IKEA Case Solution & Answer

IKEA Case Solution

Summary

This case discuss the sustainability in the IKEA about the management of wood portfolio and the growth plan. Currently, the company has set the goal of achieving EUR50 billion sales and focusing on its sustainability plans through working on the value chain. Especially centered on wood. IKEA is a multinational organization, founded in Sweden in 1943, which manufactures and sells ready-to-bring together furniture, appliance and small motor automobile and domestic accessories. It is the world’s biggest furniture store which has its business idea centered on“ offering a wide variety of well-designed, functional domestic providing merchandise at charge at low prices so that many people would become able to afford its products” The company is famous for its cutting-edge designs for appliances, furniture and it’s indoors layout work, which are often related to the green concept. Besides this, the corporation is also well-known for its interest to operation details, cost cutting and non-stop product development. Nowadays, IKEA owns and performs in 373 shops in 47 countries. IKEA is a value-driven corporation with the passion for lifestyles at home. Its imaginative and its prescient is to improve the lifestyle of people. The main financial principle of the IKEA Group is to grow by using their personal asset.

Problem definition

IKEA was facing huge challenges for wood supply chain and the company had aimed to minimize its transportation cost. IKEA’s management was willing to achieve the sustainability goals in order to reduce the cost and maintain effectiveness. Basically IKEA was held accountable for the Strategic sustainability issues, along with that Customers were also focusing on these issues.

Alternatives

1. Owning More Forest.
2. Driving higher procurement targets and standards.
3. Use more Recycling products.
4. Use more Recycled wood.

Criteria

To measure and analyze the alternatives; we would analyze based on the future sustainability objectives, results generated by each alternatives and IKEA’s overall competitive positions.

Analysis

We will do analysis in two parts.First we will have an analysis of the provided alternatives and along with that, we will conductIKEA’s internal and external situational and environmental analysis

External Analysis

Opportunities

• IKEA’s present business strategy to double its sales by 2020 at a lower cost. It could be done through expansion. IKEA is currently operating in 47 countries only. It is comparatively lower in numbers than how well the company is performing.
• IKEA could adapt the e-business model to achieve its business strategy. (Frue, 2018)
• The “Green” business model of IKEA has a huge awaiting opportunity in the context of attracting those customers who like to buy environment friendly products. (Unknown, SWOT Analysis of IKEA, n.d.)

Threats

• IKEA’s low cost strategy with maximum sales could be copied by rivals, which might lead the company towards huge loss incurrences. To avoid this, the company needs to be continuously innovative in order to meet/achieve its targets/goals.
• Increasing the cost of raw material would increase the manufacturing cost of product, which is threatening for IKEA as it causes hurdles in achieving its business strategy. (Dudovskiy, 2019).

Competition Analysis

The competitors evaluation of Sustainability at IKEA Group appears at the opened and closed competition within the companies that it acts in.

• This includes a described analysis of their moves and the way they would have an effect on the destiny techniques of Sustainability at IKEA Group.
• It includes searching on the current market % of the company and its rivals.
• It ought to check the marketing mix factors of rivals, their supply chain, human capabilities, financial performance
• Additionally it should check at the potential possibilities and threats that those rivals pose on the market.

Five Forces Model

Bargaining Power of Suppliers

The bargaining power of suppliers are low, because there is a fine number of suppliers which limits the bargaining power of suppliers. The switching cost for IKEA is low that means that IKEA can switch easily. But if suppliers deny to supply raw material; it will get difficult for IKEA to manage the situation. To avoid this IKEA bound; its suppliers are in a contract named IWAY.

Bargaining Power of Buyers

While the bargaining power of customers is irrelevant for IKEA; they keep some sizeable influence that’s why there may be a lot recognition on attracting and retaining the customers. Except huge competition, technological boom has delivered this alteration about. The poise has now turned in the favor of the customers………………………..

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