Jones International University
MBA 505: Marketing Management
Module 4: Product/Service Positioning
Assignment 4.2: IKEA
By: Cheryl Tomlin
For: Dr. Terrance Cusaac
September 29, 2013
Read the case study.
In a Word document, respond to the following:
Given the SWOT analysis presented in the case, what are IKEA's key competitive advantages? What strategic focus should the company take as it looks to further expand into the U.S. market? From its low cost structure to its corporate culture (“The IKEA Way”) to the do-it-yourself approach (replete with measuring tapes, paper, and pencils available in-store) plus its strong brand image (representative of high quality, low-cost ,trendy, modern and fashionable furniture), the added amenities it provides (carracks, childcare, restaurants, design consultants), and its strong focus on sustainability (from product design to disposal) IKEA is well able to avail itself of current market opportunities (the weak state of the U.S. economy, demand for convenience, sustainability issues) to leverage its competitive advantages. To this end IKEA employs a strategy of operational excellence (OE) to focus on efficiency of operations and processes. OE is a competitive advantage: it translates to increased production flexibility, improved customer responsiveness, and cost minimization involving all aspects of business operations. OE streamlines functions and optimizes performance (www.deloitte.com). OE isn't achieved overnight. It is the systematic management of safety, health, environment, reliability and efficiency which takes constant, deliberate efforts to build and sustain a culture over time (www.chevron.com). IKEA has developed relational advantages (long-term relationship with supply chain partners/ability to offer them financial assistance, local trading offices); legal advantages (tax advantages, NPO corporate ownership); organizational advantage (culture); human resource advantages (committed employees – “100 Best Companies to Work For” rating, Antibureaucracy Weeks); product advantages (brand equity- product designs. For example, because cabinetry is not affixed you can move it around easily or take it with you when you move; simple, crisp lines make the furniture easy to clean and maintain. Reputation for innovation); pricing advantages (lower production costs, economies of scale, bulk buying, low-cost distribution, debt collection management – non-acceptance of personal checks); promotion advantages (iPhone/Android apps, local store events, company image- sustainability issues ); and distribution advantages (efficient distribution system, supply chain operations, exclusive distribution outlets) (Ferrell and Hartline, 2014, pp.99, 493-8). When we refer to competitive advantages, we usually speak in terms of real differences between competing firms: real strengths possessed by the firm or weaknesses possessed by rival firms (Ferrell and Hartline, 2014, p.98). Though competitive, IKEA’s practice of offering its own in-house credit card and its use of social media are not competitive advantages but merely requirements of “doing business in America”. As IKEA possesses many internal strengths, but limited external opportunities, given its current business model and inability/unwillingness to fund new stores, it might enter a strategy of diversification by expanding into new markets consistent with its central mission, The IKEA Concept. Specifically, IKEA should increase its market share of the online catalog business. Currently, it is akin to “a hardcopy girl livin’ in a digital world” - a dinosaur slogging along with its (primarily) brick and mortar offerings while its competitors flit from customer to customer in cyberspace. b.
What factor is the biggest reason for IKEA's growth and popularity: product value, service value, or branded image? Discuss the reasons for your answers. With a strong...
References: Ferrell, O.C. and Michael D. Hartline. Marketing Strategy: Text and Cases, 6th Edition, 2014, South-Western, Cengage Learning.
www.deloitte.com. Retrieved 09/29/13.
www.chevron.com. Retrieved 09/29/13.
http://businesscasestudies.co.uk. Retrieved 09/29/13.
www.biblestudytools.com/asv. Retrieved 09.29.13.
IKEA 2014 product catalog published Sept 2013, accessed 09/29/13.
Please join StudyMode to read the full document