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Introduction

Management performance tends to handle the operational process in organizations through regular feedback. The scope of business management is enhanced when a business model is invigorated. It is vital for a company’s success that several changes should be implemented (Korsgaard, Rask &Lauring, 2007). The process of strategic management is to implement a strategy in an organizational framework that allows the accomplishment of strategic goals. This kind of operation is to get more customers who spend more, so longer retention is made. (Lechehab&Kamassi, 2016) The monitoring and planning analysis in an organization need specific processes to meet the objectives. This report will discuss international strategic business management in IKEA regarding Malaysia. The report will discuss the mission, strategic goals, and SWOT analysis.

Company Overview

IKEA is a global brand that was found in 1943 by Ingvar Kamprad. The company is famous for its famous and modern stores. Its different kinds of products are eco-friendly and cost-effective. IKEA operates in 389 stores worth of 42.9 billion. It also has few branches across the world with such as KungensKurva, in Shen Zhen, and Texas. It has presented an example of trendiest with low-cost furniture. IKEA is considered a recognizable brand at the globe with best practices. The trademark of the company is well designed and functional regarding frugality experience. These practices are related to the principle that offers competitive advantage (Soh, Wong & Chong, 2015). The image, quality, and affordability of products is an asset for the company. The company has the opportunity to be streamlined about its customs, franchising, and popularity.

IKEA is successful in terms of its management operations. Its formulation processing is based on the right demographic framework. IKEA stores are customized to offer a better experience to customers in terms of fluid shopping (Hultman, Johnsen, Johnsen & Hertz, 2012). The living room and domestic style experience for customers are exciting. They need to take a code linked to the selected item when they buy furniture. The functional layout of products is seen as a mass service for a product offering that fulfills the basic needs of consumers.  Some basic features of the firm are high quality, wide variety, the flexibility of products, less disruption, and easy supervision.

Mission

The mission of the company is to build a strong culture that will deploy crucial factors for the continued success of IKEA. The concept of sustainability is inherent because furniture is considered a necessary value for people’s lives (Korsgaard, Rask &Lauring, 2007). The recognizable brand name and concept are linked to low valued price and home furnishing products. The company has a wide range of its products and allow frugality practices for being the first choice of consumers as compared to other brands. The culture of IKEA is to work within everyone, create and develop it further, so people live with this vision. This concept is building a core competency of the company against others. IKEA has established its long going capacity in Malaysia with the science and technology concept and managerial practices. The developing economy of Malaysia is offering huge potential to the company to produce furniture due to newly identified competitive advantages (Garnier&Poncin, 2019).

SWOT Analysis

IKEA is a valuable furniture brand in the world, and in 2019, its worth is estimated at US$45.4 billion. The strengths of the company are its brand image and brand name. The reputation and awareness of the company are its key strengths (Johansson &Thelander, 2009). A most significant strength is its low-cost affordable furniture because it aims to sustain in the lives of people, so it is cost-conscious. The philosophy of IKEA is to keep costs low and incorporate new technologies, advances, and innovation to allow profit margins(Arrigo, 2005). This is associated with the profitability, efficiency solutions, and cost-effectiveness methods in handling products. In Malaysia, IKEA has a competitive advantage in producing products.

The combination of effective packaging and low price furniture startup in Malaysia is a big strength for the company. The products of the company are new, different, and allow extraordinary shopping experience to people, so consumers are engaged in decision making (Soh, Wong & Chong, 2015). It is different from other brands because of the wide variety, selection, and offering a chronological order. Just as its competitors are working in Malaysia, IKEA aims to maintain long term relationships with customers, so optimizing its cost and transport timing.

Its weaknesses are less focused on improvement policies while working in less developed countries like Malaysia. It also has inadequate support policy as well as limited visibility regarding marketing and promotion. The sparsely located few stores in Malaysia can be less responsive to increased demand of the population (Minkes&Minkes, 2005). It has to employ more staff to enhance the buying experience of customers by attracting them. The packaged furniture and its technical nature is different and needs more focus on assemblage. It depends on the third party to assemble and assist in purchasing products that can be a weak point for IKEA. There is an absence of detailed instructions that can accompany products and retain consumers when they go for detailing.

