IKEA Case Study

2963 words 12 pages
To: Carol George
From: Fangyi Shao
Subject: IKEA case study
Date: 24. Apr. 2009

1. Introduction
IKEA is the world’s largest furniture manufacturer who offers a wide range of well-designed, functional home furnishing products at a low price that many people can afford it. IKEA’s mission statement describes the purpose and distinctive advantages of the company clearly. (See appendices Ⅰ) It can also motivate management by saying ‘create a better everyday life for people’ because employees need work together to achieve this goal.

2.0 SWOT analysis (See appendicesⅡ)
2.1 Strength
Ikea was ranked 35th among the best global brands around the world in 2008 with a brand value of $10,913 million. (Interbrand, online, 2009) IKEA is far more
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For instance, competitors beginning to mirror the model of low cost value flat packed furniture which will influence IKEA. In addition, the furniture retailing market is growing slowly and even negatively during UK’s recession. Almost half of the companies suffered a decline in sales return on total assets. At this time, the rivalry becomes extremely intense. IKEA must continue to reduce price and take market share from their competitor if the company want to keep up growth. The high fixed costs and costs of storing finished products may also be a reason that causes the competition. (Campbell, 2002) The high competition forces IKEA to achieve basic sales volume and gain more profit through cutting price.

5.0 IKEA’s strategic position in ‘strategy clock’
According to research, I think IKEA belongs to the third position of strategy clock which is hybrid strategy. (See appendices Ⅴ) This strategy seeks to achieve differentiation and a low price that also match with IKEA’s mission statement of producing high quality products at a low price.

IKEA builds its differentiation through many ways. Firstly, the company offers a wide range of modern home furnishing products from cabinets to candlesticks at a low price. The designer use suitable materials to make them look expensive. Secondly, it is IKEA’s position itself as an integration brand. The company owns its brands, design and sales distribution channel. Unlike other companies


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