IKEA Business Strategy and Competitive Advantage: Capitalising on IKEA Concept
IKEA business strategy is built upon the IKEA concept. The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few. It is achieved by combining function, quality, design and value – always with sustainability in mind. The IKEA Concept exists in every part of the company, from design, sourcing, packing and distributing through to business model. [1]
The following points constitute integral elements of IKEA business strategy.
1. Offering the lowest prices . Cost effectiveness is one of the solid bases of IKEA competitive advantage. The global furniture retailer is able to offer low prices thanks to a combination of economies of scale and technological integration into various business processes.
2. Increasing variety of products . Great range of products also belongs to the list of IKEA competitive advantages. There are 12000 products across in IKEA portfolio and the company renews its product range launching approximately 2000 new products every year. [2] The company is also increasing its presence in food and catering industries.
3. International market expansion strategy . The home improvement and furnishing chain has traditionally engaged in new market development in an aggressive manner. IKEA has11 franchisees operating in more than 500 locations in 63 countries. [3] Furthermore, The Swedish furniture chain has long-term plans to establish its firm presence in many developing countries.
4. Benefiting from strategic alliances . The global furniture retailer benefits from strategic alliances to a maximum extent. The formation of strategic alliances is placed at the core of IKEA business strategy. The list of the most successful collaborations include partnership with Apple to explore the possibilities of Augmented Reality as a tool for home-furnishing, partnership with LEGO for new product development and partnership with Adidas in knowledge sharing about customer behaviour. Experience and competency in the formation of strategic alliances can be specified as one of the most important IKEA competitive advantages.
Currently, IKEA is in the middle of transformation of its business model that made it successful in the global scale. Specifically, for many decades IKEA business strategy was largely based on having giant out-of-town warehouses, where shoppers pick their own furniture and then build it at home. But now it is looking increasingly at city-centre stores, online shopping, home delivery and assembly, and more radical ideas such as leasing furniture and selling on websites such as Alibaba. [4]
IKEA Group Report contains the above analysis of IKEA business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] The IKEA Concept (2019) IKEA, Available at: http://www.ikea.com/ms/en_US/this-is-ikea/the-ikea-concept/
[2] Sustainability Report FY 2021,IKEA
[3] Inter IKEA Holding B.V. Annual report FY21
[4] Milne, R. (2019) “Inter Ikea’s Torbjorn Loof: making the vision clear” Financial Times, Available at: https://www.ft.com/content/6b250c0a-2486-11e9-b329-c7e6ceb5ffdf
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The IKEA sustainability strategy – making a real difference
The planet is our only home. And our home needs us now more than ever. Inequality risks making it unaffordable. Intolerance risks making it unwelcome. And climate change, uninhabitable. But home has always been what we make of it. And we’re determined to help a billion people live better everyday lives.
Becoming People & Planet Positive
We have big ambitions for 2030. Together with co-workers, customers, and partners the world over, we are tackling climate change, unsustainable consumption, and inequality. Our three major focus areas are:
1. Healthy & sustainable living
Inspiring and enabling more than 1 billion people to live better lives within the limits of the planet.
2. Circular & climate positive
Becoming climate positive and regenerating resources while growing the IKEA business.
3. Fair & equal
Creating a positive social impact for everyone across the IKEA value chain.
Some examples of how we plan on reaching our goals
- Giving IKEA furniture a second life
- Creating a global clean energy community
- Introducing more good food that’s good for the planet
- Aiming to be 100% powered by renewable energy across the entire IKEA value chain
- Offering zero-emission home deliveries, everywhere
- Supporting refugees around the world
- Working with social entrepreneurs
- Promoting gender balance and equal pay
Let’s assemble a better future
Want to know more.
Take a look at People & Planet Positive – the IKEA sustainability strategy.
- People & Planet Positive Open PDF ( 5.01 MB )
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