There are some opportunities for IKEA to further develop and boost its concept in Malaysia. It can increase its clientele by educating people more about environmental waste and pollution. If wastes are reduced regarding furniture usage, it can develop a strong concept as an opportunity in corporate social responsibility (Hultman, Johnsen, Johnsen & Hertz, 2012). With Malaysia and other less developed counties like India and Indonesia, IKEA can fully develop its network of furniture supply. It has the advantage of working on broader concepts by developing effective solutions for business. This will provide solutions to reduce environmental pollution, so a sustainable life at home will be easy. In Malaysia, the potential exists regarding natural resources and others like advanced technology and science, so it can promote a technical friendly product (Garnier&Poncin, 2019).

Some external factors can work as threats to the company in Malaysia. There are many low-cost retailers in Malaysia that can share market value and specialty of furniture with IKEA; there is a need to produce more economical and consumer-friendly products to compete with the rivals. The financial conditions of a country are other luring threats for IKEA. Any financial crisis and economic downturn in the economy can cause threats to IKEA (Lechehab&Kamassi, 2016). The size and scale of the company is also a threat because it has to focus on the operating economy where experts believe watering down of innovation due to less targeted consumers in Malaysia. The company is steadily acquiring a household place in masses, so it has to improve quality and standard with its expansion (Fröding& Lawrence, 2017).

IKEA strategies and its associated plans

IKEA’s marketing strategy through which the organization searched out cultural and advanced customers and also searched a sufficient market to sell its products. IKEA sends its designs to concern professional people to its homes and provide them feedback(Arrigo, 2005). This strategy allows the ministers to make the market decisions that are based on people’s life’s experience; this experience might be collected from survey and data collection. IKES Strategies considered all elements that are involving around product and price into mixed marketing. IKES tries to present its best product on the lowest market rate, and it is also called the 7Ps of marketing, in which position, development, methods, characters, and material elements are taking place (Hultman, Johnsen, Johnsen & Hertz, 2012). IKEA was established by Kamprad in 1943; this term developed when the home furnishing stores are used for monetary purposes around the world. All IKEA retailers are running their own franchise business.

IKEA of Sweden concerns all product ranges, which are associated with IKEA; the entire production differentiated with tags, designs, and quality. To start IKEA’s strategies, find the solution to various questions.  IKEA knows about consumer satisfaction and how much it is important. Consumer relations influence the business significantly (Stanciu, Zlati, Antohi&Bichescu, 2019).

Different research objectives also take place in this term, like investigating the consumer demand theory. Establish a referencing and suggestion system for company development. The basic purpose of this theory is to satisfy the consumer at any cost, either the consumer belongs to any category of life. In those days’ customers have awareness about the brand and its worth; at first, the consumer judges the product, and its services afterward estimate his personal experience and, at last, make a decision whether the product is appropriate and meets its exceptional level or not. After using the product, if the product fulfills its requirements, then the customer will purchase it again. Otherwise, he contacts any other commodity. In this fast business establishment affairs, customer relations are critical to managing. Customer satisfaction shows that he will purchase the commodity afterward to satisfy the demand that would be a long-term relationship to company and customer till then the other product may not facilitate its needs. An efficient marketing program consisted of all terms and conditions to evaluate the mix marketing concerning the market objectives which a company has to occupy to compete for the other rivals (Fröding& Lawrence, 2017).

