Strategy in the Global Environment- IKEA

7/23/2019 Strategy in the Global Environment- IKEA

1/15

STRATEGY IN THE GLOBAL ENVIRONMENT-IKEA

ISSUES FACED,AND STRATEGIC DECISIONS TO BE MADE

Submitted to:

Prof. Arun Sangwan

Submitted by:

Arpit Ku!"r#!"t"a

Ri!"i Ma"otra


2/15

List of Cotets

S!No! "#$ti%u$s

$ ABOUT T%E COMPAN&

' T%E EFFECT OF G(OBA(ISATION

) PORTER*S DIAMOND MODE( OF NATIONA( COMPETITI+E AD+ANTAGE

INCREASING PROFITABI(IT& AND PROFIT GRO-T% T%ROUG% G(OBA(

EPANSION/ COMPETITI+E PRESSURES FACED

0 G(OBA( STRATEG&

1 C%OICE OF ENTR& MODE

2 REFERENCES


3/15

ABO'T THE COM"ANY

IKEA i! a Sw#3i!" %o4# furni!"ing! 5o4pan6 foun3#3 76 Ing8ar Ka4pra3 in $9) in S4:an3

in !out"#rn Sw#3#n. At t"# ag# of fi8# Ing8ar Ka4pra3 !tart#3 "i! ;ourn#6 a! an #ntr#pr#n#ur!#ing 4at5"#! to "i! n#ar76 n#ig"7our!. Fro4 4at5"#! "# #IK? pu! t"# fir!t #tt#r! of E4tar63 >E? an3 Agunnar63 >A?, t"# far4 an3 8iag# w"#r# "# gr#w

up. IKEA origina6 !o3 !#! p#n!, wa#t!, pi5tur# fra4#!, ta7# runn#r!, wat5"#!, ;#w##r6 an3

n6on !to5@ing!. Furnitur# wa! intro3u5#3 into t"# IKEA rang# in $92 an3 t"# r#!t i! "i!tor6

T"# IKEA 8i!ion i! to 5r#at# a 7#tt#r #8#r63a6 if# for t"# 4an6 p#op#. T"# IKEA 7u!in#!! i3#ai! to off#r a wi3# rang# of "o4# furni!"ing! wit" goo3 3#!ign an3 fun5tion at pri5#! !o ow t"at

a! 4an6 p#op# a! po!!i7# wi 7# a7# to affor3 t"#4.

Our 4i!!ion i! to gi8# p#op# wit" t"in wa#t! a 5"an5# to furni!" t"#ir "o4#! in a 7#autifu an3

fun5tiona wa6. -# 5a it D#4o5rati5 D#!ign.

T"#r# ar# 5urr#nt6 )$/ IKEA Group !tor#! in '1 5ountri#!. IKEA #4po6! $/, 5o=wor@#r!

an3 in '$ aon# w# "a3 1$0 4iion 8i!itor! to our !tor#!, wit" a '2.1 7iion !a#! turno8#r.

Our $/, 5o=wor@#r! ar# t"# inn#r !tr#ngt" of IKEA an3 ar# w"at 4a@#! u! a uniu#5o4pan6. -# 5o4# fro4 a o8#r t"# wor3 7ut !"ar# t"# fun3a4#nta "u4ani!ti5 8au#! t"at our

5utur# i! 7a!#3 on, !u5" a! tog#t"#rn#!!, "u47#n#!!, !i4pi5it6, 5o!t=5on!5iou!n#!!, gi8ing an3

ta@ing r#!pon!i7iit6 an3 5o44on !#n!#.
http://www.ikea.in/democratic-design.htmlhttp://www.ikea.in/democratic-design.html


4/15

THE E((ECT O( GLOBALISATION

Go7aiation i! t"# !6!t#4 of int#ra5tion a4ong t"# 5ountri#! of t"# wor3 in or3#r to 3#8#op

t"# #5ono46.T"# t#r4 go7aiation "a! 5o4# to 4#an t"# wa6 in w"i5" t"# wor3 #5ono46 i!

run an3 3o4inat#3 76 4utinationa 5orporation! an3 int#rnationa tra3# t"#6 t#n3 to 5ontro.

