IKEA

PREPARED BY: ARPITA PATHY

MADHUSMITA MOHANTA
SUSHREE PRIYABRAT
 ABOUT THE COMPANY

¡ IKEA is a Swedish multinational conglomerate based in the Netherlands that designs and
sells ready-to-assemble furniture, kitchen appliances, home accessories, and various other
goods and home services.
¡ It was founded in the year 1943 and has been the world's largest furniture retailer since 2008.

¡ It is also the largest furniture retailer in the world.

¡ For 75 years, the company has been living up to its key goal, which consists in making “well-
designed, functional home furnishings available to everyone”.
 ¡ It follows a low-cost and obligation-free business
model, with high flexibility and low investment cost to
serve various customer needs.
¡ IKEA adopts a vertically integrated supply chain
model that includes self-owned forestry operations,

IKEA’s Business
forestry specialists, and direct sourcing from over
1,000 suppliers in more than 50 countries.
¡ It offers a great range of products for customers to

Strategy
choose from.
¡ The forever expansion into new international markets
is the key to growth for IKEA.
¡ The formation of strategic alliances with local partners
is also vital to the expansion strategy of IKEA.
¡ It also acquired Geomagical Labs for an undisclosed
amount in April 2020.
How would you characterize the competitive strategy of IKEA?

¡ IKEA business strategy is built upon the IKEA concept.

¡ The IKEA Concept starts with the idea of providing a range of home furnishing
products that are affordable to the many people, not just the few.
¡ It is achieved by combining function, quality, design and value – always with
sustainability in mind.
¡ Its competitive advantage lies in its ability to meet customer needs using an
extensive product portfolio and innovative design concepts.
¡ The company uses an interactive website that provides customers with
comprehensive information on products.
¡ It is also among the few companies that offer customers the ability to customize
products before purchasing them.
¡ IKEA also uses a unique direct delivery system, where goods are transported
directly from its warehouses to its customers’ homes.
¡ Cost efficiency has also played a key role in the growth of IKEA.
IKEA’s Strategic Fit:

¡ IKEA mainly follows the “Cost Leadership Strategy”. This

method saves delivery costs for both producers and customers.
¡ Besides, IKEA follows “Differentiation Strategy” to some extent.
Basically, the company innovated the way people purchase
furniture. Every IKEA stores is a unique building with the noted
brand symbol and style. Compared to other furnishing retailers,
IKEA shows their products in prototype rooms which are
miscellaneous and stylish.
¡ Moreover, IKEA obeys the “Focus Strategy” on differentiation.
For instance, in IKEA stores in China, customers can find lots of
Chinese traditional designed furniture, which is well-satisfied for
Chinese customers’ decoration demand.
¡ Last but not the least, it also follows
“promotional strategies”.

¡ It makes IKEA unique and is a source of

inspiration for customers.

¡ For example; In Sweden to support the

launch of the 2008 edition, IKEA
furnished the waiting hall of the
Stockholm train terminal – and all major
newspapers carry lengthy reviews and
commentaries.

¡ Also in China, they have adapted to its

market has meant embracing the fact
that customers quite like to lounge in
the store, taking enthusiastic advantage
of the comfy beds and free air-con.
How can IKEA expand the scope of Strategic Fit across it's
Supply Chain?

¡ Improver in the area of Customer Service.

¡ Set up outlets (may be on a third-party basis) such as showrooms where customers can save cost in
terms of transportation but enjoy a more personal service and detailed instructions in the area of
assemblage.
¡ Provide in-house assemblage instructions for their products (some customers were seen being asked to
dissemble a product in the return and repurchase section with no assistance from staff) for those who
want clarification while on site.
¡ Employ and train more customer interfacing friendly staff, realizing that Customer service is not
negotiable or an area that can be over emphasized.
¡ Draw long-term strategic plans, being innovative and creative in their approach to the future to avoid
decline.
What level of responsiveness would be
most appropriate for IKEA supply chain?

¡ The IKEA supply chain is highly responsive in the areas of

handling home decor products, furniture, customer response, and
service level
¡ IKEA provides responsiveness in the supply chain, with the stores
absorbing most of the uncertainty and being responsive, and the
suppliers absorbing little uncertainty and being efficient.
¡ Another approach for responsiveness may involve the retailer
holding little inventory.
¡ For the supply chain to be responsive, the manufacturer needs to
be flexible and have low response times.
REFERENCES
¡ https://blogs.ubc.ca/junlingliu/2016/10/02/ikea-a-success-of-porters-generic-strategies-combination/
¡ https://research-methodology.net/ikea-business-strategy-competitive-advantage-capitalising-ikea-
concept/
¡ https://www.researchgate.net/publication/268160897_A_SITUATIONAL_AND_STRATEGIC_ANALYSIS
_OF_IKEA_AND_THE_FUTURE
¡ https://businesschronicler.com/competitors/ikea-competitors-analysis/
¡ https://research-methodology.net/ikea-business-strategy-competitive-advantage-capitalising-ikea-
concept/
¡ https://www.studocu.com/row/document/jahangirnagar-university/consumer-behavior/sm-ch2-supply-
chain/16006049
¡ https://www.coursehero.com/file/p5ivjp0/cost-countries-and-focus-on-efficiency-IKEA-provides-
responsiveness-in-the/
THANK YOU