The business idea of IKEA is to offer a wide range of home furnishing with good design and utilities at prices at a lower price so that a maximum number of people will be able to afford them. This sentence sums up the Ikea spirit and this document will present some of the strategies undertaken by Ikea to accomplish the above objective. Ikea was established by Inguar Kramprad at the beginning of the 1950's. He created an innovating concept which corresponds across the world. After fifty years of Ikea's presence in the world market it now currently operates through 225 stores across the world.
[...] According to the founder: you want to serve the people, it is necessary to know the people's situation in general”. The purposes of these levelling practices are to create a house spirit which feels in the rate of workmen turn-over employees which is only 13%. They like their company. We can also illustrate this strategy by the publicity the October when the totality of the Ikea stores' takings was distributed, in equal shares, between the employees. This action can show for the public a healthy and solid company. [...]
[...] This implies an effort in the logistics of the transnational distribution of vertical integration. Internet Sales: It exists only in certain Scandinavian countries; Ikea should thus increase this service in the most developed countries. Ikea's Threats It is useful to define the Ikea strategy on its current markets, to wonder about the threats. In this way, the traditional Porter's five forces can sum up us the potential dangers. Competitive rivalry: To start, due to the relative importance of Ikea this sector and its “semi-finished” product selling, the products' prices are low. [...]
[...] Ikea works with a local partner To be in adequacy with each country Ikea made the choice to create different frankness' contracts. In fact, it works with partners who know the local environment. If the case of American is taken again, Ikea produced a new range better adapted while calling upon American suppliers. At the result, the costs increased but the sales progressed by 40%. On the distribution's level, Ikea gives a degree of freedom to its local managers. To conclude this part, today, the Ikea's growth's strategy is more than a geographical development than a competitive position. [...]
[...] During my research I found other threats which are not show in the last part. The first one is the geographical establishment. In fact Ikea is not in inner city but only in suburbs area. Consequently it loses an important market's share. Next, the products should less standardized because customer will wish more and more various lines goods. The Ikea's products can be found everywhere and customers want more identity at home. Finally, since the end of the nineties the market is qualified as “stagnant market”. [...]
[...] Moreover, Ikea must worry due to the fact that its principal target, the young couples, who tends to decrease on the population's level. The arrival on the market of new potentials competitor on a national scale forces Ikea to fight more. Lastly, Ikea is confronted with another major challenge: change of the group's size. Indeed, Ikea is a company entirely founded on the philosophy and the values of its founder, which allowed the birth of a strong cultural web. However, the increasing of the company's size involves a certain dilution of this cultural web. [...]
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