IKEA, has been the market leader in the Swedish furniture industry, consequently of their implementation of competitive strategies for a global market place. All aspects of the business's value chain are focused on the development of high quality 'knock-down' furniture at low and affordable prices.
The double-dip recession has resulted in a decrease in sales of IKEA's furniture as many persons are unemployed anticipated to many companies inability to economically meet their overhead cost. Because of this a lot of IKEA's customers have chosen to carry to their savings because of the economic doubt. The recession impact IKEA's operations as countries in which IKEA operate in, may deglobalise their markets and try to promote buying-in with their local products and services rather than products from the international market. Therefore, this might reduce IKEA's making potential predicated on a decrease in customer spending.
Socially, IKEA has been able to provide job to folks in 35 countries increasing the standard of living of the employees. IKEA has been getting strategic advantages over their competition given that they have been outsourcing the primary degree of their value string activities. This plan can be used to increase job levels in developing countries as they grapple with the communal ramifications of the global recession, such as increased unemployment and criminal activities.
IKEA's technological principles have added value to their main competencies which allows them to become more competitive. Technology at IKEA supports the development of services, research and development systems and solutions to improve on the development process. Their technology has led to an efficient distribution string to ensure that their goods reach their consumers as and when these are needed, making them always available. IKEA's information technology offers countless opportunities to simplify, streamline, and improve every part of functional activity.
Ethically, IKEA has established admirable specifications for achieving better competitiveness in family members furnishings industry. Through its clear description of their jobs and their romantic relationship with their customers, IKEA can significantly develop strategies and systems to ensure that products gets to the customer promptly which is of the highest marketable quality available at affordable prices.
IKEA's corporate guidelines basically are regarding their impact on the natural environment it is the motivator because of their romantic relationship with suppliers. IKEA is placing itself to provide energy saving electrical lights to consumers. Through its interpersonal programs IKEA has donated a large number of the standard requirements to underprivileged children.
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There are also legislations to regulate the ethical and lawful management organisations including IKEA. IKEA must carry out their operations according to the rule of legislation when it comes to the countries in which they operate especially about the human rights act, the safety of staff and the correct execution of the Profession Health and Security Act. These laws and regulations are enacted to protect employee from exploitation, misuse, discrimination and violation. If workers believe that their protection under the law, while used have been violated by the business they have a plan of action which they are obligated to adopt against their company. The violation of staff' rights can be quite damaging to the image, brand and reputation of the company. Therefore, it is of essential importance that the correct investigation and specifications are implemented when outsourcing activities to ensure that workers' protection under the law in expanding countries aren't exploited and abused.
IKEA's strategic capacities are their advantages, such as their skilled human resources and their reliable value string and distribution programs. The business developed ways of conquer weaknesses and convert them into talents which the company can capitalise on to gain competitive advantages. The standisation of the creation process in the make with their furniture allows IKEA to increase its production output with an increase of accuracy and efficiency, in so doing enjoying economies of level.
Strengths, Weakness, Opportunities, Hazards (SWOT) Examination identify the issues and issues.
IKEA has outsourced to a number of global manufacturers to create their furniture at a cheaper cost added to the easily availability of raw materials and skilled labour. This however, can be considered a problem for IKEA as governments desire to protect their local sectors. Therefore, they could impose trade tariffs and embargoes on the company's products thus making them more costly for transfer.
The affordability of IKEA's furniture is a way to obtain power for the furniture large because of this of which they could enjoy more sales. However, IKEA has noticed the obstacles of the double-dip global recession from 2008. The recession has kept many unemployed and other cautiously monitoring and managing their level of spending. This may take into account the marginal upsurge in sales from 2008 to 2009.
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Through the standisdiation of their production techniques and furniture design IKEA has been able to increase production, with minimal wastage and increased efficiency and swiftness. However, the standardization of the furniture will present difficult for IKEA since it is a global company and the cultural difference in countries are present. Therefore, their global customers may necessitate a variety plus they might need to conform their furniture to adequately satisfy the various tastes, needs and styles.
The company has adopted a set organisation framework for increased efficiency in the management and control of personnel to ensure that the corporate and business goals of IKEA are achieved at the operational degree of the company. However, IKEA's management strategy which empowers personnel to make decision can lead to the development of a lassire-faire frame of mind among staff. Management may loss control as staff conduct may become unethical and irresponsible.
