IKEA Analysis

Analysis of IKEA

Executive Summary

This paper explores the IKEA's current strategic issues and challenges in a holistic context. A brief account of strategic direction is shown through the organization's history and business focus. Further, the paper provides the macro and micro environmental forces that have a significant impact on the strategic choices of the company. A comprehensive PEST analysis impacting IKEA is presented to show these environments. The issues faced by the company are discussed using the Porters five forces framework and SWOT analysis. Finally, the paper concludes with the options the company may consider in dealing with its strategic issues and challenges.

IKEA in North America

IKEA is the leading manufacturing firm, engaged in the manufacturing of furniture. Since its inception, IKEA has maintained a distinctive position among its competitors, thus enjoying an overwhelming competitive advantage. It has always enjoyed a formidable position in this particular sector. Now, as every organization is planning to expand its operations, the top management at IKEA has realized the necessity and importance of expanding its business in other countries. The IKEA Group is owned by a foundation, Stiching Ingka, based in the Netherlands. The Group's management is in Leiden, Netherlands. IKEA Group is active in the development, procurement, distribution and sale of its products. IKEA was founded by Ingvar Kamprad in 1943. Since then, IKEA has expanded to include a number of domestic furniture stores worldwide. Today, IKEA is a global company of 110,000 employees working in 42 countries. There are approximately 12,000 articles in the total IKEA product range. Each store holds a selection of these articles in 9500 based on its size. Most of the assortment is same from one country to another.

The idea in creating the set is to provide products with a good design feature prices pleasant, almost everyone can afford to buy them. Last year, the department stores of IKEA were visited by 286 million people worldwide. The IKEA catalog was published with the printing of 118 million copies in 45 editions (in 23 languages). IKEA became the first company in the world, bringing together trade by mail with a "live" demonstration. A unique format has brought success and a means to open the "incredible" in Elmhulte store, where customers waited for another innovation - free coffee and muffins. Later, this invention has become a popular restaurant chain. The company has succeeded in this market because they have chosen an appropriate entry strategy. International management issues have to take in account for the MNCs operating the international subsidiary. Understanding culture differences are also the key to success of IKEA where the managers experience how to adapt effectively these differences.

Case Analysis

This study examines the internal and external environment of IKEA. The company uses PESTEL for external analysis and SWOT for internal analysis.

The Political Environment

This is marked mainly by the degree of state intervention in the retail sector, established programs and policy choices involved. Thus, the retail sector is seen by the intervention of the state to regulate and promote ...