47030153 ikea case study
DESCRIPTION
ikeaTRANSCRIPT
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International BusinessJeff ShayUniversity of Montana
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What business is IKEA in?
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Who are IKEAs customers?Individuals and families for whom price is more important than cultural valuesStarting a new home and have no or very little furnitureTransient makes functional, easy to assemble and disassemble furniture a must
Can you come up with an ideal cultural profile to use when selecting potential markets?
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What needs are being satisfied?Need to buy a whole array of furniture at an affordable price
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What is a distinctive or core competency A bundle of skills and technologies (rather than a single discrete skill or technology) that enables a company to provide a particular benefit to customers Example: Pepsicos unique distribution, franchising, and branding skills bundled together allowed for quick penetration of Asian market with KFC
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What distinctive competencies does IKEA possess?LogisticsOutsourcingCustomer serviceAny more?
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IKEAs StrategyWhat is IKEAs strategy?
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Types of Business-Level StrategiesOffers Products toOnly One Group of Customers Offers Products toMany Kinds ofCustomersOffers Low-Priced Productsto CustomersOffers Uniqueor Distinctive Products toCustomersFocused Cost- LeadershipStrategyFocused DifferentiationStrategyDifferentiationStrategyCost- LeadershipStrategyGeneric Business-Level Strategy
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How would you characterize the industry?
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What about the macro-environment?
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Competitive advantageA relatively unique characteristic of an organization that provides greater opportunities over rival organizationsExample: American Airlines Sabre system
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What competitive advantages does IKEA possess? What does it do better than the competition?
Are these competitive advantages sustainable?
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What are competitive advantages built on?
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Summary of the Impact of Efficiency, Quality, Innovation, and Customer Responsiveness on Unit Costs and PricesCustomerResponsiveness
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The Roots of Competitive AdvantageDistinctive Competencies, Resources, and Capabilities
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Describe IKEAs growth since its inception
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BCG Growth-Share MatrixRelative Market ShareStarQuestion MarkDogCash CowHigh
MarketGrowth
LowWeakStrong
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BCG Growth-Share Matrix: Quadrant CharacteristicsRelative Market ShareStarEarnings: high stable, growingCash flow: neutralStrategy: hold or invest for growthQuestion MarkEarnings: low, unstable, growingCash flow: negativeStrategy: increase market shareor harvest/divestDogEarnings: low, unstableCash flow: neutral or negativeStrategy: harvest/divestCash CowEarnings: high stableCash flow: high stableStrategy: hold or add marketshare30%
MarketGrowth
-10%.1101.0
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Using the Model: SymbolsProduct APreviousMarket Sizeand PositionMarketShareProduct ATotalMarketProduct B MarketSmaller but firmhas greater share
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Plotting Your SBUsRelative Market ShareStarQuestion MarkDogCash Cow30%
MarketGrowth
-10%.1101.0
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What Strategic Alternatives did your group come up with?
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What has allowed IKEA to be so successful with a relatively standardized product and product line in a business with strong cultural influence?Consumers with low status concern, low conservatism, high education, white-collar workers, and also high income groups have fewer cross-cultural differences than other consumer groupsmore open to adapt values to new views
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Did adaptations to this strategy in the North American market constitute a defeat to their approach?North American adaptations changes IKEA from a standardizer to a global marketerSome adaptation might be transferable to other markets (i.e., sofa beds in Europe)
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What international trade and investment policies have hurt or might hurt IKEA?
Which have helped or might help IKEA?
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What were some of the concepts from the text that you applied to the case?
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