IKEA's policy of deploying management from their Swedish store to train staff at their global branches is utilized as a technique to ensure that IKEA's concepts, vision and quest is standarised throughout the company's 300 branches. This insurance policy may leave many employees feeling de-motivated as they may feel that the Swedish branch is centralising their electricity, authority and control over them.
IKEA's polished catalogue is a great promotional tool as it is sent out in 35 countries, in 25 languages more than 190 million. The price attached to publish these catalogues would impact the company's profit percentage especially in market experiencing gradual sales. The impact on the destruction of the natural habitat as a result of the lot of catalogues circulated on a yearly basis; there may be cause for environmentalist to be concerned.
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IKEA's main strength however is the rate and efficiency with which the company means that their furniture reaches their customers though however, in trying to help make the furniture more affordable IKEA has didn't enhance the appeal of their customer bottom part through their lack of style and selections.
IKEA has been able to start 35 stores however, the negative impact of the global recession poses an issue as the value of countries currency may be devalued as countries seek to cope with the economic effects of the recession. Many governments so that they can protect their local sectors from the impact of globalisation are deglobalising their economies to allow their local businesses to endure as many folks exercise increased control with regards to their spending.
EXPECTATION & PURPOSE
At this level business functions must be conducted ethically to the benefit of its stakeholders (employees, environment, customers, shareholders, suppliers, opponents). IKEA has a responsibility to culture and its connections with its stakeholders must reveal and symbolize the organisation's best interest.
The business level of IKEA's businesses strategies are carried out that allows for the hiring of the greatest skilled, qualified and trained employees who are able to work proficiently with minimum supervision. Employees are empowered to be always a area of the company's decision making functions of the business. This has allowed the business to be ever more ground breaking in fullfilling the vision, missions and values of the organisation. The proper execution of IKEA's business strategy would bring about IKEA realising competitive benefit.
EXPECTATION AND PURPOSES
"Strategic choices are worried with decisions about an organisation's future and the way in which it requires to the many pressures and influences"
IKEA's quest is to provide low-cost furniture, of high quality which would meet the needs and targets of their customer platform. Their labor force is highly trained and empowered with the authority to make decision and take responsibility for their decisions. IKEA can also put into action procedures and insurance policies to ensure that their main production and developing concepts are standardised on a global scale at every one of the 300 stores in the 35 countries that they operate.
CORPORATE & INTERNATIONAL LEVEL
However, at IKEA's commercial and international proper level they ensure that the development and manufacturing techniques of the furniture are standardised to ensure that efficiency and quality control are maintained. The furniture are easily made available jam-packed in boxes where in fact the customer don't need to pay added costs to really have the product supplied, they can self carry and assemble themselves.
DEVELOPMENT DIRECTIONS & METHODS
IKEA's strategic direction and ways of development has allowed them to purchase research and development. Their new principle in "knock-down" furniture has located them become a market innovator in this sector.
STRATEGY IN ACTION
IKEA have had the opportunity to implement prepared and unplanned strategies which includes enabled the company to get competitive benefits through technological command, producing superior furniture in comparison to competitors.
Suggest a variety of options to cope with the issues of IKEA's position examination issues.
For a worldwide organisation such as IKEA operating in an extremely competitive recessionary market suffering from troubles and issues there are variety of successful strategies which IKEA should apply. The successful execution would place IKEA able to revitalise their declining market and boost their product offerings which allows them to maintain competitive benefit. IKEA must use ways of drive the market through innovative ideas and not allow market drive it.
IKEA can adapt its marketing strategy to catch the attention of a wider and diverse portion of the market. Strategies like a concentration differentiation strategy also needs to be used along with IKEA's low-cost "no frills" strategy which would place IKEA at a tactical advantages to provide furniture at a substantial price to a decided on niche market demanding furniture of a perfect quality and fine detail. This strategy would allow IKEA to focus on consumers from the upper and upper middle income which they didn't focus on before.
It is also advisable that IKEA invest heavily into advertising and branding with their products to catch the attention of a wider demographic and enter new market segments. This strategy attempts to encourage customers they are paying higher charges for something of top quality and unique to the needs and wants of the buyer.
