ASSIGNMENT

Assignment



Assignment

Introduction

IKEA Group (Ikea or 'the group') is a global retailer of Scandinavian designed furniture and accessories. The parent company of the Ikea Group of companies is Ingka Holding, a private Dutch-registered company, which in turn is owned by Stichting Ingka Foundation. The Stichting Ingka Foundation was established in 1982 by Ingvar Kamprad and the ownership of this foundation lies with the Kamprad family. The Ikea trademark and concept is owned by Inter Ikea Systems, another private Dutch company, but not part of the Ingka Holding group. The parent company of Inter Ikea Systems is Inter Ikea Holding which is registered in Luxembourg.

Part 1: IKEA's core competences

According to Porter's (1980) model of generic competitive strategies, the industry where the organization competes is the key part of the competitive environment. Industries are comprised of organizations that provide close substitutes of products and services (Porter, 1980). The competitive environment has a common structure consisting of five competitive forces that are determinants of the overall profitability and competitiveness of the industry. The five competitive forces are the threat of entry, pressure from substitute products, and intensity of rivalry between existing organizations, negotiating power of vendors, and negotiating power of purchasers. The combined influence of the five forces determines the competitive intensity of an industry (Porter, 1980).

Organizational managers who understand the effect of each competitive force are able to develop effective actions in response to emerging competitive forces (Ragatz, Handfield & Scannell 2007, 190). By understanding that competition reaches beyond existing competitors, managers can identify wider competitive threats and become better able to focus on emerging competitive forces (Ragatz, Handfield, & Petersen 2009, 390). As the result of increased competition and relentless change, managers need to think structurally about competition (Ragatz, Handfield & Petersen 2009).

Successful utilization of Porter's 1980 model of generic competitive strategies requires an understanding of the internal and external factors affecting the competitive strategy. Porter (1998) identified four key factors that establish the limits of what an institution can successfully achieve: (a) organization strengths and weaknesses, (b) industry opportunities and threats, (c) broader societal expectations, and (d) the personal values of the key implementers. Factors internal to the organization include strengths, weaknesses, and values. The strengths and weaknesses of an institution are identified by comparing the skills and assets of the institution to the skills and assets of competitors. Brand identification, financial resources, and technological posture are all factors to be compared (Quinn 2009, 9).

In a for-profit organization, the personal values of the organization are determined by the needs and motivation of the key managers and other employees who are responsible for implementing the chosen strategy (Quinn 2009, 9). At ASU, which is a public institution, institutional values are expressed in the mission statement. The mission of the university was developed by a consensus of people ranging from the ASU faculty, staff, and executive administrators to the administrators at the Alabama Department of Postsecondary Education (Quinn & Hilmer 2007, 43). The combination of strengths, weaknesses, and institutional values establishes the internal ...