IKEA base the business success on superior marketing strategies that must be the same around the world, which consisted of the description list it must be in written form in 17 languages and color should be blue and yellow, the color of the Swedish flag. This technique applied to the customer that they are free to purchase any commodity. The price also is shorter than other brands because the consumers, first of all, focused on the price (Johansson &Thelander, 2009). To understand the IKEA business strategy, it is necessary to be based on business conception and formulation prepared by IKEA 12th January 2009. It also provides a wide variety of sketches, functional, and other home decorating products at a low price thus can purchase every kind of class. The main objective must be centralized the objectives and purposes of IKEA’s business strategy. It also provides a guideline on work; these rules implement all sectors of the strategy, whether they belong to the country or around the world. IKEA focused that the environmental designs are presented into its home decor items; for this purpose, it launched a plan in 2015(Arrigo, 2005). This plan will combine the cultural, environmental, and financial and commercial crises. IKEA follows SWOT analysis to gain its objectives (Carter, 2009). This is a developmental business tool. It also assists the business to focus on its fundamental issues. SWOT is a planning stage and focuses on strengthening and weakening and also deals with the internal and external aspects of the business, and also face all threats that are affecting the company matter and associated with other business merchants. The SWOT business plan also concerns retailing, production departments. It also can deal with economic situations, social variations, and technological advancements. IKEA also emphasizes that every business holder has to sense its strengthening aspects to overcome its future challenges. IKEA also focuses on attracting the fundamental group of customers to establish a brand in a world community. It also provides different business techniques at a low price (Alänge, Clancy &Marmgren, 2016).

To maximize the profit, the brand has to establish a trustful relation to the supplier, retailer, and customers. It also embraces several strategic techniques to create customer trust and gain worth in a market. Long term relations to customers or retailers also provide a profitable sense to the business. IKEA emphasizes making good relations with customers by fulfilling their expectations and trying to find out how the new customers ties in a long-term relationship (Baxter & Landry, 2017).

Successful Strategic Goals

The world economy is booming, so the furniture market is also going up with rapid development. 70% of the global market is acquired by traditional furniture companies. The scenario is easy to understand due to increased production capacity, technical advancement, and strategic management. IKEA has also managed to enter in China, Indonesia, and Malaysia by focusing on the key significant strengths and its strategic goals. In many less developed countries, it has developed its concept of competitive advantage and working to show greater potential. Its production is increasingly focused on matching quality standards in Malaysia and beat its competitors. The clear mission of the company is to sell a wide range of furniture with reasonable prices that allow people to buy and get involve (Baxter & Landry, 2017). The wide range offering is a keyword in functionality because consumers, in this way find a place where everything is present. The strategic goals that IKEA has considered to enter in Malaysia are creating high efficient sales department, offering best ideas for home furnishing and serving customers with the best shop of furnishing ideas.

The aim of IKEA at Malaysia to offer them successful appearances and a perfect shopping experience for whole family (Carter, 2009). The people and environment is always a concern for IKEA so its management try to manage every day’s life with a better notion of commitment. It has also responded any rising public concern regarding sustainability, choice of the communication and product range. In Malaysia, effective focus on transportation and raw material was easily maintained due to easy access and prevalence of raw material. This situation helped company get its green targets and spread impact. In Malaysia, it is working on the original approach of dealing customers, i.e. self-serving method. The catalog allow people select whatever they want so they choose their products and put and assemble at home.  The centralized strategic direction at IKEA is increased with its expansion (Alänge, Clancy &Marmgren, 2016).

The rapid internationalization has enhanced the challenges for company in a broader scenario so there is also increasing difficulty of managing and responding needs. It is considering cultural and social factors while operating in new premises so emerging demographic trends are easy to tackle with a focused strategy(Arrigo, 2005). IKEA is also focusing on varied level consumer groups by implementing its strategies. The power of strategic management is significant under the organizational structure. It is focusing on maintaining a balance between autonomy and country-level centralized intervention, which will be attributable to franchisee autonomy and subsidiaries. Its suppliers are located in low-cost countries that are an advantage for Malaysia based IKEA (Stanciu, Zlati, Antohi&Bichescu, 2019). They can access raw materials so effectively reach out to distribution channels. The suppliers are selling standard products with broader dealing at the same time.

IKEA’s brand is focusing on innovation mix, advanced, and quality furniture. A combination of low-cost high quality furniture is the business model that is further being tackled with new innovations and techniques to expand and cut costs. Its simple idea of keeping costs low for manufacturers and customers is workable because it doesn’t own its sole manufacturing facilities. The upstream innovation and research & development activities are centralized in Malaysia. The strategic and operational strategies are workable and acquired a steady scope due to global policies.

