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 vision and values
Inspired by our vision and driven by our values, we’re passionate about life at home.
We bring the IKEA brand to millions of homes, offering well-designed, functional, durable, affordable and sustainable home furnishing solutions to people with big dreams and thin wallets. We’re curious about the world around us, and want to make a positive difference in people’s lives.
The IKEA vision
“To create a better everyday life for the many people.” This vision goes beyond home furnishing. We want to have a positive impact on the world – from the communities where we source our raw materials to the way our products help our customers live a more sustainable life at home.
By sharing what we do, and speaking up for what we believe in, we can be part of positive change in society.
The IKEA business idea
While our vision tells us why we exist, our business idea tells us what we want to achieve. And if you’ve ever visited IKEA, you’ll have probably worked out what our business idea is – “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”
Ingvar Kamprad, IKEA Founder
IKEA is not the work of one person alone. It is the result of many minds and many souls working together through many years of joy and hard work.
Ingvar Kamprad IKEA Founder
The IKEA values
Our values reflect what we consider to be important. So important in fact that we refer to them as one of our “forever parts”. They guide us in our everyday lives at work in everything from how we treat people and the planet to how we make decisions - large or small.
Togetherness or “Tillsammans” as we say in Swedish, is a big deal for us. In fact, it’s at the very heart of the IKEA culture. We know we’re at our best when we trust each other, pull in the same direction and, not least, have fun together.
We want to be a force for positive change. Our reach gives us the possibility to make a significant and lasting impact - today and for the generations to come. We will continue to offer more sustainably sourced and manufactured products and help people live a more sustainable life at home.
We’re constantly challenging ourselves and others to make more from less without compromising on quality. Every day, everywhere, we do our best to discover and eliminate unnecessary costs, because low prices are impossible without low costs.
A simple, straightforward and down-to-earth approach is part of our heritage. In our world, simplicity means efficiency and doing what comes naturally. We say “no” to complicated solutions and see bureaucracy as our greatest enemy.
We believe that whatever we are doing today, we can do a bit better tomorrow. To us, there is no such thing as impossible. In fact, finding solutions to “impossible” challenges is what made us successful.
We are not like other businesses, and we don’t want to be. We want to challenge conventions and drive positive changes in our industry and sometimes even in the world. We are restless doers, driven by curiosity, enthusiasm and a desire to create a better world.
We make a point of giving people a lot of responsibility early on in their IKEA journey. We believe in empowering people and in the power of the individual who wants to grow. And each one of us grows with bigger and more challenging tasks.
To us, leadership is an action, not a position. We give people’s values as much weight as their competence and experience. People who ‘walk the talk’ and lead by example.
From humble origins to global brand – a brief history of IKEA
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