IKEA fa5#3 5"a#ng#! in t"# 3i!5r#pan56 of 5utura, 3#4ograp"i5 an3 4ar@#t!. For in!tan5#,

IKEA awa6! o5at#3 t"# r#tai !tor#! in 5"#ap ar#a! an3 appi#3 3o=it=6our!#f prin5ip# to t"#

furni!"ing!. N#8#rt"##!!, !u5" ##4#nt! n##3#3 to 7# 5"ang#3 in C"ina r#gion in or3#r to 5at#r

t"# C"ina 4ar@#t. An3 it 6i#3#3 a gr#at !u55#!!. %a8ing #


5/15

T"# fir!t !tor# of IKEA in 5"ina wa! op#n#3 in $992 an3 C"in#!# 4ar@#t i! on# of t"# 4o!t

5o4p#titi8# 4ar@#t! in t"# wor3. An3 w"#n t"#6 #nt#r#3 in 5"ina t"#6 w#r# 5onfront#3 wit"

!#8#ra pro7#4! of 5utura an3 tra3itiona. I@#a group a!o "a3 to 5"ang# two of t"# 4o!t

n#5#!!ar6 a!p#5t! of it! ti4# t#!t#3 an3 pro8#n of go7a !trat#g6. T"# #!!#n5# of IKEA in

o5ating t"#ir !tor#! i! u!ua6 it o5at#3 in #!! #DI&? prin5ip# i! not !u55#!!fu a! ot"#r!. if 6ou a! a 5o4pan6 "#p

5o!tu4#r! to g#t t"#ir pro3u5t! r#a36 to u!#.

B#!i3#! t"at t"# IKEA group 5ai4#3 t"at it "a3 3#5#ntrai#3 4o!t of it! fun5tion! in5u3ing %R

an3 !tor# 4anag#4#nt. In a 4att#r of go7aiation 3#5#ntraiation pa6! a 8ita ro#. B#5au!#

t"#r# i! a opportunit6 to g#t a infor4ation a7out t"# 4ar@#t !ituation fro4 5o4pani#! own

!our5#. An3 to 4a@# ui5@ 3#5i!ion 5o4pan6 n##3! t"# infor4ation of 3a6 to 3a6 7u!in#!! of

tota 4ar@#t !o, t"#6 5an ta@# an appropriat# 3#5i!ion. If 5o4pan6! top 4anag#4#nt i!5#ntrai#3 in ta@ing 3#5i!ion an3 it! ow#r #8# i! 3#5#ntrai#3 !o, it 5ou3 7# "#pfu to t"# top

4anag#4#nt in ta@ing ui5@ 3#5i!ion!.


6/15

"ORTER)S *IAMON* MO*EL O( NATIONAL COM"ETITIVE A*VANTAGE


7/15

NATIONAL

COM"ETITIVE

A*VANTAGE

INTENSITY O(

COM"ETITION

LOCAL

*EMAN*

CON*ITIONS

RELATE* AN*

S'""ORTING

IN*'STRIES

(ACTOR

EN*O+MENTS

Mi5"a# Port#r i3#ntifi#3 four attri7ut#! of a nationa or 5ountr6=!p#5ifi5 #n8iron4#nt t"at "a8#

an i4portant i4pa5t on t"# go7a 5o4p#titi8#n#!! of 5o4pani#*! o5at#3 wit"in t"at nation.

T"# four attri7ut#! of t"#!# 4o3# ar#J

$. Int#n!it6 of Co4p#titionIt ta@! a7out "ow 5o4pani#! ar# for4#3,organi#3 an3 4anag#3,go8#rn#3 76 t"#

5on3ition! in t"# 5ountr6 an3 t"# natur# of 5o4p#tition. Mor# t"# int#n!it6 of


8/15

5o4p#tition,7#tt#r it i! for t"# 5o4pan6 to 5o4# out wit" !trat#gi#! to 7# 4or# !u55#!!fu.

