Cooperative Strategy And IKEA: A Case Study Analysis

Select from the following topics, as relevant to the chosen case:

• Business Strategy
• Competitive Dynamics
• Corporate Strategy
• Acquisitions and Structure
• International Strategy
• Cooperative Strategy
• Sustainability

Be sure to use Report Format, with an Executive Summary, Table of Contents, Section Headings, Page Numbers

Competitive strategy is recognized as the long term strategy. It is the strategy that facilitates in growing the business in the competitive market. This paper will consider the case study of IKEA Company in which appropriate strategy will be taken. There are various strategies in the competitive market in which the main focus of this paper is on the cooperative strategy. It is the strategy that keeps focussing on creating the protective location in the industry (Schramm-Klein, Morschett, and Swoboda, 2015). Background of IKEA Company will be elaborated under this paper which will describe the position of the company in the competitive market. The reasons behind choosing the cooperative strategy will be described under this paper. Along with that, the role of the cooperative strategy in IKEA will be mentioned in order to bring the better understanding regarding the case study and the condition of entry in the Indian Market.

 IKEA is a global organization that offers the home furniture items, appliances of the kitchen and assembles furniture. It has been discovered that IKEA is a global organization that arrangements in furniture and fulfill the clients by giving them top-notch administrations. The organization has in excess of 400 stores in 49 nations in which more than140, 000 representatives are working around the world. The organization is known for its innovator outline for different sorts of furniture and machine. The organization has created in excess of 12000 results of furniture with a number of inside highlights. The vision and mission of the company put significant impact over the business by which the company is able to attain the revenues in a huge manner. The organization has in excess of 2.1 billion guests visit its sites and buy items (Harapiak, 2013. The company is famous due to its effective operational particular, cost control and corporate credits that represented IKEA to smaller its range transferred by normal of 2% to 3% in the season of development of worldwide. It has been discovered that the present scene of the furniture business is dynamic that is the reason it is required for the organization to look forward in the most recent pattern of furniture with a specific end goal to achieve the energy in the destructive market (Burt, Johansson and Dawson, 2015).

The cooperative strategy facilitates many organizations to attain the objectives of the company within the time frame. It is the strategy that considers as the planning strategy in which two or more than two organizations are working in order to achieve the common goal of the business. A cooperative strategy is being adopted by many companies for the purpose of increasing the competitive advantages (Schramm-Klein, Morschett, and Swoboda, 2015). The main motto of this study is to provide the chances to overcome the challenges by taking consideration of the acquisition strategy. It has been analyzed that cooperative strategy has two sub-kinds such as collusive strategy and strategic alliances. The job of the collusive strategy is reliant on the working criteria of a few associations keeping in mind the end goal to distribute with capitulating of the business beneath the destructive level. It has been found that the strategic alliances are another sub-kind of the cooperative strategy which is able to amplify the position of the competition of the industry (Regnér and Zander, 2014). The role of the cooperative strategy has major role in the company as it facilitates in amplifying the competition in the market by creating development in the operation of the company.

Cooperative Strategy

There are so many reasons that being the major cause of applying the cooperative strategy in the company. These are lack of resources, acquiring new skills and ineffective knowledge about new concepts where the company wants to expand its business. Co-operative behavior is liable to give a company value that cannot be attained independently.  Companies develop a cooperative strategy for the reason of creating strategic alliances due to lack of resources to attain their aims. It helps in reaching the stakeholder's interests to decrease uncertainty inside the company. Cooperation has the ability to develop the image of the company. The company can achieve various opportunities to acquire knowledge and experience (Keyes, 2016). The role of the cooperative strategy helps in fulfilling the resources for the purpose of developing the scope of growth in the comparison of the competitors. It has been found that there is a number of companies along with the trade projects that require expertise from different sorts of fields. It is the strategy to ensure that the employees of the company are valuable and the strategic alliances help in gaining a lot of knowledge about different culture.

It has been analyzed that the strategy of IKEA Company is entirely different from other companies because the main focus of IKEA is on core competencies that have been influenced with respect to maintain the productivity. The company’s capabilities are expanded worldwide in which the value of the supply chain is involved. The company’s business model is based on the low-cost strategy in which a company can approach a large number of customers in one go. The major core competency of the company is to develop the firm brand equity in which unique promotions and different kind of advertisement campaigns are embedded. The major strength of the company is financially strong in which the brand value of the company is increased. It has been found that the revenue of the company was €32.7 billion in 2015 (Hitt, Li and Xu, 2016).

