Individual Assignment

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Table of Contents

Introduction1

Question 11

Answer 12

Value proposition2

Question 23

Answer 23

Business Level Strategy3

Reasons for failure of IKEA in US market4

Question 35

Answer 36

IKEA's growth potential in China7

The competitive advantage model of IKEA8

BCG Portfolio Analysis9

Ansoff Matrix9

Selecting a Product-Market Growth Strategy9

Question 410

Answer 410

References13

Appendix16

T 1: the competitive advantage model of IKEA16

Figure 1: Porter's generic strategy17

Figure 2: P.E.S.T analysis17

Figure 3: Balanced Score Card (BSC)18

Figure 4: BCG Portfolio Analysis18

Figure 5: Ansoff Matrix19

T 2: IKEA by the Numbers in 200820

Individual Assignment

Introduction

IKEA is the world's most triumphant global enterprise. According to the statistics, in 2007, IKEA had established around 300 home decorating retail stores in 35 countries. It has been visited by around 583 million customers. IKEA's inexpensive, smartly designed products, exhibited in huge depot stores, made sales of €21.2 billion only in the year 2008 compared to €4.4 billion in the year 1994. Although IKEA has refused to issue statistics of its profitability, the net profit margins of IKEA were believed to be around 10% higher than an average retailer. Ingvar Kamprad, the founder of IKEA, is believed to be one of the richest men in the world.

IKEA was founded in 1943 in Sweden by Kamprad when he was only 17 years old. The young organisation sold Christmas magazines, fish, and seeds of his family ranch. His primary business was trading matches. The IKEA is an acronym: I and K are the initials of Ingvar Kamprad; E is for Elmtaryd, which is the name of his family ranch and A is for Agunnaryd, which is the name of his home town. Shortly, Kamprad added ballpoint pens to his product range and innovated the way of selling through mail. His depot was a shack on his family ranch. IKEA's success has accredited to luck, good showmanship and timing, obsession, strategic brutality, efficiency, good corporate, business and global strategy - and the capability to turn around barriers into competitive edge.

Question 1

To be successful in foreign markets, an organisation needs to have a successful value proposition. What, in your view, is Ikea's value proposition?

Answer 1

With the rapid growth of the business, Kamprad recruited Gillis Lundgren, a young designer, who initially helped out to do snapshots for the catalogues, later on he began to create furniture designs for IKEA, which includes many best sellers.

Value proposition

Corporate strategy primarily is focused to the collection of businesses in which an organisation competes and develops and coordinates the business portfolio (Baum & McGahan 2004, p 55-87). The corporate's value propositing is in line with the corporate strategy which deals with:

Corporate responsibilities; these include goal identification, type of business, he process of business management.

Defining the competitors.

Developing synergies by coordinating, sharing and investing personnel, financial resources and other assets across all the business units and using business units to assist other corporate activities.

Management style such as centralization or decentralization.

Organisations are liable to create value through their businesses by maintaining their business portfolio, making sure that their businesses are thriving for a long time (Baum & McGahan 2004, p 55-87).

Therefore, the important questions addressed by the corporate ...