Fa5tor En3ow4#nt!

It t#! u! a7out t"# 8ariou! fa5tor! of pro3u5tion i@# an3,raw 4at#ria!,a7our #t5 in a

parti5uar nation !o a! to 5o4p#t# in a gi8#n in3u!tr6.

'. R#at#3 an3 Support#3 In3u!tri#!It ta@! a7out t"# pr#!#n5# or a7!#n5# of !uppi#r an3 r#at#3 in3u!tri#! in a nation t"at ar#

int#rnationa6 5o4p#tition. T"roug" t"# "#p of !u5" in3u!tri#!,a 5o4pan6 i! i@#6 to

"a8# a !trong 5o4p#titi8# po!ition int#rnationa6.

). (o5a D#4an3 Con3ition!

It r#f#r! to t"# natur# of "o4# 3#4an3 for t"# in3u!tr6*! pro3u5t or !#r8i5#. T"#!#

5on3ition! "#p in 5r#ating pr#!!ur#! for inno8ation an3 uait6.

A 5o4pan6 i! 4or# i@#6 to !u55##3 in in3u!tri#! or !trat#gi5 group! in w"i5" t"#!# four

attri7ut#! ar# fa8oura7#.

In 5a!# of IKEA, t"#!# four attri7ut#! wou3 5o4pri!# of t"# foowingJ

$. Itesity of CometitioJ A55or3ing to %op@in! >'2? t"#r# i! 4or# 5o4p#titi8#

pr#!!ur# if t"#r# ar# 4or# ri8a! in t"# in3u!tr6. T"# nu47#r of ri8a! for IKEA i! i4it#3

in Europ# w"i5" i! w"#r# 4a;or r#8#nu# i! g#n#rat#3, a! t"#6 ar# a7# to r#!tri5t

5o4p#tition 3u# to t"#ir 5o!t #a3#r!"ip an3 pro3u5t 3iff#r#ntiation. Apart fro4 t"#

5o4p#tition IKEA fa5#! fro4 UK 7a!#3 BL >t"# arg#!t DI& r#tai#r in Europ# an3

t"ir3 arg#!t in t"# wor3? in 5"ina it! 7igg#!t worr6 i! t"at it i! fa5ing 5o4p#tition fro44an6 int#rnationa an3 C"in#!# 5"ain! w"o ar# 5op6ing it! pro3u5t!. Man6 !tor#! in

5"ina "a8# IKEA! 5ataogu# in t"#ir !tor#! an3 t"#6 t# 5u!to4#r! t"at t"#6 5an

r#pro3u5# t"# !a4# furnitur# at a ow#r pri5#. IKEA! onin# 5ataogu# 4a@#! it #a!6 to

8i#w an3 5op6.

'. (#%to$ Edo.metsJ Suppi#rJ IKEA 3o#! not #nt#r into a5tua pro3u5tion 7ut "a! ta@#n furt"#r !t#p! t"u!

@##ping t"# !uppi#r! in an #8#n tig"t#r grip. T"#!# !uppi#r! ar# not on6 3#p#n3#nt on

or3#r! fro4 IKEA 7ut ar# a!o in 3ir#5t finan5ia 3#7t to IKEA, 7#5au!# IKEA "a! pai3

for t"# a!!#476 of t"#ir 4a5"in#r6 T#5"noog6J In5r#a!ing u!# of r#n#wa7# 4at#ria!, B6 u!ing n#w t#5"noogi#!J (i@#

IKEA! OG(A 5"air "a! 7##n in it! rang# !in5# $92.

). Reted #d Suo$ted Idust$iesJ Fa8ora7# 5on3ition! for furnitur# 4a@ing "a8#

pro3u5#3 a nu47#r of furnitur# 5u!t#r! in Sw#3#n. In3u!tr6 5u!t#r!