Challenges

While operating in a global market, an international brand may face some challenges. For instance, while operating in Malaysia, it has to focus on its internal capabilities, ceasing activities, and incorporate key strategies to make its reputation (Carter, 2009). It has to work in an intensely competitive environment because targeting consumers is not easy, and there are multiple brands considering similar operations. It has been facing external and internal challenges in Malaysia regarding raw material, transportation, and availability of the latest technology. Some competitors are focusing on influential corporate decision-making strategies to make effective decisions for the firms. The management team has identified key threats from this business point objective so IKEA has to implement consumer related methods. It is facing diversification issues to boost sales (Alänge, Clancy &Marmgren, 2016). Some internal cultural issues are also prevalent. Due to geographic factors, IKEA is facing different taboos in Malaysia so it has to focus on to improving furniture design.

Conclusion

IKEA in Malaysia is working on competitive strategy with low cost initiatives. It has opened new stores, with an aim to use stability strategy. This will be helpful to monitor performance of the products and allow well operating conditions for business. The stability factor increases productivity of a company so it can take profit based features. Low cost operating methods, effective decision making approach and a business formulating method for its consumers are main pillars of Malaysian market that company is focusing. IKEA is working at global level so a focus on price and differentiation is a key to maintain. The price cost of company is linked to the cost of production, under strategic management framework, this scope is maintained. Globalization is a central aspect of strategic management, so IKEA in global market places, is expanding this view by gaining better competitive advantages and profits. The trend of consumer products at global marketplace is emerging and IKEA is viewing this phenomenon in Malaysia to reap a better growth.

References

Alänge, S., Clancy, G., &Marmgren, M. (2016). Naturalizing sustainability in product development: A comparative analysis of IKEA and SCA. Journal Of Cleaner Production135, 1009-1022. doi: 10.1016/j.jclepro.2016.06.148

Arrigo, E. (2005). Corporate Responsibility and Hypercompetition. The Ikea Case. Symphonya. Emerging Issues In Management, (2). doi: 10.4468/2005.2.04arrigo

Baxter, M., & Landry, A. (2017). IKEA: Product, pricing, and pass-through. Research In Economics71(3), 507-520. doi: 10.1016/j.rie.2017.03.003

Carter, R. (2009). Will consumers pay a premium for ethical information?. Social Responsibility Journal5(4), 464-477. doi: 10.1108/17471110910995339

Fröding, K., & Lawrence, G. (2017). Sustainability at IKEA. Linnaeus Eco-Tech, 67. doi: 10.15626/eco-tech.2010.008

Garnier, M., &Poncin, I. (2019). Do enriched digital catalogues offer compelling experiences, beyond websites? A comparative analysis through the IKEA case. Journal Of Retailing And Consumer Services47, 361-369. doi: 10.1016/j.jretconser.2018.12.011

Hultman, J., Johnsen, T., Johnsen, R., & Hertz, S. (2012). An interaction approach to global sourcing: A case study of IKEA. Journal Of Purchasing And Supply Management18(1), 9-21. doi: 10.1016/j.pursup.2011.11.001

Johansson, U., &Thelander, Å. (2009). A standardised approach to the world? IKEA in China. International Journal Of Quality And Service Sciences1(2), 199-219. doi: 10.1108/17566690910971454

Korsgaard, S., Rask, M., &Lauring, J. (2007). The Diversity Management Paradox in Globalization – The Swedish IKEA Way. SSRN Electronic Journal. doi: 10.2139/ssrn.1135570

Lechehab, S., &Kamassi, A. (2016). The Benefits of Implementing Lean Management System at IKEA Malaysia Company. مجلةالباحث, (16), 55-66. doi: 10.12816/0034358

Minkes, J., &Minkes, A. (2005). Decentralisation, Responsibility and Ethical Dilemmas. Social Responsibility Journal1(1/2), 16-20. doi: 10.1108/eb045790

Soh, K., Wong, W., & Chong, C. (2015). Strategic Choices: A Composite Model for Logistics Service Providers. Journal Of Southeast Asian Research, 1-10. doi: 10.5171/2015.652416

Stanciu, S., Zlati, M., Antohi, V., &Bichescu, C. (2019). The Development Analysis of the Romanian Traditional Product Market Based on the Performance Model for Sustainable Economic Development. Sustainability11(4), 1123. doi: 10.3390/su11041123

