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Business strategy IKEA group - Case Study Example

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Business strategy IKEA group

Using secondary research this report will present the emergent and direct strategies of this company and will also explain the reasons for IKEA to follow them. The report will then explain the importance of written strategic plan and cite the approach companies must take to deal with emergent events. This report also presents the future strategies for IKEA by using Ansoff's matrix.
The history of IKEA in the Appendices section shows its steady growth over the years. This report now gives examples of emergent strategies and direct strategies of IKEA and the reasons for following them.
(i) The company generally works through a network of worldwide suppliers and doesn't manufacture its own products. But, the company has few factories that set benchmarks for their suppliers on production economy, and quality (Nattrass and Altomare, 1999). The company focuses on achieving efficiency at low cost without compromising on the quality (Rosenhauer, 2008). By setting an example in front of the suppliers, the company can get better products from them and deliver more customer satisfaction.
(ii) IKEA is also the joint owner or financer in a number of countries to secure supplies and help suppliers develop (Nattrass and Altomare, 1999). This may increase IKEA's competitiveness as companies can increase their competitive positioning by undertaking key activities in the value chain. The company also makes efforts to form close relationship with the suppliers and helps them develop, and innovate through training programs (Rosenhauer, 2008). This ensures better cooperation with the suppliers who strive to give quality products at a very low price. Relevant and timely training can provide the valuable guidance that can help suppliers produce the right product for the customers.

(iii) The global furniture giant is characterized by lesser hierarchical structure and absence of bureaucracy. This helps the company to have centralized control over key functional activities. The Chairman of the company believes that strategic decisions of an organization should be reached in a simple manner (Rosenhauer, 2008). IKEA also delegates important strategy decisions to their store managers (Nesbitt, 2004). Apparently, this freedom to take decisions will make the managers feel more responsible towards their jobs and they will become more loyal to the organization.


Emerging Strategies

(i) The company has begun to focus on inviting the customers to be involved in the design and production of the products. IKEA is focussed on redefining roles of their stakeholders in the furniture business so that it can effectively beat the competition (Rosenhauer, 2008). The company has also begun to target young people who have a liking for stylish designs available at affordable price (Winfield et al, 2004). By involving the stakeholders in the design the company can provide customers with products that they really want and this will give them a competitive edge. The company will no longer waste its energies in unproductive work and focus on making only those designs that click.

(ii) IKEA was driven to change its strategy and pay more attention to taking care of the environment. The company was criticized for the huge packaging waste, using excess of PVC plastic and cutting trees to make its catalogues. This global home furnishings ...Show more

Summary

IKEA group has been founded by Ingvar Kamprad who has successfully led the company to become a profitable global venture (Nattrass and Altomare, 1999). The company opened its first furniture showroom in 1953 and is now present in thirty one countries across five continents (Rothacher, 2004)…
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Business strategy IKEA group essay example
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