IKEA: Business Ideas and Strategies. Management Essay Example.

Paper Type:  Course work
Pages:  7
Wordcount:  1913 Words
Date:  2021-04-05

There are a lot to gain from IKEA which helps in the development of business ideas and the building of business in the modern society. IKEA is a company that deals with furniture where there is selling and distribution of furniture to homes and offices, in this regard, the success of the company proves the need to examine its importance and strategies that it employs to achieve a successful business plan that can achieve the goals and objectives of the company. Some of the business ideas and strategies to build stable business include business strategies, organizational strategies, activities related to corporate social responsibility, and how PESTEL and Ansoff help in the development of business ideas in the society (Yakhlef and Kumar, 2016, p235). Examination of such helps in ensuring business use the new found strategies that can help to tackle modern-day business and societal challenges in business settings.

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Question 1

The level of strategy that the company employs in the business process is business level. Such is because of some factors and challenges that the company deals with and are reflected in the Five Porters framework. One is that there is the rivalry between existing companies, this takes place when companies deal with the same product in the market necessitating the application of strategies that can help them to distribute products in the market. There are various companies in the United Kingdom which necessitate the formation of strategies to make the company successful in the market. The five factors in the Five Porters framework are the threat of entry, the threat of substitutes, bargaining powers, the Bargaining powers of suppliers and finally the degree of energy between competitors (Bower et al., 2015, p78). The degree of rivalry increases on various occasion among them being aggressive competitors in seeking leadership, the rate of decline or maturity of the market, high exit barriers among others.

The threat of entry is another factor that the company has to deal with to gain access to the right market. The threat to entry, which is also the barrier that the company faces trying to gain entry into the new markets. Economists posit that threat to entry tends to be low on the occasions when there are high barriers to entry and vice versa. Some of the barriers to entry into the new markets include economics of scale, the experience of learning, access to the distribution and supply channels among others. The third factor is the threat of substitutes, substitutes in this cases are the products or services that provide similar products or services but have different natures. In such a setting in the market, there is the possibility of switching to alternatives. However, the alternatives only become available when the substitute has a has a higher price/performance ratio. Secondly, the substitute must benefit from the innovation which helps in improving the satisfaction of the customers.

The bargaining power of buyers is another factor that the company deals in the business level in the Five Porters framework. In this setting, buyers have the most power, and the can demand the cheap products which can lead to reducing their profits. The powers of the buyers are likely to increase when the buyers are concentrated; buyers have low switching costs and they can also supply their inputs. Next is the bargaining power of supplies and which is because of the powers of powerful suppliers have the ability to reduce the profits of the organization and mostly come when the suppliers are concentrated, the suppliers help in providing a specialist or a rare input. In this business level, the company has to deal with various industries, and one is the monopolistic industry which is the industry with one firm making it avoid competitive rivalry. The company also deals oligopolistic industry which is where there are few firms in the market that dominate the industry; this results because firms have more power than suppliers.

Question 2

One of the organizational strategies that the company employs in doing business is the resource-based view (RBV), and this takes place when it is the distinctive of capabilities are help in explaining superior performance and competitive advantage. In this manner, strategic capabilities are the capabilities of an organization that that helps it to contribute to the long-term survival or competitive. Resources are the assets of an organization and which help in the fulfillment of organizational goals and objectives, competence is another factor in the business and is the ways in which the assets of the company are used or deployed in the company. One organizational strategy is that the company employs are to clear the underbrush, which are the stupid rules, activities that have low value and the time wasters in the organization. Some of the activities in the company focus on are such as the optimum number of people that the company needs to succeed in the business.

The other organizational strategy is to take an outside-in perspective, and this is because simplification can only be successful when the needs of the client, either internally or externally, become the greatest focus. Such calls for clarification of the clients to help in analyzing what they need and what the company can do to succeed in the market. This is a strategy that helps the company to seek how to improve the customer value of the product. Besides, there is the policy that focuses on the priority of the what is important in the company and carry out a continual reassessment of the priority list; this is also connected to another idea of the company is to take the shortest paths to success and to promote their products in the market. Such helps in reducing the time taken to achieve success in the organization. It is needful for the company to reduce redundancies and the opportunities to help in making processes lame. Moreover, there is a need for the management not to be so nice as this will help the company to root out the poor practices in the firm. The result is a dynamic working society which enables the fulfillment of organizational goals and objectives using the limited resources. Moreover, there is the need to reduce the levels and increase spans because it is apparent in companies to experience complexities in the structural tendencies to add layers of management which help managers to supervise one or two people. In this regard, the managers usually feel compelled to engage in the adding value by questioning the actions of their subordinates.

