SWOT Analysis of IKEA Company, Its Marketing and Business Strategies - Case Study Example

IKEA COMPANY. by Student’s name Code+ course name Professor’s name University name City, State Date IKEA Company. Introduction. IKEA is a multinational company situated at Sweden. It was founded in the year 1943 by Ingvar Kamprad in the place known as Smaland in the southern Sweden. The word IKEA is an acronym of the initials of Ingvar. (IK) are the first letters of Ingvar Kamprad while (EA) are the first letters of Elmtaryd and Agunnaryd which are the farm and the village in which he was brought up in. From the word go, IKEA was known by selling stationary such as pens, runners, pictures, tables, watches, nylon stockings, jewelry etc. The objective, vision and the main focus of IkEA Company is to modify the lives of the people every day by making them better and more comfortable than before. The business idea of the company is to provide diversified domestic furnishings which have the best designs and eventually operate at fair prices that are affordable by most of the people. The company does not only favor the thick walleted people but also those with the loose wallet too. The company applies the concept and the “Democratic Design” strategy that enable the even the poor to get a golden opportunity of furnishing their homes with the IKEA Company products since they are cheaply sold. SWOT analysis of the IKEA Company is recorded as below; STREBGTHS. The IKEA’s co-values of humanistic approaches. The knowledge of the customer. Constant application of innovative drives. An integrated chain of supply. The reputation of the brand and markets availability. Variety and diversified goods portfolio. WEAKNESSES. Poor and negative publicity. Decreasing quality of the products. Relatively poor standards of its products. OPPORTUNITIES Continuous adventure into expanding economies. Establishment of online transactions. Introduction of grocery market and restaurants. THREATS. Stiff and intensified competition e.g. Wal-Mart, ASDA and Tesco. Progression of mediocre customer income. Table 1: The SWOT analysis of the IKEA Company. IKEA Marketing and Business Strategy. The IKEA Company employs the networking pattern as the main method and the structure of marketing their business worldwide. From this strategy, the company has been able to acquire a wide range of popularity. For instance, the company owns a total of 315 IKEA stores owned in groups in 27 countries of the world. The method is reinforced by the able co-workers that the company has. Up to date, the company has 150,000 co-workers that probably provide the basic strength to IKEA and drawing the company to be so unique amongst other world companies. More influential feature of the company that enhances its spread is the central humanistic values that the company culturally applies to the people around and its workers too. The value that we are talking about are; devotedness, friendship, self-effacement, straightforwardness, cost-consciousness, sharing and specialization of responsibilities as well as the common sense which they apply them during the process of working. The IKEA Company is much endowed and knowledgeable with the concept of distinctive competition. They majorly strategized on how they can be much more different from other competitors and actually maneuver the completion as well. The IKEA Company is stylish in working and probably offers its goods at relatively cheaper prices compare to other competitors. This strategy has enabled them to earn millions of customers globally. The company offers home delivery of the products or transport services to the goods the customers who shop with them. The service guarantees the customers that there are no frustrations on transportation of the goods transacted with the IKEA Company. Therefore the company wins the competition advantage over other companies that are reluctant to devise unique strategies of attracting customers. The table below display the top five countries that IKEA is majorly supplying the furniture are: Country. Supply percentage (%) Poland 50% China 21% Italy 8% Sweden 6% Germany 6% Table 2: The top five supplying countries of IKEA Company. IKEA has actually been presenting itself as a “green company” that with the biggest percentage worked with social missions. This kind of strategy helped the company to interact, interrelate and create friendship with the people thus forming an inter-woven web which greatly boosted the business performance of the company. During these interactions, the company offered charitable donations and mainly employed the concept of utilizing the renewable energy in its business process. Its process is environmental friendly and consequently was much upheld, appreciated and applauded by many people globally. The Chief Executive Officer of the IKEA Company, Mr. Ohlsson says that he aims to make his co-workers happy, ensure their honesty and possibly, incline them to thinking for themselves. The Balanced Scorecard in IKEA. To be like other related retailers, IKEA created and launched a loyalty scorecard in most of its warehouses in Sweden, Demark, Turkey and many other countries which are termed to as IKEA Family. This kind of distinctive card it is provided free of charge and is mainly used to get discounts especially under a range of products within every IKEA warehouse. Particularly, the card offers a 25% discount of the price specially made ranges of IKEA goods on appearance of the card. The card also provides a discount on the food bought in the IKEA restaurants and the Sweden Food Stores. It sometimes entitles one who holder the card to a free coffee in the restraint. This special offer to the holders of the card is