IKEA is a Swedish furniture producing company that has taken Europe by storm in the business. The company has embraced the concept of globalisation and opened stores in different nations across the world, including in the U.K., Japan, and the U.S. among many other nations. The main business activity in the nation is the production of wooden furniture. The company has also taken up the development of residential houses in Sweden. IKEA has distinguished itself from other companies in the industry by developing high-quality furniture and placing low prices on the products. The diversification of business activities in the company has raised its competitiveness over other global furniture producing companies.
Mission & Vision
The company’s mission statement highlights the quest for IKEA to become so large on a global scale that it will seem impossible to achieve. The management function in the company has assumed a strategy of diversification to increase its production zones across the world. IKEA associates with high-quality products at the cheapest prices in the market, and its aggressiveness in marketing is recognised globally. IKEA’s mission is in the initial stages of actualisation because it has assumed a growth strategy that targets the global market rather than its traditional regional marketing strategy. IKEA’s vision statement is to enhance lives of people across the world through the products. IKEA focuses on providing quality products for people in different social-economic classes, and it assumes a services provision strategy that allows the company to provide cheap services and products.
Strategy Choices
IKEA’s bases its business strategy in reducing the cost of services to maintain low prices for its products. The company limits the number of workers in the stores, allowing the customers to select their furniture independently in the display areas. Customers have to collect their furniture over the counter; hence, the company rarely provides transportation services. This low-cost service enables the management to maintain low prices, and subsequently attract more customers. The marketing function at IKEA has developed and effective marketing strategy. While most of the rival companies use newspapers and radio advertisements as their primary marketing avenues, IKEA invests in TV advertisements. The company has different stores in different nations. It targets consumers from different social-economic classes; hence, it has a big market share in the European nations.
SWOT Analysis
IKEA’s main strength lies in its supply chain. The company diversifies its suppliers by selecting the cheapest companies from 50 different countries. IKEA receives raw materials from 1,500 companies from the 50 countries, and they enable IKEA to provide consumers with the cheapest furniture products. The company’s popularity in Europe is also one of the strengths that have placed it at the top of the competitive bar. IKEA is a Swedish company, and Sweden is popular for its quality products. European consumers in different parts of the continent have confidence in products from IKEA because it is a Swedish company. As revealed by some customers in one of IKEA’s stores in the U.S., the lack of comprehensive services for customers is one of its weaknesses. The manager at the store claimed that the company limits its services to maintain low prices on the furniture. IKEA has numerous opportunities that can be harnessed through the expansion of its stores in the emerging markets. For instance, the demand for furniture in the U.K. is very high, yet IKEA has not supplied sufficient products into the market. Expanding its stores is a potent strategy in harnessing the opportunity. The company should continue expanding its entities in the U.S., and venture into new markets within European nations, as well as the Asian and African continents. IKEA does not have any immediate threats currently, but customer satisfaction in its stores through quality services threatens to cause some loss in customers in the American market. Competitors like Lexington Furniture Industry strive to give IKEA a run for its money through competitive prices and quality of products as well as satisfactory customer services.
Strategy Implementation
The management at IKEA is quite effective in the implementation of its strategies. The marketing strategy in the company secures many new customers across Europe and other regions where its stores are located. The management function in the company allocates large amounts of finances into marketing. Effective management of its supply chain also facilitates the implementation of its low-price product strategy.
Strategy Evaluation & Recommendations
IKEA’s business strategy is effective in increasing sales. Providing consumers with quality furniture at cheap prices creates interest in potential consumers in the emerging markets; thus, the company is likely to succeed in any new market it targets. It is, however, apparent that consumers in the U.S. require better services at the stores. IKEA should continue expanding into different emerging markets, and it should also look into ways of introducing better services without affecting the prices of its products. IKEA should focus on customer satisfaction through quality products, fair prices, and satisfactory services for customers in its stores.