Question 3

There are various corporate social responsibilities for IKEA that would help in getting the mind of the customers and help in the fulfillment of organizational goals and objectives. One of the activities that can be carried out to promote corporate social responsibility is environmental efforts that are aimed at improving participation of the customers in the improvement of the environment in the society. One of the primary objectives of the corporate social responsibility in the society is the environment; this is because the company has a large carbon footprint. In this regard, the efforts taken to conserve the environment is beneficial for both the company and the society in general. Efforts of the conservation of the environment call for activities such as reforestation and afforestation which help in increasing forest cover in the country to help in harnessing rainfall.

The second corporate social responsibility that the company needs to have is philanthropy that is channeled to the society; this can be through channeling funds to donations of national and local charities to help in the improvement of the social life of the population. The business has a lot of resources that can help in benefitting the population through the local charities and community programs by helping the poor in the society. The company can assist childrens homes and through the charities where through such platforms can help the company to promote its products and help in increasing the market segment. Through philanthropy, the company can gain a lot of new clients and get trust from the company by helping in creating employment opportunities in the modern society. IKEA can use activities of corporate social responsibility to introduce new furniture products to the society where part of the donation can be a donation of company products.

Finally, IKEA can use ethical labor practices in the organization to make the company more sellable and introduce new products to the clients. Some of the ethical labor practices include treating employees fairly and ethically which help in building loyal customer base. Besides, the company can also demonstrate its corporate social responsibility; this is an act that is highly required in the company because the company operates in different nations and where there are different labor laws. It is factual that the clients are more likely to buy from organizations that have the best ethical labor practices and this help in gaining customer confidence. Finally, volunteering can be another way of improving corporate social responsibility in the modern, volunteering helps organizations to sell out their ideas because it helps to portray an organization as a sincere one that is interested in the welfare of the population. Doing good without expecting to be repaid helps organizations to express the concerns they have for specific duties and make an input in societal organizations.

Question 4

It is apparent that the company uses business level of strategies because it uses PESTEL framework in the business settings. PESTEL deals with the analysis of six key environmental factors which are political, social, economic, ecological, legal and technological. In this regard, the company uses PESTEL to examine issues that are of greatest influence to the business and assessing the degree of influencing factors. The impact of the IKEA in the country calls for the analysis of political factors and mostly the role of the state in influencing business purposes. There are various political factors affecting business operations of IKEA among them being changes in taxation, regulations of foreign trade, government policies, changes in trade blocks and political risks in the foreign markets. The business strategy of using PESTEL is beneficial as it helps in the expansion of business.

The organization strategy of PESTEL greatly helps the organization to examine the position of the organization in the external environment and how it performs in the market; this enables the management of the organization to identify the strengths of the company and how to tackle challenges affecting the company. Moreover, PESTEL perfectly fits in the IKEA framework in that it analyzes the determinants of the strategic capabilities; these are the competences, resources, and the linkages between the same. Moreover, the same is of great importance to the running of IKEA in that it plays a critical role in the understanding organizational purposes including, but not limited to, corporate governance, business ethics and the expectations of the shareholders. Moreover, PESTEL helps IKEA in addressing how history and culture help in determining the position of the organization in the population and how to improve organizational performance.


IKEA plays a great role in the society and some of the benefits it brings to the society in that it helps in creating employment opportunities which in turn lead to the growth of the economy. Moreover, the IKEA improves the social nature of the population by selling elegant products that improve the living conditions of the products and helps in the expansion of the market for furniture. With such, there is the need for the society to help in...

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IKEA: Business Ideas and Strategies. Management Essay Example.. (2021, Apr 05). Retrieved from https://proessays.net/essays/ikea-business-ideas-and-strategies-management-essay-example

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