Application Of Business Strategies: Corporate, International, And Cooperative Essay For IKEA.

Write a report on demonstrate application of the following Business Strategy, Corporate Strategy, Acquisitions and Structure, International Strategy, Cooperative Strategy, with academic references.

This report will show the objective of the IKEA Company in which the elaboration will be done of three strategies. These strategies are a corporate strategy, international strategy, and business strategy. In the context of business strategy, the report will explain the cost leadership strategy which would be helpful to determine that in what way company can get more success. The corporate strategy will entail the sustainability and CSR of the company so that the company can catch the attention of the customers of India. At last, the international strategy will be described in the context of case in which the report will describe the how IKEA will compete in India using Five Forces analysis. 

Business strategy facilitates organization to attain the objectives of the company which can be simplified by describing the long-term business planning. It is considered by the business for a long period of action which is designed to attain a specific objective or set of objectives. The strategy is the game plan of the management which is planned for strengthening the performance of the enterprise. It defines how business must be organized to attain the desired objectives. It has been discussed in the case study that the current challenges of IKEA are lack of availability of retail space and its cost. The cost leadership strategy should be taken by the company for making effective marketing strategy.

The cost leadership strategy is based on the porter’s generic strategies which were proposed by Michael Porter. However, the company has adopted the indirect differentiation strategy because of the unique way of adding the consumer of the company in the value chain. The combination of it is included the focus strategy in which the young buyers find fashionable and stylish household and furniture at low cost. The company has adopted this strategy and endeavoring to provide the maximum products as per the affordability of the customers. IKEA should consider n the organization’s engineers design low cost and modular furniture ready for meeting by consumers instead of focusing primarily third-party manufacturer. IKEA should seek for the suppliers who could manufacture effective subassemblies at an affordable rate and allow Customers to assemble the products themselves.  It would be beneficiary for the company to enter in the market as this method has the ability to save the delivery costs not only for the producers but also for the customers. It permits many manufacturers of the company to reduce the unnecessary costs as soon as a customer can buy the products at affordable rate. The company can be able to win the market of India with the competitive process in which it can attain the wide market.

Cost Leadership Strategy

It has been found that the customers of the company are actively included in the shopping experience due to attractive concept of IKEA. The concept of IKEA is relied on consumers to opt, collect, transport and assemble the products themselves which increase the rate of the customers appropriately. The company can adopt the same strategy in the market of India for getting huge benefits. Company should focus on the idea of “You do your part and we do our part and it will save our money”. This idea would be beneficiary for the company to get advantages in the market of India. The concept of the company with the help of business strategy can be attained when people of India will get chance to assemble their products on their own in which they can get higher quality with lower prices according to their choice (Alänge, Clancy and Marmgren, 2016). Along with that the cost leadership strategy can reduce the challenges of failure. 

Corporate strategy is the sum of business strategy and the competitive advantages. As per the case study, the challenges of hiring and vendor negotiations can be reduced with the help of this strategy. This strategy incorporates the allocation of the resources, organizational design, strategic tradeoffs and portfolio management in which the company’s vision mission, objectives, and strategies incorporated. The sustainability strategies and the CSR will be described below in the context of IKEA Company.

Sustainability is considered as the root of the strategies of IKEA throughout its evolution. It has been found that the company has introduced its People and Planet Positive sustainability strategy which helps the approach of the company to attaining the effective affirmative impacts of social and environmental. The company should set out the same strategy for IKEA in India so that the trust of people on the company is increased and they prefer the products of this company. The sustainability strategy of the company will bring entire aspects of values mission and vision together to drive innovation and change the business of IKEA (Keyes, 2016). The company gets success in the market of India with this strategy which will strengthen the competitiveness of IKEA through making safe long-term access to vital raw materials, handling and maintaining the base of the supplier, enhancing the relationships with employees and customers and enhancing the market share. The company should implement the sustainability strategy for the business of India and it should work on to motivate its customers to live a more sustainable life at home (Businesscase, 2018). The strategy of sustainable of IKEA Company should be developed not only for the customers but also for the co-workers. For instance, the company should focus on inclusion and diversity strategy involving the aim of having women of India of entire management positions at every level across the business. This would increase the face of the company and people will encourage to get employed in this company which is the cause of success (Purce, 2014). Along with that, the company needs to motivate co-workers to involve in the community involvement activities in their local areas.

Corporate strategy

The corporate social responsibility efforts are dealt by Chief Sustainability Officer, Steve Howard.  IKEA and CSR activities and efforts entail supporting local communities, empowering workers, educating, and addressing the concerns of the gender equality within the organization. It would be helpful for the company to reduce the current as well as potential challenges of the company in an efficient manner (Schramm-Klein, Morschett, and Swoboda, 2015). Furthermore, the global furniture retailers tasks to diminish the consumption of the energy and derive energy from alternative sources. It has been found that the sustainable sourcing shows a CSR conflict that IKEA need to define within the scope f its operations. IKEA has taken various steps in the context of energy consumptions. The energy consumption products of IKEA are more effective and IKEA has taken an initiative step to establish the solar panels in which the company has installed 70,000 solar panels. In the context of the Indian market, IKEA will gain huge advantages due to this idea. IKEA Company has committed to EUR 1.34 million investments to facilitate about 100,000 farmers all over the world to generate cotton with less utilizing less water and chemicals (HuffPost, 2012). IKEA impose supplier code deny to use child labour, bonded labour and discrimination at work. This kind of activities and applied law in the company will facilitates the company to reduce the impact of child labour in India and contribute in the development of India as well (Leonidou, Christodoulides, Kyrgidou and Palihawadana, 2017).

