The strategic management

According to Liu and Fu (2011), strategic management is the art of implementing, formulating, and evaluating cross-functional decisions that can help an organization achieve its objectives and aims. As a result, it is the viewpoint of the company strategy. Top corporate executives implement the concept of strategic management into their daily operations. The executives must incorporate this idea within the company in order for it to be used effectively. Analysis, strategic composition, and goal formulation are all parts of strategic management. This is the main theme of this article, the writer will assess the success of the IKEA in respect to its operational and utilization of the resources to achieve its objectives and goals. The paper will address SWOT analysis, structure and systems of IKEA. Additionally, the corporate strategy of the company will also be assessed.

This part of the study examines the success of IKEA on the grounds of how it is operating and how well it has utilised resource to achieve results with time. SWOT analysis, as well as the structure and control systems of the organisation, are discussed and analysed in this section of the study. Nature of business level and the problems of corporate strategy are analysed in this part of the paper to discern the main causes of challenges affecting the organisation.

SWOT Analysis

The IKEA’s environmental and sustainability design objectives and goals are important elements of its business strategy. The company launched sustainable strategy which comprise of social, environmental and economic plans that will help it thrive in the foreseeable future. The organization uses SWOT analysis plan to achieve its objectives (Lassarre,2012). The tool is very vital in evaluating the key issues like strengths, weaknesses, opportunities and treats.

Strengths and weaknesses are manageable by the organization means since they are internal factors whereas opportunities ad threats are not manageable since they external t the business organization (Lassare,2012). The main strength of IKEA is the ability to strategically minimize costs / inputs and maximize the outputs. Moreover, the company also establishes the product strategy that increases the usage of the waste and recycled resources.

Strengths

Strengths are elements that add value to the products of the business. IKEA has various strengths as presented in the case study. The agency has a concrete and known global brand that promises similar spectrum and quality around the world. IKEA has strong concept that provides a broader range of the well-designed functional end goods and services at affordable prices.

The company’s products are optimally designed to strike a deal that brings an equilibrium between price, quality, design and function. Additionally, IKEA also adopted cost consciousness which results in low process that is taken into consideration whenever the products are created from the outset. IKEA formed a long term partnership with the suppliers for the t achieve massive commitments. Consequently, the commitment to prolonged massive purchases, the company can lobby for cheaper supplies (Jones and Hill,2010). Through the above plan, the IKEA get their products directly from the suppliers. It also reduces the costs associated with storage of goods as well as lowering the carbon footprint and reduction of the mileage of travelling.

Opportunities

Companies utilizes strengths to identity the opportunities that emerge. IKEA in particular, embraces the environmentally committed business to believe and conduct results in the good returns in price sensitive markets (Jones and Hill,2011). The enterprise take advantage of some opportunities by sustainability idea. However, there is progressive demand for the green products, demand for reduced water consumption and minimized carbon footprints, and increase in demand for the cheaper commodities.

Consequently, IKEA focuses on the specific sections to work with the sustainability idea such as utilization of the resources. The company aim to ensure no wastage to landfill, treatment of the minimized water usage and effective and efficient wastewater programs. Finally, IKEA adopted renewable energy strategy and reduced packaging and transportation cost.

Weaknesses

Organizations need to identify weaknesses for them to strategize on specific alarming issues. Identification of weaknesses is the basis upon which organizations can use to turn around the business. Therefore, IKEA just like any other company has weaknesses. Firstly, the size and scale of its international business could make it hard for the company to control the standards and quality of its goods and services.

Moreover, there is no regulations controlling business in some of the countries in which the company trades its products (Lassaree,2012). This is actual representation of the weak link in the IKEA logistic chain and it affect the client’s view on the company’s products. Secondly, low cost products and the balance between the production of quality products are needed. The company also requires to distinguish its self from competitors. However, within the IKEA’s regulations there is no promise between low prices and providing quality products.

Threats

Threats help the organization in laying the strategies to counter them. IKEA’s threats comprise of the social trends such as reduction in first time purchasers in the go downs for marketing. Market forces are also regarded as the threats to the organization. Therefore, IKEA has to improve on the strategies it uses in competing in the industry. The economic factors like recession reduce the client spending and impacts in a minimal disposal income (Jones and Hill,2010).

