designers usually produce creative
and stylish design products to depend on customers' likes. They also make flat-pack
products which are easy in transporting and ready to assemble. If they have not
extensive customer knowledge and cannot apply on that knowledge, IKEA cannot be
able to compete its current competitors (Jurevicius, 2013). Their innovative products
which are either sustainable environment or reduce costs with newest ways of
packaging styles. As IKEA is the largest valuable furniture retailer brand in the world,
it reached $US 12.8 billion according to 2012 Interbrand. Weakness 4
On the other side of making low costs, quality of products and services are caused
customers unpleasant. According to the Verdict's UK Customer Insights report on
IKEA, UK customers less contented on IKEA products and services quality than other
furniture brands. This is the evil result of IKEA low cost strategy. The consequence
of that strategy is they just achieved standardised products and inability to offer
better quality in customized products (Jurevicius, 2013). Opportunities
IKEA usually have in a lot of developed countries but haven't in developing countries
except China (Jurevicius, 2013). Malaysia, Brazil, Indonesia are the great
opportunities for IKEA to increase market share in future. On the other hand, IKEA
online sales are increasing with 870 million visitors (Jurevicius, 2013) and this is benefit for low costs. Threats
Organisation has to reduce threats and get more favourable conditions from the best
opportunities. Walmart and Tesco are well known low cost retailers which are usually
enter to IKEA markets. Those products are also low costs and good supply chain and
huge market presence. On the other hand, consumer incomes are directly impact to
IKEA revenues. Increasing consumers' incomes is look good for company and has
chance to buy but actually, IKEA low cost strategy will destroy because of that.
Consumers will prefer to other higher quality home ware brands to upgrade their life style.
There are three approaches in Generic strategies set out by Michael Porter book of
"Competitive Advantage: Creating and Sustaining Superior Performance" in 1985.
These are Cost Leadership, Differentiation and Focus.
Cost leadership strategy is one of the ways of competitive advantage in the
market. The main target of this strategy is to increase profits and market share by
reducing costs. As an international company, IKEA has a limit of success in furniture
market. Most competitors are local and they make similar designs with IKEA. In this
situation, IKEA is stronger in financially, market share and existing customers than 5
local competitors. IKEA's low price strategy, great quality, knight service and creative
designs by modern technology make IKEA to occupy the market quickly. Goods in
IKEA store are almost at the same price in globe. Exchange rate is a big gap between
RMB with Euro. This changes the result of sales in China because most of Chinese
customers cannot afford to buy them. This is seemed as a weakness but this is the
logistics strategy of IKEA. Changes from traditional methods give new opportunity
sometimes. In Generic Strategies, cost leadership strategy can be regard as main strategy of IKEA.
Differentiation strategy is making unique and creative products or services to get
the attraction than competitors. But they are usually late in expanding countries than
other competitors (Zhi Li, 2010). To make creative and innovative products, well
research and development is the basic need. As written in cost leadership strategy,
great quality in low cost is IKEA's vivid strength. Producing product with good quality
and having low price by reducing production costs are easy to have but both of them
at the same time is not easy. IKEA products list is long but they don't display all IKEA
products in their store and putting product styles are different depend on local
situations. For example, IKEA make bed scales bigger than Europe because of
complaints that beds are not fit for Americans. IKEA had tricked out 12 bus stops and
decorated with IKEA products for a week throughout the centre of Paris which is
heavily traffic area during the holiday season as an advertising campaign. Effective
sales and marketing processes are also important for differentiation strategy to get
the market understanding of differentiated offerings. Focus strategy
IKEA mainly focus cost leadership strategy by finding differentiated characteristics
with low-cost products (Suarez, 2006). IKEA use focus strategy on differentiation by
making a lot of Chinese traditional designs in China IKEA stores (Kristin, 2016). They
also use cost focus as written in Low Cost Strategy and these separates of the
Strategies into different business aspects make a huge success in the furniture retail industry. 6
By using those above three Porter's Generic Strategy flexibly, IKEA is getting
competitive advantages than competitors as a world's largest furniture retailer.
Porter's Five Forces model analyse company's structure into five underlying
competitive forces in the industry. These five forces are underlying competitive rivalry
of IKEA Group. As shown in introduction, there have so many competitors in furniture
industry. Among them, IKEA is playing in major role in this industry as a market
leader (Soundarya, 2015). Company procedures and strategies are might be flexible
in the local market but in going global, these traditional strategies will not be suitable
for every different country. But it can be used as guidelines and have to adjust with
respective government's policies and country's culture.
