IKEA

1150 Words3 Pages

1) The Concept of Strategy
Competitive advantage is more likely to be created and sustained if the organization has distinctive or unique capabilities that competitors cannot imitate. This may be because the organization has some unique resources and core competences (Johnson, Scholes and Whittington, 2005). The unique resources of IKEA are leadership and Scandinavian style designed. IKEA had a presence in more than 43 countries and was well known for its good-quality products marketed at relatively low prices. This accomplishment has been achieved by the vision of the founder Ingvar Kamprad. IKEA have consolidated designed department, Com-in, to discover consumers’ need and design for them. All Com-in specialists are from either an interior design background or visual merchandising, and are responsible for the presentation or IKEA product offers using all current range presentation medias and techniques. Core competences are cost leadership, global sourcing, differentiation, and branding. IKEA controls every aspect of the process, from manufacturing to the time the product reaches the consumer. And at every step along the way, IKEA cuts its costs through global strategies. Moreover IKEA buys in global quantities; it is able to get goods manufactured at a relatively low cost. In addition, the company is intent on having good made in the most economical way possible, even if that means using unconventional suppliers to produce furniture or using different suppliers for different components of one item. Furthermore, IKEA outsources its manufacturing in many different countries and also outsources final assembly and delivery to the customers themselves meanwhile IKEA expands its brand with its concept worldwide (Zeller, 2002)

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...space without adding costs to IKEA. On the other hand, differentiation strategy is aimed at delivering products/services that are different from the product mix of the competition. Although IKEA seems to be mainly focused on cost-leadership, we also have identified some aspects that customers would perceive more differently than traditional furniture manufacturers. Most products are ‘Flat-packed’ in IKEA stores, and this increases the convenience of the goods carriage and transportations.
Overall, we can conclude that IKEA started its business “cost-consciously” in the early years. Later, when the organization had accumulated enough experience and fund, it achieved the “cost-leadership” in furniture retailing industry. However, in the years following, IKEA started to strive for differentiation due to its unique way of incorporating the customer in the value chain.

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