For #a5" in3u!tr6, 5o!#6 r#at#3 in3u!tri#! ar# !our5#! of 5riti5a r#!our5#! an3

5apa7iiti#!. (a7our for5#J ow 5o!t


9/15

Infra!tru5tur#J goo3 Go8#rn4#nt poi56

. Lo%#& *em#d CoditiosJ Sw#3i!" 5u!to4#r! ar# !#n!iti8# to #n8iron4#nta

5on!i3#ration!. IKEA argu#! t"at it go#! for ow 5o!t!, 7ut not at t"# #


10/15

INCREASING "RO(ITABILITY AN* "RO(IT GRO+TH THRO'GH GLOBAL

E/"ANSION

So5ia tr#n3!J IKEA i! pro8i3ing onin# "#p to gui3# 5u!to4#r! to a 4or# !u!taina7# if#. T"#

a38antag#! of onin# 7u!in#!! wi r#3u5# a34ini!tration 5o!t an3 it wi gi8# 4or# infor4ation

to 5u!to4#r of pro3u5t an3 IKEA 5an pa!! it! 5orporat# goa to targ#t it! 5u!to4#r 4or#

#ff#5ti8#6

Mar@#t for5#!J IKEA i! arg# #noug" to #n;o6 #5ono4i#! of !5a# an3 a!o targ#t t"# 7igg#!t

!#g4#nt of t"# 4ar@#t .i.#. 4i33# 5a!!. T"i! "#p! to r#3u5# a8#rag# 5o!t! in t"# ong run

t"roug", for #


11/15

COM"ETITIVE "RESS'RES (ACE*

Co4pani#! t"at 5o4p#t# in t"# go7a 4ar@#tpa5# t6pi5a6 fa5# two t6p#! of 5o4p#titi8#

pr#!!ur#!J Pr#!!ur#! for 5o!t r#3u5tion an3 pr#!!ur#! to 7# o5a6 r#!pon!i8#. T"# 5o4p#titi8#pr#!!ur#! pa5# 5onfi5ting 3#4an3! on t"# 5o4pan6.

"$essu$e fo$ 0&ob#& Ite0$#tio

Stan3ar3i!ing w"#n#8#r po!!i7#

9 of pro3u5t in# i! !i4iar a5ro!! in 4or# t"an $' 5ountri#!

IKEA*! 4ar@#ting i! 5#ntra6 3#8#op#3 at "#a3uart#r!

"$essu$e fo$ &o%#& $esosi1eess

A3apting w"#n n#5#!!ar6

Mo3ifi5ation of it! furnitur# to !uit in3i8i3ua 5ountri#! #.g ong#r "ang#r! in Ita6

an3 3##p#r war3ro7#! in USA

I4p#4#ntation of o5a a3;u!t4#nt! in 4ar@#ting to !uit anguag# an3 5ataogu#.

"$essu$es fo$ Cost Redu%tio It r#uir#! t"at a 5o4pan6 n##3! to 4ini4i# it*! unit

5o!t!. To attain t"i! goa,it 4a6 "a8# to 7a!# it! pro3u5ti8# a5ti8iti#! at t"# 4o!t

fa8oura7# ow=5o!t o5ation. It 4a6 a!o "a8# to off#r a !tan3ar3i#3 pro3u5t to t"#

go7a 4ar@#tpa5# to r#ai# t"# 5o!t=!a8ing! t"at 5o4# fro4 #5ono4i#! of !5a# an3

#arning #ff#5t!. At#rnati8#6,it 4ig"t out!our5# 5#rtain fun5tion! to ow=5o!t for#ign

!uppi#r! in an att#4pt to r#3u5# 5o!t!. Pr#!!ur# for 5o!t r#3u5tion i! "ig" if a 5o4pan6 i!

foowing a go7a !tan3ar3iation or tran!nationa !trat#g6. It i! ow if a 5o4pan6

foow! t"# int#rnationa or o5ai!ation !trat#g6.

