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IKEA Business Strategy Term Paper


IKEA is a well-established furniture retailer company established in the year 1943. The company has now extended its services to larger part of Europe. The company is now recognized globally and it is among the world prominent leading companies in furniture retail business. IKEA company has recorded high sales of their products in the Scandinavian market which translates to about 80% of their sales, while 15% of the sales can be attributed to North America whereas the remaining 5 % of the sales can be attributed to the Asian and Australian markets. Therefore, in general, the IKEA markets can be attributed largely to the European markets, followed by the American markets and lastly the Asian and Australian markets. The business idea behind IKEA Company is to offer a variety of well-designed home furniture and well-furnished products at a fairly competitive price. These products attract very wide markets especially in the European and American markets as they are appealing to the eye, have a modern look and are relatively easy to use and put together.

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The company targets individuals in the American markets that are relatively young, both genders and most importantly the middle and low income groups. The company additionally targets well developed economies and cities in Europe and America as such cities have relatively high pace of life. The company has therefore resorted to use of social media, TVC, and print ads for marketing purposes to these audience. IKEA’s marketing strategy has been consistent, which relies largely on the market to buy their products.

Since IKEA is one of the largest furniture retailers in the world, IKEA should not only venture in United States market as their brand is well known in most parts of the world, therefore, to increase the company’s revenue, the business should also venture into new markets in other countries. However, the American market is a very stable market as the living of standards of citizens in the country is relatively high above the world’s average standard. Therefore, promotion of the brand in the American markets should remain active, and more efficient and alternative competitive strategies should be invented. IKEA company’s products are most likely to pose a high competitive advantage in other countries, and there is less risk and competition in the other countries. Therefore, venturing into new markets can be quite effective for the company can be a great opportunity for the company as the markets are ready and the products of the company pose an undoubted quality that will be readily acceptable by these new markets. In conclusion, since IKEA is a worldwide recognized company, the target markets for the company should not be restricted to a particular market. On the contrary, the company should promote its brands to other fast growing economies such as Asian countries, and Africa continent as these are promising markets in the future due to the high globalization rates in the world.

IKEA’s business strategy is based upon its business concept. The concept of the business is first based on providing wide range of well-furnished furniture to the markets at a fairly valued price so as the furniture may be assessable and affordable to all classes of people. Through the combination of quality, value, design and functionality, the company thrives to achieve and promote sustainability. This company’s concept is prevalent in every department of the company ranging from manufacturing, designing, sourcing, packaging and distributions all the way to the business models.

The business strategy of the company is based on offering low product prices, thus achieving cost effectiveness which translates to a strong competitive advantage for the company. With the advancements in technology and growth of economies, the company is able to achieve this strategy as these advancements are incorporated into the processes of business. Increased product variety and international market expansions are just but a few business strategies the business is employs.

Works Cited
Baraldi, Enrico. “Strategy in industrial networks: experiences from IKEA.” California management review 50.4 (2008): 99-126.

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