Bargaining power of suppliers is lacking strength. There have 1002 IKEA suppliers
around the globe according to the Yearly Summary 2014, IKEA Group. They
introduced IWAY in 2000 as the IKEA supplier code of conduct. They aim that all
suppliers and transport service providers to comply with the requirements in IWAY.
It provides requirements which ar
e relating to the environment, social and working
conditions such as Child Labour. When they invent their new product, they think
about designs with low price firstly. After that, they try to find most appropriate
supplier all over the world because suppliers are one of the important parts of their
unique products (Mr. Karlsson, 2010). IKEA have 28 distribution centres (Warehouse)
in 16 countries in 2010 according to the Mr. Karlsson who is the staff office of Gavle
IKEA store. He said that Shanghai distribution centre is the biggest in Asia and these
centres control the goods between factories and stores.
Bargaining Power of customers is huge. Selling furniture with high quality in low
price makes a unique among the competitors. On the other hand, this low price
strategy is the IKEA's unique attraction to customers' needs. Bargaining power of
customers is strong enough but have to aware of local furniture producers and other
global furniture retailers (Soundarya, 2015). Furniture market is intense and there
are so many furniture retailer lists people can buy. IKEA transport their goods to the
customers by reducing cost of transport and keeping the low price on the other hand.
As written in above, they already transport their goods to the distribution centres
from suppliers (factories). From that main distribution centre, they transport ready 7
to assemble products to IKEA stores all over the world. Stores are collet customers'
orders and send the information to the respective distribution centre. In China, IKEA
does not exist at the low price because of exchange rate and most Chinese people
cannot afford to buy (Zhi Li, 2010).
Competitive rivalry is high although threat of substitute products and new entrants
are low condition. IKEA have a lot of competitors and some are as shown in
introduction. Walmart is regarded as a competitor from U.S though which is not
selling only furniture. China and Japan furniture markets have largest competitions
(Caplan, 2006). Everybody knows China is like the largest economic factory in the
world after their open up policy. Most of businesses have their factory there because
of labour costs and production costs are lower than other countries. Globally, Home
Depot, Walmart, Argros and etc. are main competitors of IKEA. They make similar
strategies with IKEA such as low cost, good quality, better services and appeal with advertisings and promotions.
Threat of new entrants is low and IKEA has strength of budget and strong market
as an existing global furniture retailer in a global scale. IKEA is holding 25% market
share in Sweden and there have potential entrants to the furniture market (Caplan,
2006). Existing players and high investment make decrease attraction to new
entrants in furniture retail industry.
Threat of substitute products and services are relatively low because of IKEA's
unique low cost strategy in a high quality and customers can feel quite different with
competitors' products and services. Substitute products are similar in appearance or
characters but not exactly the same. Consumers are unwilling to switch another
alternative because of stiff furniture market (Martin, 2014).
Above Porter five forces identified bargaining power of customers and suppliers, low
injury of new entrants and substitute products in furniture market by researching IKEA furniture group. 8 3. Area (b)
Trading through geographic must have the ability to obtain sources of international
competitive advantage. Multinational companies are using different international
strategies to control forces between global integration and local responsiveness.
Polices, disposable incomes, life styles, rate of technological changes, weather and
laws differ across countries. As a multinational company IKEA have to balance locally
responsive, adapt to local demand and meet the requirements and satisfactions of each national markets.
Each country has attractions which are not same types. Countries can be compared
by using standard environmental analysis techniques which are identified in PESTEL
framework. PESTEL is a strategic analytical tools used to assess the impact of
external factors on businesses. There have six external factors that may impact the
performance and affect the strategic development of the organisation.
Political factors depend on different governments. IKEA planned to build a store in
Ukraine but cancelled after a year later because of Ukraine economy minister stated
that it should be opened to help in destroying the perception of corruption. There is
no IKEA store in Africa where most nations are not politically stable. IKEA entered
into Canada in 1976, the USA in 1985 and China in 1998 (Hill, 2011). After 1978
reforms and open up policy in China, IKEA got the opportunity to enter into the
Chinese market as western retailer. IKEA made first step into Shanghai as a furniture
retail store which is the main area of land of a country. For store location, they have
to rent land from Chinese government by joining local partner according to Chinese
government policy (Josson, 2017). IKEA faced problem with some non-governmental
organisations because of suppliers from developing countries. They revealed that
some IKEA suppliers are using child labour and hosting terrible working conditions.