available specifically during the normal working days of the week. Non-Financial Measures in IKEA. The IKEA Company offers variety of benefits and rewards to its workers in order to motivate the workers for them to work wholeheartedly with a lot of zeal and willingness. IKEA Company, US branch has a plan to raise the minimum wages paid hourly for the workers in retail shops. As from January 2016, the hourly payment per hour for the workers in the already existing retail shops is approved to increase up to $ 11.87 per every hour worked. The CEO of the IKEA Company states that, the benefits package is one and the major aim for the company to create a very great and competitive place of work. There are several offer providences within the company that varies from one aspect to the other. Competitive health care strategy is one of the benefits offered to the persons or rather the co-workers who have worked over 20 hours weekly. Other benefits enjoyed by these IKEA co-workers include; the generous 401(k) plan, “Tack” which is bonus retirement plan which is meant to say thank you for the service provided by the worker, tuition support is the other benefit, discount is offered to the co-worker for any goods bought from the company, meal deal is guaranteed for the company’s co-worker, a substantial pay-time off package and many others, the list is long. The company mostly recruits people with an optimistic group spirit to be workers. The company work as one person since they have one zeal, common passion, and similar vision. IKEA workers are a very diverse partnership of down-to-earth that comprise straightforward persons whose hunger for the domestic equipping is real. The company is not limited to one side of the world but rather is all over spread, sharing a common inspiring and intrinsic vision as well as motivation of creating a better life for the people in day to day advancements. In order to capitalize on their vision and mission, the company employs the humanistic values which are the key foundation for the workers and the comprehensive, understanding, open and authentic culture. The company’s CEO attests that working with the company is equivalent to working with your closest friend. IKEA Company is highly driven by its values. They have majorly contributed to the company’s prosperity and propagation. Leadership by example is highly valued in the company. The managers are expected to perform their duties in respect to the values of IKEA thus creating the environment of well-being and therefore expect the rest of the workers will follow their footsteps. Another value is constant urge to renewal. The company is flexible to change to suit the customer’s desire with innovative resolutions that contributes to advancing the life at home every day. The company constantly dares to be different. It’s the other value of the company. The management constantly scrutinizes, evaluates and questions the old solutions and if provided by new ideas, they as swift to change. There are so many values that govern the company and probably keep it moving in positive trends. The IKEA business is appreciating from the good and reliable management skills applied in its governance. In the 2010-2011 financial years, the company’s transaction increased by 7.7% and reached $ 23.1 billion with a net income of 6.1% which is equivalent to $ 2.7 billion. The figure below demonstrates the company’s performance in 2010 fiscal year. Figure 1: IKEA performance in the 2010 fiscal year. Conclusion. IKEA Company is plainly known as an internationally brand with several warehouses globally. It is faced with a competition threat, and therefore in order to maneuver, the company has to take the initiative of improving its performance by analyzing its external and internal competition factors and eventually devise a strategy of winning the distinctive competition. This step will openly reveal the competitive opportunities the company has as well as the threats which it is obliged to address. I recommend the IKEA Company to majorly focus on the taste and preferences of the consumer, make strong and deep researches on expansion department, conduct outdoor advertisements and possibly enhance tree plantation, environmental conservation and other related programs. Such initiative will not only support the furniture company in line of promoting good surrounding but also will add value to the IKEA brand which is an imperceptible advantage of every other corporation. More so, the company would be more eco-friendly during its process. Reference Lists.  Charles W.L. Hill, Gareth R. Jones (2010).Theory of Strategic Management with Case. 9th Edition, South-Western Cengage Learning. IKEA’s official website. Retrieved July 8, 2011 from http://franchisor.ikea.com/ IKEA (2013). About IKEA. Available at: http://www.ikea.com/ms/en_GB/about_ikea/index.html The Times 100 (2012). Business Case Studies. Ikea case study. Available at: http://businesscasestudies.co.uk/ikea/swot-analysis-and-sustainable-business-planning/strengths.html#axzz2VB9TPpjz Interbrand (2012). Best Global Brands in 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx  Patrick Chu; Robert LA Franco (27 June 2013). "Europe’s Richest Person Kamprad to Move Back to Sweden". Bloomberg. Retrieved 24 July 2013 "Ingvar Kamprad and IKEA". (1996) Harvard Business School Publishing, Boston, MA, 02163. 1996 Lorna Brett (3 November 2011). "Ikea Tempe opens". Dynamicbusiness.com.au. Retrieved 28 January 2013 The Economist, "The secret of IKEA's success", 24 February 2011, pp. 67–68. Appendices: Table 1: The SWOT analysis of the IKEA Company. Table 2: The top five supplying countries of IKEA Company. Figure 1: IKEA performance in the 2010 fiscal year. Read More