 The role of the cooperative strategy is great as it is not an easy task for any company to enter the international market without applying an effective strategy. IKEA had to struggle for 12 years to enter in the market of India because the company did not want to share its shares with other that is why the main focus of the company is on suppliers. IKEA Swedish furniture Retailer Company has signed a multimillion-dollar software contract with VerticalNet. It is done because of its planning to set up a portal for communicating and negotiating with suppliers online. It has been found that the company booked around $10 billion in sales for the purpose of negotiating the contracts with manufacturers that is able to supply the organization with the facility of the home furnishing which sells in around 170 stores worldwide. It has been expected by the company to help communication regarding the sales of the store and the plans of manufacturing with a huge number of manufacturers and suppliers that do not make use of Electronic Data Interchange (Businesscase, 2018). The portal shows that the company is able in increasing cooperative strategy in which the feature of the applications is made for the benefit of IKEA’s suppliers which make them sure that they are valuable assets for the company. The role of the cooperative strategy in the company is increasing the revenues of the company. India is the second largest population country which has a largest open economy market. There are more than 7500 products that are being offered by the company to a large number of customers worldwide (Tandon, 2018). The strategy and the concept of the company is different from other company in which Do it Yourself concept helps the customer to assemble the furniture as per their needs and affordability. However, the company can be faced the challenge due to this concept and with the help of the case study, it has been found that the company is facing various challenges such as availability of retail space and its cost, Hiring activities and vendor negotiations, Last-mile supply chain issues, Reception of IKEA’s products is unpredictable, IKEA’s anti-corruption policy (HuffPost, 2012).

Reasons of Cooperative Strategy

IKEA took around 12 years to create a store in India and after a lot of struggle the company has opened its store in Hyderabad. The company wanted to enter in the market of India with full of shares but the local laws of INDIA allowed them to enter with 51% foreign ownership and rest for a domestic country that hampered the entire plan of the company.  In 2012, Indian Government allowed IKEA to invest in the Indian Market around 600 billion and this proposed plan was accepted India’s Foreign Investment Promotion Board. It has been analyzed that the company started to a partnership with its supplier which is Hyderabad-based Shree Malani Foams Pvt Ltd that deals in mattresses (TOI, 2018).

Strategic alliances are considered as the major factor that is able to facilitate the company in order to reduce the challenges of the lack of resources and skills. It increases the value in the view of the partners that they are valuable assets for the company. Along with that, it has been found that the company has the partnership with GATI-KWE to manage home deliveries of its products which would be helpful to decrease the challenge of the major concept of Do-it-yourself across Telangana. Alliances can provide the different way of earning more revenues in the competitive market and amplify the range of responding to the opportunities of the market and changes in the technology. The company has a different policy for suppliers in which it has made IWAY (IKEA Way) that refers the code of conduct for the suppliers which specify the requirements of the company as well as the supplier so that the bonding between both of them can be maintained for a long term. The work of the company is proactively that help in preventing the illegal and corruption activities. However, the company has corruption policy but by giving more importance to the suppliers, the company conducts its own code of conduct for the suppliers and IKEA representatives. IWAY is based on the international declarations as well as on conventions. It involves laws and legislations in order to increase the importance of the Human Rights. According to this code of conduct, suppliers are liable to communicate in the context of the IKEA code of conduct to sub-suppliers as well as the co-employees (IKEA, 2018).

Conclusion 

In the limelight of the above discussion, it can be concluded that the role of the competitive strategy is great in achieving the competitive advantages. Along with that, it has been analyzed that the company is strategically designed their structure to cater better understanding to their target market. The case study of IKEA has been taken to describe the cooperative strategy in which the paper has described the strategic alliances in an effective manner.  The paper has described the depth information regarding the cooperative strategy by taking the case study of IKEA to make proper understanding regarding the position of the company and its potential impact on the company because of the entrance in the market of India.

References 

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.  

Harapiak, C. 2013. IKEA’s International Expansion. International Journal of Business Knowledge and Innovation in Practice. (1)1 pp.25-51.

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.  

IKEA, 2018. IWAY, Our code of conduct. Available [online]:  https://www.ikea.com/ms/en_SG/about_ikea/our_responsibility/iway/index.html. Accessed on 19 Sept 2018.  

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

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.

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.

Tandon,S., 2018. With 7,500 products and four years of research, IKEA is ready for India. Available [online]:  https://qz.com/india/1301582/ikea-prepares-to-open-its-first-store-in-india-after-four-years-of-research/ Accessed on 19 Sept 2018.  

TOI, 2018. IKEA partners with its first mattress supplier from India. Available [online] https://timesofindia.indiatimes.com/business/india-business/ikea-partners-with-its-first-mattress-supplier-from-india/articleshow/62892095.cms. Accessed on 19 Sept 2018.