VRIN Analysis

Business level strategy

Low cost

From the begin, IKEA utilizes the value authority technique. Mr. Kamprad, the originator, endeavored to think of a structure of tastefulness to the furniture, and it was speaking to the clients to locate their coveted furniture at impressively low costs. At the point when Kamprad wandered into furniture generation in Sweden, it was extremely costly there, thus it was an astute procedure to make great outline furniture which was financially savvy to collect.

Product development

The author employed an equipped fashioner who chipped away at improving the furniture and concocts an ever increasing number of plans. Kamprad’s logic was that great furniture ought to be evaluated in a way that a level wallet can likewise stand to buy. Through this school of thought, Kamprad attempted to create cost productive furniture. The fashioner investigated new thoughts on the most proficient method to spare the creation cost with new outlines.

Large warehouse stores

The association utilized a huge showroom to show their furniture to the clients. The extensive stockroom was profitable in that; the clients could perceive how the furniture looked like when masterminded in a total set (Lasserre, 2012). IKEA’s distribution center outline is standing out that subsequent to intersection a labyrinth, it appears like a log out of a range. The straightforward objective was to make the clients encounter how it feels after the furniture is masterminded in a specific way. Making an eatery inside the distribution center was a splendid thought; it was successful as it kept the clients warm and made them feel at home. IKEA arranged their furniture at diminished costs of 30 percent to 50 percent than the contenders.

Market expansion and development

Kamprad figured out how to make solid benefits and a wide piece of the overall industry in Sweden and thus, the organizer wandered into the Poland showcase. There, the assembling expense of furniture was half of that in Sweden and thus; Mr. Kamprad created business in the nation. The Polish individuals cherished vodka as their business festivity and for this situation, Mr. Kamprad was quick to focus on the nearby needs, tastes and inclinations. There was the foundation of good relations with the providers in Poland. IKEA started business in Norway, Poland, US, UK, Switzerland et cetera in the year 1965 and afterward wandered in the Scandinavian locales and between the years 1976 to 1982 they stretched out business to Canada and the United Kingdom.

Market penetration

From commencement, IKEA secured a wide piece of the overall industry through giving trendy furniture at low costs. As a focal piece of that market infiltration procedure, the association could extend the business to different nations. After expansion to the United States, things were not functioning admirably for the association. The furniture that they had outlined by the European style inclination was not pair with the Americans’ tastes and inclinations. Kamprad reacted by upgrading of furniture with the accentuation on the youthful era as their objective market.

Recommendations

IKEA’s administration style is casual, and it might work in the European and Scandinavian nations, however may not work in various parts of the world. At the point when an organization goes worldwide, it needs to alter its administration style to suit various societies (Jones and Hill, 2010). IKEA does not keep up formal pecking order, but rather on the off chance that it means to works effectively in the United States, for instance, it has changed in light of the fact that the American individuals are formal and grasp the reasoning of pay for execution.

IKEA has put numerous assets in getting the correct providers who can fit in the lower cost methodology. Rather, they could invest the energy and cash in leading innovative work before wandering into the universal exchange (Liu and Fu, 2011). For instance, they ought to have looked into about the American jumbo beds which are unique in relation to the European individual’s inclinations.

Conclusion

IKEA has been in presence since the year 1943 and from that point forward, the organization has actualized the vital administration procedure to develop and turn into a worldwide undertaking. The association’s key technique has been to offer quality inside obliged fabricating assets and this deciphers to low costs at last. Clients dependably like to get an incentive for their cash thus when they buy quality items at moderately bring down costs; they are probably going to create faithfulness and allude the association to other potential clients.

Works Cited

Jones Tuan and Hill Laituri. “Establishing a transformative learning framework for promoting organic farming in Northern Vietnam: a case study on organic tea production in Thai Nguyen province.” Asian Journal of Business and Management (ISSN: 2321-2802) 2.03 (2010).

Lassarre Tewodros, Paul Evangelista, and Melinda Laituri. “Utilization assessment of Prosopis juliflora in Afar region, Ethiopia.” US Forest Service, USDA Office of International Programs, USAID Pastoral Livelihoods Initiative II Project (PLI II) (2012).

Liu Teguh, and Fu Gautama. “Strength, Weaknesses, Opportunities, and Threats (SWOT) Analysis of CV Rejeki Mapan Lestari.” Binus Business Review 7.1 (2011): 47-52.