Also they have already known child labour is banned, they used children 14 aged and
below in their works because of IKEA's strong pressure to cut costs. IKEA told that
they didn’t know of such practices and objected to them. Suppliers from other
developing countries which are less strict in maintaining labour laws than Sweden
and IKEA cannot be blamed for that. IKEA Singapore was reopened in 1978 and 9
Singapore tax rate is lower than Hong Kong. As a foreign investor, IKEA was attracted by this scheme (Sigh, 2012).
The power of economic growth is effecting on the sales of the company (Mamady,
2014). The main keys of economic factors: GDP which is used to measure the health
of a country's economy, disposable income which indicates the potential size of the
market and global recession which is one of the biggest challenges facing by
multinational companies. Rising the economy in the country also provide people living
standards high. At the same time, disposable income of the consumers will increase
which will give rise to purchasing power (Mamady, 2014). As a global company, IKEA
revenues are directly affected by exchange rates such as euro, U.S dollars and other
major currencies due to the global business operations. Interest rates, tax rates,
employment rates are additional economic factors that multinational companies
usually face. Rise and fall irregularly in costs of IKEA raw materials also impacts the
business notably. Since they made products in China, their strategy of low price with
satisfied quality is more succeed.
IKEA contributed much in the society and maintained a fair social standing. People
life styles, buying habits and social classes are affecting to the sales of furniture.
Furniture industry has weakness in environmental and social factors which is the use
of toxic chemicals used in production process. Consumers' health consciousness,
emphasis on safety, career attitudes are some of social barriers for company which
effect on the demand for the firm's products. In Japan and Germany, there have
aging population and less likely to buy modern furniture (Mamady, 2014). These are
the changes of demographic variables such as age, family size, population, etc. By
watching trends, cultural factors, people life styles, behaviours and tastes, can control demands.
In these modern days, technological advancement and innovation are necessary to
have and use effectively. They have taken advantage of technology by providing IKEA
store app. Customers can get detailed information of the products through the
internet. Putting to the shopping list in application make easy to remember when
they are buying. There is no need to explain detailed about product by staff.
Customers have to go to the warehouse to pick up products and it waste the times 10
of customers and also staffs. But now, they put computer operated lift - s customer
has to order and then has to put the code of product on the computer operated lifts.
This advancement of technology save the time of customers and staffs. Using modern
technologies seem cost increase but in reality, it reduces cost for long term and it
also give a limit of standard. Not only product qualities are important but also first
impression (design and development) of furniture is an essential element.
Consumerism and environmentalism are trending nowadays. IKEA supplies product
in flat packing process and they use recyclable products when packaging. By UK strict
policy of maintaining environment green, they joined with WWF to make a project
which is focusing on sustainable forestry, cotton manufacture and climate change.
They follow low emission and products are transported by rail, road or ship. Most of
products are eco-friendly to have less impact on environment and they try to use
recyclable materials in their products. They focus on climate change and low emission
of fuel energy (encourage its staff to use public transports). According to the IKEA
vision, they are doing to make the world better care of the environment as one of the part of process.
Legal and political environment of host countries effects marketing strategy of
company. Although market has strength to penetrate, IKEA face difficulties in some
countries government policies. Every country has laws to protect their people.
Controlling prices, promoting fair trade and regulate monopolise. As a multinational
company, IKEA has to comply with various laws and regulations of different countries
which are customer rights, minimum labour wages, labour laws, interest rates, credit
card, etc. They also accompany to prevent child labour. The founder of IKEA, Mr
Kamprad was claimed of using child labour in Asia and buying feathers which are
pulled out of live geese. According to Journalists revealed, he apologized in an open letter (Malmo, 2011).
Multidimensional CAGE framework of IKEA group will provide to analyse the border
barriers on trade. CAGE distance framework point out Cultural, Administrative,
Geographic and Economic differences depend on various countries as a global
furniture company. These distances can give not only risks but also great 11
opportunities. Company may have to learn from their weakness and change into
challenges and get success by accomplishing different challenges. Cultural distance
Analysing cultural distance is one of the tools of CAGE Framework. Cultural
differences can make big problem multinational companies. Firstly, managing cultural
conflicts between employees is essential to keep workplace. After the internal
management is flawless, company can make well for external. Adaptation the
different culture is necessary to solve the cultural conflicts as a multinational
company. IKEA observed carefully about what cultural adaptations need to fit with
its corporate culture (Vasteras, 2010) for opening IKEA first store in Thailand in 2011.
