As part of the Strategic Planning module, students are required to Essay

As part of the Strategic Planning module, students are required to analyze a case study and write a report to the CEO to help hi - Essay Example Table of Contents Introduction – Company background 3 Analysis of IKEA’s Business Model and its Strategic Positioning (Question 1) 3 IKEA’s Internationalisation Strategy 4 The internationalisation in the USA (question 2) 5 Current Asian markets (China and Japan)(question 3) 6 Further Asian Expansion (question 4) 8 Current Business Environment (question 5) 9 PESTEL 9 Industry analysis 10 SWOT 11 TOWS 13 References 14 Appendix 1 – The IKEA Concept 16 APPENDIX 2 Ikea’s International presence 19 Introduction – Company background Founded in 1943 by 17-year-old  Ã‚  in Sweden, IKEA is named as an acronym comprising the initials of the founder's name (Ingvar  Kamprad), the farm where he grew up (Elmtaryd), and his home parish (Agunnaryd, in  Smaland, South Sweden). Today, IKEA is the world’s largest furniture retailer, having pioneered the concept of selling furniture in kits that are later assembled by customers in their own home (IKEA 2011). With its base in Sweden, the company retails affordable flat-pack furniture, accessories, and bathroom and kitchen items in its 253 stores spread over 24 countries at the end of the 2008 financial year. According to IKEA’s data, the company had worldwide sales of about â‚ ¬23.1 billion in the 2008/09 fiscal year – Figure 1 (IKEA 2011). ... IKEA sells a lifestyle that signifies hip design, thrift, and simplicity and targets customers that are seeking value and are therefore willing to participate in the production process by serving themselves, taking the goods, and then assembling them if necessary. It therefore seems as it targets a market niche. The fact that IKEA does not hold a large market share in the geographic markets, except Sweden (Thompson and Martin 2005) may be taken by some as indication that a differentiation strategy is incompatible with high market share as argued by Porter (1980). However, IKEA’s 25% market share in Sweden and its growing market share in other countries (Caplan 2007, Datamonitor 2010a, 2010b) may be taken as an evidence of the opposite. Furthermore, one may argue that the company follows a cost leadership strategy, as it tries to position at the market based on price as its positioning of being ‘different.’ Porter (1985) identified several aspects of establishing c ost leadership, including creating a good product, drawing advantage from many sources, and making cost of part of the organisation’s culture. All these aspects have been integrated into IKEA’s strategy and allow the company to engage in innovative cost management. IKEA’s CEO announced in 2007 that the company has succeeded in reducing prices by approximately about 17% over the last five years (Caplan 2007). Indeed, the company is able to integrate both a differentiation and low cost strategy in such a way that it can pursue both an operational excellence strategy and a product leadership strategy, something that few companies have been able to achieve (Kaplan and Norton 2000). In terms of operational excellence, IKEA’s success is based on the