International strategy is making effective relations with the other countries (Burt, Johansson and Dawson, 2015). IKEA operates in Sweden and in relation to the expansion of the business in the international market; the organization has chosen Indian market due to emerging economic conditions in India. This has attracted IKEA and this will also help the organization to attain its goals and objectives in relation to the expansion and growth of business in international market. As per the case study, the international strategy of the firm is the strategy by which the organization is able to sell its products outside its domestic market (Regnér and Zander, 2014). The several reasons have been defined by Ikea to pursue an international strategy such as international markets increases the new opportunities, required sources can be secured, huge potential product demand. The Porter's five forces as a strategy are defined below in the context of International strategy in which the description will be made on the five aspects of this strategy to define the threats of substitutes and new entrants, power of suppliers and buyers, rivalry in the industry (Hitt, Li, and Xu, 2016). This strategy helps the company to analyze the situation in the market of India in which it can take appropriate action to reduce the impact of threats on the company. The Porter's five forces are defined below to understand the various aspects of Ikea Company.

Sustainability strategy

 It is necessary for the company to bright in the business world to control its supplier. It is because when the suppliers have control over the raw materials, they will start to rule the company indirectly and charge a higher rate to raw material and deny designing the products as per the company requirement (Prasad and Warrier, 2016). In the term of Ikea, it can be clearly stated that the power of supplier is low. The company has an effective relationship between each of its suppliers all over the world. it would be beneficiary for the company to enter the market of India. Due to have its own manufacturer, it is clear that the threats of suppliers are low and company can develop products at a lower rate.

There is a number of retailers in the industry that are included in the war price against each other. They are mostly considering as the importers who get their list from China along with a direct competition in the market. The bargaining power of buyer in the industry is high but there is a number of customers who prefer Ikea due to brand’s name. However, people of India prefer readymade furniture or give the order to a carpenter for their designer furniture. The entry of this company in the market of India will bring change for the people as they will get a latest furniture item basis on global strategy at lower price that can increase the sales of the company (Bischoff, 2016).

The entrants of a new company of similar industry may impact the company’s strategy but Ikea is a brand and other companies needs to invest high to compete with it. the threat of new entrants are considerably low for this company, however, the intensity of the competition in the industry can fright off new entrants (Kristin’s Blog, 2016).

The threat of substitutes is low on the company as there are no substitute products available for furniture and the home applicant. Moreover, the company has the efficiency to make furniture in an effective manner. The customer retention rate remains effective with IKEA which would be beneficiary for the company at the time of entering the market of India.

When the industries held high-profit margin, it would attract a number of other companies to involve its market. The rivalry within the business of furniture is moderate. Even though, there is a number of retailers in the market of India that provide furniture at low cost and offering discounts as well like IKEA. The major competitor of this company in the same industry is Walmart stores, Argos and Galliforms that can take the risk to enter the market of India to compete for IKEA. On the other hand, IKEA remains the leader in low cost and discount of the products (HuffPost, 2012)

Conclusion

In the limelight of above discussion, it can be concluded that the competitive strategy should be applied by the company to compete with its competitors in an effective manner. In this report, the discussion has been made on various strategies such as corporate strategy, international strategy, and the business strategy. The depth information has been given in the relation of that strategy to make proper understanding about the position of IKEA Company and the potential impact on the company due to entrance in the market of India. 

References

Alänge, S., Clancy, G. and Marmgren, M., 2016, Naturalizing sustainability in product development: A comparative analysis of IKEA and SCA,  Journal of Cleaner Production, 135, pp.1009-1022.

Bischoff, A.L., 2016. Porters Five Forces. Innovation through Business, Engineering and Design.

Burt, S., Johansson, U. and Dawson, J., 2015. International retailing as embedded business models. Journal of Economic Geography, 16(3), pp.715-747.

Businesscase, 2018. Vision, Values and Mission in Driving Strategy An IKEA case study. Available [online] https://businesscasestudies.co.uk/ikea/vision-values-and-mission-in-driving-strategy/strateg.html. Accessed on 19^th May, 2018. 

Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and beyond. Journal of World Business, 51(1), pp.58-73.

HuffPost, 2012. IKEA’s Environmental Sustainability Strategy Includes Plan For Energy Independence By 2020. . Available [online] https://www.huffingtonpost.com/2012/10/25/ikeas-environmental-susta_n_2018703.html. Accessed on 19^th May, 2018. 

Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.

Kristin’s Blog, 2016. IKEA–A success of Porter’s Generic Strategies Combination. Available [online] https://blogs.ubc.ca/junlingliu/2016/10/02/ikea-a-success-of-porters-generic-strategies-combination/. Accessed on 19^th May, 2018.

Leonidou, L.C., Christodoulides, P., Kyrgidou, L.P. and Palihawadana, D., 2017. Internal drivers and performance consequences of small firm green business strategy: The moderating role of external forces. Journal of business ethics, 140(3), pp.585-606.

Martinez-Simarro, D., Devece, C. and Llopis-Albert, C., 2015. How information systems strategy moderates the relationship between business strategy and performance. Journal of Business Research, 68(7), pp.1592-1594.

Prasad, A. and Warrier, L., 2016. Mr. Porter and the New World of Increasing Returns to Scale. Journal of Management Research (09725814), 16(1).

Purce, J., 2014. The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals), 67.

Regnér, P. and Zander, U., 2014. International strategy and knowledge creation: The advantage of foreignness and liability of concentration. British Journal of Management, 25(3), pp.551-569.

Schramm-Klein, H., Morschett, D. and Swoboda, B., 2015. Retailer corporate social responsibility: Shedding light on CSR’s impact on profit of intermediaries in marketing channels. International Journal of Retail & Distribution Management, 43(4/5), pp.403-431.