They faced the cultural varies between Western and Eastern such as languages,
values, beliefs and tradition. As a multinational company, employees are also
different nationals who work together. There have both weaknesses which are culture
barriers and strengths which are having different points of view. In China and most
Asia countries, every apartment has balconies and they put a balcony section in their
stores. Staff of IKEA, Smedberg said that Chinese people are usually spending their
times in their living rooms and they also put dining table there. He told that bedroom
furniture and accessories are least sellers in China. So, they do not put that unpopular
furniture in their stores depend on countries' cultures. By this case, this can be regard
that they deal with different cultures by adapting. They not only service their
customers but also provide a relax condition by uniforms. There have no different
between with manager and basic employees.
Administrative distance
By looking PESTEL analysis above, there have some legal implications when IKEA
enter to the China market. According to IKEA Group corporate site, IKEA started
trading across borders such as Norway in 1963, Denmark in 1969, and Switzerland
in 1973 and Germany in 1974 and so on. It entered to attractive Japanese market in
1974 and there had distances varies between expected and actual according to Asian
info. They made second round re-enter to Japan in 2002. There is no political hostility between India and Sweden. 12 Geographical distance
As a multinational company, geographic distance plays in an important role in IKEA's
expansion strategy. Local resources are strong in India and IKEA have advantages of
costs and time by using them. Transportation linking is bad across borders in India.
IKEA have 6,800 co-workers and a lot of factories around the world. From those
factories, they transport IKEA distribution centres and send to the respective stores. Economic distance
IKEA is focusing to get 50billion euros sales in 2020 (Reuters, 2015). IKEA entered
into China since 1998 and opened store in the mainland of China, Shanghai. At first,
IKEA products are expensive because of import tax and exchange rates. But prices
are slightly fair with international IKEA prices now. In average, Chinese customer
usually earns around $399 per month and they usually buy about $36 per visit
(USCBC, 2004). Although economic size is quite big, there have low capital per income in India. 4. Recommendation
After researched about IKEA, there is so much knowledge about IKEA such as
company's competitive position in its various markets, factors and distances when
IKEA make trading across borders. This knowledge found from their official website,
company sustainable reports, others interviews and online news and journals articles.
IKEA target everybody. Actually, target segments are different depend on the part of
house such as sofa, bedroom, kitchen and etc. As a student who is staying her
parents' house. She needs neither kitchen nor some accessories but bookshelf and
desk are essential for her which are relating with studies. After 10 years later, her
needs will be change like the kitchen, bathroom and some home furnishing products
for her own place. There are no changes from IKEA target although her life situation
is changed. All different ages of people are target customers and products are
different depend on their need of life situation because home furnishing products are
one of the essential products for people daily life. 13
In these modern days, there can be seen furniture as luxury products by market
needs. They use furniture as decoration to look their home or office more attractive
without essential or luxuries products which are enjoyable but not very essential for daily life.
As a world largest furniture retailer, IKEA's way of success is having a smart strategy.
Among the Porter's Generic strategies, they deep focus on cost leadership. In delivery
process, IKEA should remove transporting to the distribution centre. This way of
direct delivered to the stores may reduce cost and also support to their low cost
strategy. They also use flat packaging process to reduce the transportation costs (Zhi
Li, 2010). This may also seek differentiation cost of standardising products.
IKEA target everybody and they have to find out each of segment what they really
need. Knowing what customers really need is main part and drawing unique designs
is the next step. Depend on the local customers' needs, IKEA have to put their
products in stores which can maintain the cost of transportation. As a foreign
company, IKEA need flexible strategies to win the heart of customers.
Firstly, SWOT analysis was written which is a way of drawing together an
understanding of strengths, weaknesses, opportunities and threats that IKEA faces.
Base on the SWOT analysis, researched Generic Strategies of IKEA which is a great
starting point for strategic decision makings and used Porter Five Forces to
understand the company nature.
Having factories in developing countries have advantages for IKEA cost leadership
strategy. For example, as a country's economy is reforming and opening up policy in
Myanmar, there does not have strict laws and regulations on labours and others. This
way is help to reduce the production costs and this is the one of reason that foreign
factories are slightly increasing in Myanmar. Labour costs are also lower than other
countries. Employees are playing in a core of company and have to retain them as
much as possible to fulfil company's goals.