"$essu$es fo$ Lo%#& Resosi1eess: In or3#r to 7# o5a6 r#!pon!i8#,a 5o4pan6

3iff#r#ntiat#! it*! pro3u5t off#ring an3 4ar@#ting !trat#g6 fro4 5ountr6 to 5ountr6 in an#ffort to a55o44o3at# t"# 3i8#r!# 3#4an3! ari!ing fro4 nationa 3iff#r#n5#! in 5on!u4#r

ta!t#! an3 pr#f#r#n5#!,7u!in#!! pra5ti5#!,3i!tri7ution 5"ann#!,5o4p#titi8# 5on3ition! an3

go8#rn4#nt poi5i#!. T"i! a33! to t"# 5o!t to t"# 5o4pan6. Pr#!!ur# for o5a

r#!pon!i8#n#!! i! ow if a 5o4pan6 i! foowing a go7a !tan3ar3iation or int#rnationa

!trat#g6. It i! "ig" if a 5o4pan6 foow! t"# tran!nationa or o5ai!ation !trat#g6.


12/15

GLOBAL STRATEGY

T"# fir!t !tor# of IKEA in 5"ina wa! op#n#3 in $992 an3 C"in#!# 4ar@#t i! on# of t"# 4o!t

5o4p#titi8# 4ar@#t! in t"# wor3. An3 w"#n t"#6 #nt#r#3 in 5"ina t"#6 w#r# 5onfront#3 wit"

!#8#ra pro7#4! of 5utura an3 tra3itiona. I@#a group a!o "a3 to 5"ang# two of t"# 4o!t

n#5#!!ar6 a!p#5t! of it! ti4# t#!t#3 an3 pro8#n of go7a !trat#g6. T"# #!!#n5# of IKEA in

o5ating t"#ir !tor#! i! u!ua6 it o5at#3 in #!! #DI&? prin5ip# i! not !u55#!!fu a! ot"#r!. if 6ou a! a 5o4pan6 "#p

5o!tu4#r! to g#t t"#ir pro3u5t! r#a36 to u!#.

B#!i3#! t"at t"# IKEA group 5ai4#3 t"at it "a3 3#5#ntrai#3 4o!t of it! fun5tion! in5u3ing %R

an3 !tor# 4anag#4#nt. In a 4att#r of go7aiation 3#5#ntraiation pa6! a 8ita ro#. B#5au!#

t"#r# i! a opportunit6 to g#t a infor4ation a7out t"# 4ar@#t !ituation fro4 5o4pani#! own

!our5#. An3 to 4a@# ui5@ 3#5i!ion 5o4pan6 n##3! t"# infor4ation of 3a6 to 3a6 7u!in#!! of

tota 4ar@#t !o, t"#6 5an ta@# an appropriat# 3#5i!ion. If 5o4pan6! top 4anag#4#nt i!

5#ntrai#3 in ta@ing 3#5i!ion an3 it! ow#r #8# i! 3#5#ntrai#3 !o, it 5ou3 7# "#pfu to t"# top

4anag#4#nt in ta@ing ui5@ 3#5i!ion!.

I@#a 4anag#4#nt t#a4 aroun3 t"# wor3 i! r#a6 goo3 an3 #!p#5ia6 t"# 4anaging 3ir#5tor of

i@#a in Unit#3 King3o4 Mr. Goran ni!on "# i! fanta!ti5 in "i! ;o7 an3 r#!pon!i7iit6p#rfor4an5#. T"# 4anag#4#nt t#a4 of i! 4ain6 5on5#ntrat# on un3#r!tan3ing of t"# "u4an

r#!our5# 4anag#4#nt pra5ti5#! an3 wor@ 5utur# of a 4a;or furnitur# 4anufa5tur#r an3 r#tai#r.

