IKEA is a multinational company that sells furnishings and furniture. It is founded in 1943 in Sweden by Ingvar Kamprad. The company focused on furniture retailing at the early stage of the business and started to design its own product in 1955. The first IKEA store was opened in Almhult (Sweden) in 1958 (Woodham, 2004). The company has experienced growth ever since, by 2016 IKEA had 390 stores in 48 countries (IKEA, 2016). Since the company was founded its pricing strategy has mainly been low cost. IKEA is known for providing a wide range of low-cost, functional and well-designed products. However, because of the scale and size of the business, maintaining the standards and quality of the products has the potential to become a challenge. For example, some countries where IKEA’s manufacturing sites are located do not have the legislation to control working conditions. This could result in a weak supply chain which could then affect customers’ views of IKEA’s products (Anonymous, 2009). The purpose of this paper is to identify a strategic issue of IKEA and examine how has the company reacted to the issue.
Strategies to response to the issue
The organisation has implemented a number of strategies to respond to the challenges in the competitive market space. Firstly, to respond to some societal and environmental challenges, IKEA has started to work with organisations that can provide expertise in environmental and social issues. For instance, regarding social issues IKEA has built a strong relationship with UNICEF and ‘‘Save the Children’’ which are two very credible organisations that focus on combating child labour issues (Strand, 2008). With regard to environmental responsibility, since founded the company has alw...
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...ires a huge amount of financial investment and expertise (Dudovskiy, 2015).
Threat of substitutes: Threat of substitutes is low because the range of products and services IKEA provides still remains attractive to its target customers.
All strategies seek to achieve higher competitive advantage. Competitive advantage is important to almost every business, it allows the frim to be in the position to make more profit (Amason, 2011). One of the keys to the IKEA’s success is its communications with materials’ suppliers and manufactures. The other key is that it believes a strong environmental policy is good business practice ("SWOT analysis and sustainable business planning - An IKEA case study", n.d.). The scale of the company is still expanding. It would be fair to say that IKEA has successfully implemented a set of well-structured business strategies.
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