Customers are holding high bargaining power because of stiff furniture market and
wild rivalry. IKEA have a lot of stores in many different countries. They also put online
store application. IKEA should research to attract the customers who could not give 14
time on the heavy traffic to go shops with their daily schedules. Instead of shopping
with online application by rolling catalogues, viewing products have more strength
and can have close relationship with customers by knowing their desires. IKEA can
expand grocery stores in its current furniture retail store because they already have
market and having market is easier than penetrating to new market.
IKEA achieve cost leadership strategy by forcing down costs and maintaining costs
which make profit increase. They also meet differentiation strategy by good qualities
in a low costs. Spending in advertisings, increasing research and development kill the
small players and increasing bargaining power of customers also likely to hurt them.
They can't make counterattack with larger players and can be squeezed out.
PESTEL factors can analyse by the macro-environment and the developments of
those key drivers are alternative situations for the future of IKEA. They usually face
with host country's government political differences. They should be prepared and
researched either their market or host country's cultures before they enter. This
makes less political problems and decrease wasting costs. IKEA foundation should
cooperate in making environment green more by making a small green garden where
people can relax in their holidays. This does not like supporting to the children
education programs in India with UNICEF. But this can give people feel better
temporary in their free times.
Providing IKEA store app give advantages for not only customers but also company.
Customers can get reviews and product detail descriptions easily. On the other hand,
company can know their strengths and weaknesses from customers' reviews easily.
Additionally, this does not make costs as surveying outdoor and they can also make
advertising and online promotions activities easily. But they should try to accompany
with Alibaba, Amazon and Taobao which are largest online stores in the world. They
already have online market and technologies.
As a global furniture company, IKEA should never ignore providing functional and
innovative styles and products depend on country's cultures, economic growth, laws,
demographic and geographic structures to wrap up high market share. 15
IKEA should have more cooperation with local suppliers to get more competitive
advantages. IKEA should make more adaptation and adjustment in China market.
Target segments are also varies depend on geographic, demographic and others. In
the same way, competitive forces are different for each target segments and markets. 5. Conclusion
This study focus to find out the competitive strategies of IKEA in various markets and
factors that IKEA considered and have to consider when trading across borders. IKEA
target every ages, sexes at an affordable price with great qualities of well-designed
home furnishing products. All different ages are target customer and IKEA have to
consider each segments' needs with well design in a low price to create a better
everyday life for many people. Firstly, SWOT analysis of IKEA was provided for each
generic strategy. And then, Porter five forces was used in Area (A) to analyse the
competitive environment with five main heads which are bargaining power of
suppliers and customers, competitive rivalry, threat of new entrants and threat of
substitute products. In Area (B), PESTEL analysis of IKEA was provided to obtain the
sources of international competitive advantage. And then CAGE framework was
researched to measure the distances between various countries' culture,
administrative, geographic and the last important one is economic distance.
Taking up of corporate social responsibilities can bring the positive publicity of
business. IKEA motivate their customers to accompany in campaigns and activities.
They usually sell soft toy for one euro at the end of each year in IKEA stores. As an
IKEA foundation, they split that sales money between Save the Children and UNICEF
projects. It supports programs which improve the lives of children in need through
health, human rights and education in Africa, Asia and Europe. They also provide
financial support for child protection, education and health programs for children from
India, Pakistan and China by cooperating with UNICEF. They gave help more than
$200 million in both cash and in-kind donations to UNICEF community educational
project in India (IKEA, 2006). They sold UNICEF greeting cards and made cause-
related marketing promotions activities by participations of IKEA customers and employees around the world. 16
IKEA can keep their reputation by stemming positive brand image in the furniture
industry. There have no perfect business and every strong business have lack of
process as their weakness. To fill them, making research efficiently is the best way.
IKEA make their customers by meeting good quality products in a low costs and that
help to get competitive rivalry. This report would give the research of comparative
analysis of IKEA in its various markets an
d factors that they consider when trading
across borders. In addition to them, there was provided things and discussions that
company have to consider to enhance their business. 6. List of References
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Chunhua He, (2009), The rhythm of IKEA in China, China Academic Journal
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all-those-ikea-names-mean-heres-the-s-1572392546 (Accessed: 11 February 2017).
Harness, J. and JIzzle (2011) 10 things you didn’t know about IKEA.
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