IKEA in 2013: Furniture Retailer to the World
Background
The strategic issue in this case is analysis of specific advantages in providing of innovative furniture products all over the world for the low price. In manufacturing strategy, the Swedish company IKEA combines adequate quality and available price. It is focused on selling products to middle class consumers. Long-term relations with suppliers enable the company to reduce transportation costs. The policy of minimalism and reducing costs is illustrated in world-view of its founder Ingvar Kamprad.
Strategic analysis and options
The manufacturing process of IKEA is concentrated on price issues rather than design. The IKEA pays attention to long-term cooperation with its suppliers from states with cheap labor. Outsourcing manufacture enables reduce costs for the furniture providing its availability to middle class. Stores of IKEA are situated outside of cities to decrease rent payment.
Strict inner policy prohibiting elements of luxury life to company managers.
Availability of entertainment at IKEA stores presents attention to clients and create comfort conditions in the store. The cafes, restaurants and rooms for children enable to keep customers as long as it is possible. The company always estimates its Swedish decent. Logo of the company is created in colors Swedish national flag.
Moreover, there are books, posters and calendars in Swedish, discounts within national holidays and national menu in cafes. Concentration on ecological issues is illustrated in manufacturing process. The furniture consists of natural materials and packed by ecological means according to the standards. IntegrationIt is clear that company IKEA relies on its reducing costs policy that is illustrated in manufacturing and supplying process together with inner management. These characteristics, which are difficult to duplicate for competitors, estimate exclusivity of the brand.
Controversially, standardized products of the company are an obstacle for involving more customers. Informality of internal management threats further globalization of the company. The corporate culture of IKEA may not work in other countries except European. These findings lead me to suggest that the company should provide not only low cost, but also sustainable products. IKEA should adjust its corporate policy depending from country where the business is carried out.
Recommendations
Offer sustainable products in order to get loyalty of consumers;change the corporate culture of a company depending from country the IKEA stores are situated in.
Action plan
Within two years the product design council should take responsibility for extension of furniture base to provide diversity in product line of IKEA; marketing department should change the low cost policy to obtain preference from more categories of customers; strict procedure of cooperation with suppliers needs to be reconsidered in order to achieve goal of opening 25 stores by 2020.
The product design council should take into account traditions of countries where the IKEA business is situated;within one year the company management should adjust its corporate culture to traditions and mentality of countries where …