An3 t"#6 appr#5iat# t"# i4portan5# of t"# po!iti8# "u4an r#!our5# 4anag#4#nt an3 pra5ti5#! in

a t"# #4po6##! r#t#ntion 4anag#4#nt. E8#n aft#r t"i! i4portan5# t"# 5o4pan6 "a! !o4#

i!!u#! r#gar3ing "u4an r#!our5# an3 t"# 4anag#4#nt t#a4 i! wor@ing on it to o8#r5o4# t"i!

pro7#4 an3 5o4pan6 "a3 !o4# 4or# i!!u#! r#gar3ing t"# #ff#5t of 5utur# on #4po6## 4ora#.

I@#a "a! a !trat#g6 an3 8i!ion for 5o4pan6 an3 it! #4po6##! to "#p 4an6 p#op# to "a8# 7#tt#r

if# an3 p#op# in5u3#3 #4po6##!, 5u!to4#r! an3 5o44unit6. An3 I t"in@ if IKEA !upport! t"#

#4po6##! in t"#ir p#r!ona i8#! t"#n t"# #4po6##! wi 7#5o4# 4or# 5o44itt#3 in #8#r6

p#rfor4an5# of 5o4pan6. If 5o4pan6 ta@#! 5ar# of t"#ir want! an3 n##3! on6.

IKEA i! a go7a 5o4pan6 t"at i! 3#8#oping rapi36. An IKEA IT !upport "#p! IKEA in

3#8#op4#nt wit" t"# "#p of infor4ation fow an3 pro8i3#! !oution! to t"# 5o4pan6. T"# t#a4

of IKEA IT !upport! i! !oution ori#nt#3 an3 IT t#a4 of IKEA i! g#nuin#6 5r#ati8# in natur# an3

"#pfu in pro8i3ing in 5orr#5t an3 r#uir#3 infor4ation. T"#6 !upp6 t"# ui5@ an3 5orr#5t


13/15

infor4ation in a 8#r6 !"ort !pan of ti4#. On t"# ot"#r !i3# t"#6 !upport t"# 4ar@#ting an3

a38#rti!ing 3#part4#nt of I@#a. An3 t"roug" t"#!# "#p IKEA 4a@# 5#rtain 3#5i!ion w"i5" "#p!

t"# 5o4pan6 !ta7iit6 an3 t"# 3#5i!ion ar# 8#r6 i4portant 7#5au!# it aff#5t! t"# !ta@#"o3#r an3

5u!to4#r! an3 #4po6##! an3 5o44unit6 a! w#.

i@#a 5o4p#titor! fro4 3iff#r#nt part! of t"# wor3 "a! a uniu# in uaiti#! t"at ar# 3iff#r#nt fro4

ot"#r! t"at on# 5annot ignor# it t"at ta@ing into 5on!i3#ration. t w# t"in@ t"at a 5o4pan6 "a! to

fin3 a goo3 7aan5# 7#tw##n !uita7iit6 in pro3u5t! in 3iff#r#nt 4ar@#t! an3 w# a! a 5o4pan6

!"ou3 @now t"at w"at i! 7#!t t"#6 t"in@ for t"#4!#8#! at a 7#!t pri5#. An3 w# !"ou3 7# a7# to

4aintain a uait6 uniu#n#!! to !u!tain a 5o4p#titi8# a38antag# o8#r ot"#r 5o4p#titor! in

3iff#r#nt 4ar@#t! w"#r# t"# 5utur# i! 3iff#r#nt.


14/15

THE CHOICE O( ENTRY MO*E

An6 5o4pan6 w"i5" want! to #nt#r a go7a 4ar@#t "a! to 3#t#r4in# t"# 7#!t 4o3#. T"#r# ar#

fi8# wa6! in w"i5" a 5o4pan6 5an #nt#r in to t"# go7a 4ar@#t!. T"#6 ar# Et"#fran5"i!#r? propri#tar6 @now#3g#, pro5#!!#! an3 tra3#4ar@!in or3#r to aow

t"# part6 to !# a pro3u5t or pro8i3# a !#r8i5# un3#r t"# 7u!in#!!! na4#. In #


15/15

R#f#r#n5#!

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Strategy in the Global Environment- IKEA

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