Through the implementation of your differentiation strategy IKEA provides goods and services different and of a wider variety from their competitors. To gain proper advantage in a worldwide recessionary market and highly competitive market IKEA can further outsource and also offshore their support and principal activities of its value string to India for example where the price tag on labour is a lot cheaper than it might be than for example, the united states and Europe. Here they might be able to reap the benefits of time arbitrage. IKEA can benefit from the benefits of time changes by adding the change with time from one geographic location to some other to effective use therefore the developing process is doubled.
This strategy would enable IKEA to enter and capture new segments of the market that they were unable to enter before. Because of this, the price of production diminishes making price less expensive to the public. Producing increase sales and conditioning the market potential of the IKEA brand on a worldwide scale.
IKEA can focus on improving the quality of their existing products thus remaining competitive reducing the risk of dropping market show to competition.
MAINTAINING CUSTOMER Life-time VALUE
By concentrating on maintaining life span customer value IKEA shouldn't only focus on a single deal with the client but growing and keeping a lifelong relationship with the customers. IKEA can achieve this by retaining an even of constant contact with customers, keeping up to date of the needs and providing them with a superior level of customer service which their competitors cannot imitate or they would find it hard to do so. This strategy works of creating customer commitment which can go on an eternity.
IKEA should continue steadily to provide added value to their customers, since their customers do value the benefits which they get from their IKEA furniture, they must get affordability. IKEA must continue to offer an extra degree of service to further increase the value of these furniture to their customer basic, IKEA has recently done this by giving a low-cost product, supporting in reducing the price by allowing customers to provide and assemble their own furniture. Additional, IKEA can offer more benefits to their consumers such as promotional items with purchases.
Through mergers and acquisitions IKEA can partner with another company which can permit them to enter into new markets which they have been struggling to successful penetrate. This plan fosters an atmosphere of growth because the tangible and intangible sources of both companies are merged which raise the chance for further growth potential.
As consequence of this expansion IKEA can benefit from horizontal integration which makes it possible for IKEA to provide to new marketplaces its existing furniture range or they can expose a new selection of products to their current. This plan can allow IKEA to see further development and increased advantages from economies of scale, as there can be an increase in the number of products produced this results in a lower cost per unit.
IKEA supply chain which include in adequate way to obtain raw materials to produce their furniture having the ability to satisfy the needs and wants of these customers. As a consequence, IKEA would be poised to exercise increased control of their functional systems resulting in improved quality, number and price which would impact the business's income in a good way. IKEA can also experience progress by diversifying into a fresh range of products and new product development allowing IKEA to take pleasure from synergic expansion and development.
SHORTENING THE PRODUCT LIFE CYCLE
By expanding products with a shorter product life circuit IKEA can continue steadily to anticipate and successfully meet the changing needs with their customer base, meeting and satisfying the needs of clients as well the prevailing. Through advancement and research IKEA would be able to keep-up with changes in fads on the market. Giving the client what they want before the customer even know, what they need.
IKEA can re-engineer its systems by critically evaluating its operations to develop strategies to let it raise the company's efficiency by so that it is more simple or taking away them from the company's functional systems.
TALK TOWARDS YOUR CUSTOMERS
IKEA can improve its existing product, packaging and supply their furniture offering in a fresh way an outstanding marketing strategy which can allow IKEA to maintain competitive advantage. This plan would be used to make an impression IKEA's customers with the new increased product offering. IKEA's marketing administrator can develop strategies through effective market research into geographic and demographic sections of IKEA's furniture market. With the info compiled IKEA can create new suggestions to improve their product offerings benefiting customers because they are able to satisfy their market potential through client satisfaction.
Though general market trends IKEA could provide stores in the physical locations where there's been a higher demand for the IKEA brand.
This may entail including or getting rid of levels of control in KEA's organisational framework which would promote a more efficient culture leading to increasing production.
TRAINING & DEVELOPMENT
IKEA should target training and development programs which would allow staff to develop and harness their functions to be more ground breaking and creative supplying IKEA competitive benefit.
For the extended success of the IKEA brand, it is important that a complete environmental evaluation is conducted which can know what is the better ways of be carried out to meet up with the changing needs and taste of the new market and the existing market. In the rapidly developing world in a market where consumers needs are constantly changing at a rapid rate, coupled with the economic issues of a worldwide recession, IKEA must diligently assess their products and their potential to satisfy the near future needs of the consumers. By producing and enhancing the skills and talents of the recruiting IKEA would be poised to increase the capabilities with their center competencies. IKEA can reinvent itself as they make an effort to maximise the amount of competitive advantage it offers over its closest competitor.
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