 

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Introduction

The Swedish furniture company is expanding globally. It has started business ventures in many countries under its global recognition. The home furniture retailer IKEA was started by a Sweden person Kamprad that later expanded to a titan.  The quality production and IKEA investment under private segments provide specialization of restructuring. Company is efficient in its production and specifically invests in Sweden. The estimated equity investments of IKEA in 2009 are from $15-$70 million with the observed sale value from $30-$150 millions. The investment ventures under IKEA’s personal capital are mainly in AB Company in Europe (Fröding & Lawrence, 2017). The performance of IKEA in global regions is remarkable due to retail business. This paper will discuss main marketing tactics of IKEA, its growth strategies and main reasons why it is not operating in Brazil.

IKEA, as a furniture company from Sweden, is planning to enter in Brazilian market and has started its first research station in Curitiba, Parana. In South America, Brazil is currently leading the furniture industry, holding around 63% of market share in the whole region. Furniture companies of Brazil are mainly small and micro sized with low technology and unskilled workers. The Brazilian environment and market size are attractive to many furniture companies from around the world having enough skilled workers and technical competence like IKEA and also other big brands like Bed Bath & Beyond. Entering the Brazilian market has both opportunities as well as threats for any industry (Kohl, 2015).

IKEA Business Strategies

The hundreds of stores in multiple locations are working on leadership of IKEA. The basis of marketing and business growth is accrued to the unique idea. IKEA is a value driven entity that make products for the people and provide them a variety to choose and fulfill their dreams from. The main priority of the company is to meet customer demand and gain competitive edge by providing top notch quality. This is relevant to establish a culture of satisfaction and maintain loyalty. The role of strategic position by the company is inherent, since it is related to the long run sustainability (Fröding & Lawrence, 2017).

IKEA is a successful company and following sustainable operations for its business. Its operations are expanded to different countries of the world. The reduction of macroeconomic factors by the company is central to get a streamlined growth company. This is undertaken by expanding the supply chain mechanism. The possibility of improving unique products is bright and company is employing latest technology in its manufacturing. Since a large network is playing its role for the company, there is an increased chance of complexity in its functioning. This is tackled by establishing stabilized conditions to get long term profitability from innovation.

The prominent business strategy of the company is to build foundations for growth in terms of re-investing, quality and an integrated approach. IKEA is strongly pursuing its vision to produce quality products and it never compromise on the quality standards. The steady reduction of a product price is a main strategy by IKEA. By leadership, this is considered an art that is making company’s growth enviable by the competitors.  The full knowledge regarding manufacturing, design and production activities are acquired. Production costs are reduced; low prices and high quality are the key tactics that IKEA is maintaining in the market.

IKEA has positioned itself after the global recession of 2008 as it is necessary to maintain the long term growth strategy. The increased saving is re-invested again to acquire core business competency. This is helpful to orient the directions of company and streamline its growth potential. The price reduction strategies are also stable and employed to get a forward looking strategy (Kohl, 2015).

IKEA not operating in Brazil

IKEA focuses on some specific factors before expanding into global markets. These factors are essential to run business in an effective way. The international franchising is a magnificent opportunity for the company like IKEA which is needed to expand in the market. IKEA focuses on international expansion; innovation and research and development environment that can help the company grow at international level. For instance, research is the center of the franchising plan and to enter in Brazil, IKEA is focusing on research. The role of a multinational firm is to focus on demographics, consumer attitude, aspirations, tastes and cultural roots. These specific elements provide information about their buying behavior (Fröding & Lawrence, 2017).

IKEA will open in Santiago de Chile by 2020 and it has planned to follow eight establishments in Lima, Chilean capital, and Bogota, according to BBC. The company has not found good infrastructure and high speed efficiency in Brazil and Mexico. It needs high volume markets, larger size of supply chain and efficiency in areas like Peru, Columbia, and Chile because these areas have more than 100 million people (Magnusson & Molin, 2018).

