Ikea Case

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Submitted By focuzfred
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IKEA’s competitive advantage is its unique designs of products. Products are designed to reflect the clean Swedish lines. These designs although may appear simple, but are IKEA’s trademarks. They are hard to imitate, and they are unique to the company. IKEA tries to differentiate its product from competitors’ by offering unique designs and high qualities, but at a lower price. Its designs are not everybody’s favor, but IKEA has been successful to identify and target a segment of the market who are interested in its designs.

One of the company’s strengths is its strategy to design a product, after surveying the market and finding the right suppliers. That enables the company to know in advance at what price point it is going to release a product, how much margin the company should have and forecast a cost. Therefore when the company is looking for suppliers, it knows about the type of suppliers, and where it should be looking for. That is one of the strengths that gives IKEA the advantage of producing goods that are high quality, yet they are priced lower than competitors.

One of the company’s weaknesses is its management style. The company has a preference for hiring younger people who had not worked for other enterprises and then promoting them from within. IKEA has a tendency to avoid hiring highly educated, status-oriented elite, and the company’s ration is that such individuals hardly adapt to the company. This mindset results in intentionally ignoring potential candidates, who could otherwise bring in fresh and new ideas, along with innovations and creativity. The other weakness is the company’s resistance to become a public company. Their ration is that the stock market imposes short-term pressures on IKEA and would not be good. IKEA thinks that stock market prevents the company from taking bold decisions. A public company has access to more capital, and…...

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