Positional Analysis Of Ikea Marketing Essay

Published Date: 23 Mar 2015

Every industry tries to use an unparalleled, efficient, and effective business strategy that will allow them to remain at a progressive position in the competitive market, especially in the global market. With respect to this, the aim of this report is to present a position analysis for the furniture company IKEA. The position analysis will apply both the pestle and swot analysis in order to determine IKEA's current position.

Executive summary

IKEA is certainly one of the top furniture retailers in the world. With its unique combination of form, function and affordability, IKEA distinguished itself from other furniture retailers. With its overwhelming success in Europe, IKEA entered the American market with the hope of continuing its success. Though not very successful initially, through its market research and impulsive advertisements, IKEA captured major market share in the US market and also the reputation of being the fastest-growing furniture retailer in the US. Though IKEA's target of 50 stores in the United States looks optimistic, considering the market potential of the US furniture market, the target is realistic if IKEA could address the challenges ahead of it in the US market.

Methodology

"The strategic position is concerned with the impact on strategy of the external environment, an organisation's strategic capability (resources and competences) and the expectations and influence of stakeholders".

A position analysis can be seen to incorporate three elements: 1. the environment. 2. strategic capability. 3. expectations and purpose.

IKEA's SWOT Analysis

In this report, the analysis of the present situation of IKEA will be carried out by using different marketing tools. With this, IKEA will be examined via the use of SWOT Analysis. The basis of external and internal analysis is to construe factors that can affect the said business to situate itself to take advantage of opportunities, and manage threats discovered via an analysis of external environments. Particularly, it also aids in spotting present weaknesses and strengths that may affect the organizations' capabilities.

Analysing IKEA's Capability

Based on the given case study of the IKEA Company it is recognized that IKEA exerts a strategic approach in order to maintain their competitive edge in the furniture industry. The management of the company is able to identify the priorities of the business and make decisions in line with the strategic direction, by placing considerations of the business and its stakeholders.

IKEA is competent as it focuses on the significance of both internal and external customers to guarantee that these customers remain satisfied and loyal.  The company also ensures that they motivate, coach, guide, and support their staff to realise the mission of the IKEA. Additionally, IKEA's capability to identify its suppliers is another factor that maintains the company's competitive advantage. The ability of management to differentiate and diversify their business strategy to dominate the global market can also be considered as major capabilities of IKEA.

Resource Based View Analysis

IKEA selects the most feasible position when it comes to delivery of items. Their warehouse is smartly located with different sectors to have greater control of activities. This strategy analyses the deployment of resources, processing time and queue times for various actions. IKEA's staff is rotated in order to complete customers' orders from each picking area. Resources are simulated at higher levels and are applied and detailed in applicable working schedules.

Stakeholders' Analysis

Other than what is already known about IKEA, it is observed that besides the management of the business, IKEA's customers play an important role in the accomplishment of the organizational goals. The management skills and capabilities of the pioneers of the company have propelled IKEA into being a powerful entity in the furniture industry today. Furthermore, the loyalty of its customers has also greatly assisted IKEA in maintaining its competitive edge. Customers and workforce entities go hand in hand, as IKEA's employees are the ones who work effortlessly ensuring that the company satisfies the demands of its customers. Therefore, when customers are satisfied, as they get value for their money with IKEA, they will remain loyal and hence build IKEA's value chain. The suppliers and stakeholder s can be considered an additional factor that made IKEA the success they are at present.

IKEA's Strategic Issues and Challenges

Competition

The IKEA's furniture competitors' offers different styles and functionality. Conrin targets a new low cost in terms of furniture line; Cratel & Barrel offers a furniture in a box which is subject in higher prices; Ethan Allen aimed at a more upscale market; Wal-Mart is equipped in a big box furniture that is categorized under the general store must-have-items, but don't have much of a style. IKEA is the most successful in delivering the complete package for the customers that reflects on weak rivalries. 

The labour force

IKEA doesn't have its own factories; they give orders to different factories in low cost countries. As it is always the cheapest companies that get the job, some even might employ children. As newspapers and magazines might find that out first, this makes very bad publicity for the company. For example as the Swedish television showed a documentary about children working for IKEA carpets, the company finished the contract directly, but the damage lasted (Die Welt, 04.11.2002)

Natural Resources

IKEA is the biggest furnishing company world wide, so it needs al lot of wood. This implicates, that there are confrontations with nature protecting organisations. For example, as "Robin Wood" started a campaign against IKEA, because they use Tige- wood in their furnitures, they had to promise only to use new planted wood for their furniture (Die Welt, 04.11.2002). Most competitors are small, so they don't get this much pressure from the media and can continue to use cheaper wood, so the need to act more ecological than all the others is clearly a constraint for the company.

The IKEA Concept

The concept of IKEA is easy to adopt. Companies like Bush Industries in the USA have taken over the concept of cheap furniture, but they adopted their products to the American habits (Terpstra, 2000, p.291). So for example, they don't use pine, the use oak wood. As IKEA sells nearly the same products all over the world, they are more dependent on the image of their new Scandinavian design.

Solutions to IKEA's issues and Challenges

Restructuiong the organization

Outsourcing - outsource accounting or technology

Convert weakness from swot analysis into strengths or opportunities.

CONCLUSION

To conclude, with this position analysis appropriate evaluation has been considered using different marketing tools which lead to the determination of the present position if the IKEA company.  This analysis has reveal which parts of the IKEA business entity needs development and altering in order to maintain the competitive edge. The IKEA strategy is quite unique but it works as IKEA is a leader in the global market.

Giving value to their stakeholders is one of the vital approaches that the company had used. In addition, their ability to innovate and diversify their products has also been identified as part of the strategy of IKEA. IKEA's ability to

In addition, because of the competitive position of the company, there is a strong barrier to entry for a new household furniture as well as food market that would compete with IKEA.  As the company is competing in both local and global market environment, Ikea's viability is to gain more customers from different areas of the world and to provide each customers quality and innovative household furniture products and will satisfy their needs while enjoying reasonable and affordable prices.  The company is looking forward to give the customers more from what they are expecting through the use of the technical innovations.  Furthermore, the strategy of the company also includes their ability to adapt to the changing needs and demands of their target market even in different parts of the world.

Bibliography

De Wit, Bob and Meyer, Ron (2005) Strategy Synthesis. Second edition. London: Thomson Learning. Print ISBN 1 86152 965 1.

Johnson, Gerry; Scholes, Kevan; and Whittington, Richard (2005) Exploring Corporate Strategy. 7th edition. Harlow, Essex: Pearson Education. Print ISBN 0 273 68734 4. Available through Voyager (UH LIS main catalogue) as an electronic resource.

Mintzberg, Henry; Ahlstrand, Bruce; and Lampel, Joseph (1998) Strategy Safari: The Complete Guide Through the Wilds of Strategic Management. Harlow, Essex: Pearson Education. Print ISBN 0 273 65636 8.