The success factors that IKEA focuses on for its development are the main elements that are not readily available in Brazil. IKEA is not expanding its business into Brazil due to several reasons. The company focuses on selling its products at random level. It mainly involves customers to sell its products. Customers play a central role to get required furniture design as own desired interior. The customer involvement is the main innovation by IKEA. Though, this idea does not always embrace success and in some places, IKEA has failed to implement this idea. In the developed markets, IKEA is listed among the low-priced big-market brand, but in developing countries where low prices are much needed, it hits the growing middle class that requires products of international lifestyle in lesser prices. In BRICS countries China already has 18 stores and Russia has 14. Also the organization is planning to open three more stores in China in Suzhou, Chengdu and Guangzhou. While in Russia their revenue increased by 11 percent in a single year.   IKEA opened its first store in India in August 2018 after a customer research of few years in the country. According to media reports, the stores first day attracted a large number of visitors. IKEA has not included Latin America in its aggressive plans of expansions due to low income population. These regions have different patterns of spending, for instance, in Latin American population; furniture is not considered a consumer commodity and the spending priorities do not include furniture (Post, 2018).

The market size and environment in Brazil is conducive for business and it has attracted many multinational companies to work. It is investigated by many researchers that how IKEA can enter into Brazilian market and how it can explore their customers. The exploring of middle class consumer might serve as an opportunity for IKEA to reach its potential customers. The growth potential is prevailed in government policies and in 2012, in Brazil, average wage ate per hour was increased from $5.5-$5.8 that helped increasing consumption of food items. This provides the role of middle class as affluent enough to help a company in growth.

For the middle class, IKEA has to aim excellence in Latin America, as it is not consistent and broad. It is globally known as a business with low prices but for the market of Brazil and Mexico, it has to go for an aspirational profile. According to Brazilian perceptions, the firm should target middle and low income population (Magnusson & Molin, 2018).

IKEA needs to target right customers in Brazil but it is unable to accomplish this. It is a main reason for no expansion and business startup. Online market in Brazil is significant and IKEA can perform very well only it targets right websites for its marketing. The potential expansion of IKEA relies in the penetration of social media in Brazil; since its people spend on average spend 10 hours on social media. High focus on family and connectivity can be targeted by IKEA. In addition to this, company can start online campaigns. It can work like to start allowing all brands to get insights about affluent consumers.

The Swedish brand IKEA is facing some difficulties in entering Brazilian market. Though it has good profitability ratios in 34 multiple countries, such as Russia, Poland and China has seen good growth rates. It has grown 10.3 per cent that is up to €2.97-billion in last year. The revenue growth rate in Sweden is estimated to be €25.17-billion with its existing stores. It has also planned to open 28 new stores in India. Their estimated goal is to reach at €50 billion in sales by 2020. Beside this performance at global level, company is facing difficulties in targeting customers in Brazil. The competition in markets of Brazil is appearing complex for IKEA. In addition to this, it is facing tough logistic structure and the taxation difficulties to operate (Post, 2018).

The internet has helped many businesses to enter and grow in the Brazilian market. The Brazilian customers are perfectly ready for IKEA to start business in their market; as increase in usage of internet in Brazil will allow the company to keep their approach of selling its products online with low prices. There are around a 100 million internet users in Brazil, which represents a major potential for an online market for IKEA.

IKEA in Mexico

IKEA has an excellent opportunity of growth in furniture market of Latin America through the online business stores, but, Latin America is far behind the other developed countries in terms of internet access for its people. In Latin America around only 45 percent of the population has the internet access which is much less as compared to rest of the world. These figures show IKEA that they cannot rely only on the online trade stores as less than half of their targeted customers has the access to their products through the internet (Edvardsson & Enquist, 2011).

Mexico and Brazil are living in turbulent times, and waiting for the implementation of North American Free Trade Agreement (NAFTA). Brazilian market is unstable due to political climate and presidential elections. IKEA is planning with its franchise partner Flabella to invest $600 million to enter in the South America. It needs physical investments in form of staff, knowledge and support to operate in Mexico and Brazil (Post, 2018).

This brand also needs to differentiate itself according to the Brazilian customer. Entering into a new market needs to target the demographics of customers.  The complex situation in Brazil is different for IKEA.  Government policies have supported the growth that has helped in increase the minimum national wage to help the low income people. In 2010, 5.57 USD per hour was the minimum national wage and it was increased in 2012 by 5.82 USD. This had supported decrease in poverty and made a large customer base for drink, food and retail sectors. In accordance with this, growth can be supported by providing prosperity to the middle class community as well.

Government schemes have been initiated to provide the ownership of consumer products like washing machines and refrigerators to the low income people. Government is also encouraging the commercial banks to offer loans or credit to more persons, particularly the poor. This tendency along with more spending by consumers and rise in minimum wage shows that IKEA entered in Brazilian market well in time. The number of customers that IKEA needs to target has increased already. Many Brazilian customers can now purchase the products and repeat the purchase from IKEA stores with variety of prices (Schirone & Torkan, 2012).

Looking into the Brazilian middle class’s rapid growth in the internet usage and household expenditure, it is eminent that there are great opportunities for the international companies like IKEA to start their business.  For the better understanding of the market, IKEA has to analyze the consumer behavior in Brazil. Brazilian customers are proven to be more eco-friendly, they are more concerned about the assembly or manufacturing of the products. IKEA is a major organization in corporate social responsibility (CSR) and dealing issues regarding environment is the organization’s major objective. The increasing number of people with growth in income indicates that more people can now be selective and particular about the furniture type they need to buy. The eco-friendly trend has already become famous in some markets of Brazil, with many supermarkets already has started selling eco-friendly products, and reduces to use plastic bags. Brazilian customers have cited that any company doing business in market should be responsible towards environment, according to a survey more than 60 percent Brazilians feel that it is the key obligation of any organization (Warren, 2018).

Conclusion

IKEA considers environment an important factor and takes care while manufacturing their products. They term it important that their products must be manufactured under suitable working conditions by their workers. IKEA developed its first environmental policy in 1990 and has been working for sustainability since then. It focuses on areas such as providing sustainable products and diminishing their carbon footstep. As an eco-friendly organization is so reflected in the working of IKEA. The produce flat packs furniture which allows its delivery easy from industry to market, that also lessens damage. IKEA is working to reduce their levels of power consumption since 2005 and shifting its stores towards alternative renewable energy. Thus IKEA can be a great contender to enter into a flourishing eco-friendly market in Brazil and can be a big success if the requirements set by the Brazilian customers matches the organization’s ethos.

Brazil is now the only BRICS country where there is no IKEA store. In Brazil, matters are always likely to be more complicated than others. There are some reasons that can be challenging for IKEA if they choose to start their business in the Brazilian Market. For example, Brazil has increasingly high rate of taxes for imported products, nearly 75 percent or more over FOB rate. Local businesses like Tok & Stok have also faced similar issues, but perhaps they have already improved their purchases to control the tax impact. Also the logistics in Brazil is a serious problem. Ports are sluggish where the country is huge. The transport is much expensive and limited. Moreover, IKEA can have a tough competition in Brazil as the county has already established businesses in its strong furniture market; also some of them have already a model comparable to IKEA’s. The market lobby-groups of Brazil’s furniture industry have simply averted IKEA to enter market in Brazil. As long as they do not find out the solution of these issues and develop a strong business strategy for Brazil, it may not be possible for them to open a store in Brazilian market. The good thing is that they already have established an office in Brazil, analyzing these problems and understanding the environment, customer behavior and market trends.

References

Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: Lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence22(5), 535-551. doi: 10.1080/14783363.2011.568242

Fröding, K., & Lawrence, G. (2017). Sustainability at IKEA. Linnaeus Eco-Tech, 67. doi: 10.15626/eco-tech.2010.008

Kohl, M. (2015). Bloom units for IKEA and ASP in California, and market in Japan. Fuel Cells Bulletin2015(4), 7-8. doi: 10.1016/s1464-2859(15)30084-5

Magnusson, N., & Molin, A. (2018). Ikea Puts Latin America, Southeast Asian Markets in Its Sights. Retrieved from https://www.bloomberg.com/news/articles/2017-10-09/ikea-puts-latin-america-southeast-asian-markets-in-its-sights

Post, L. (2018). Learn how Ikea will arrive to Latin America. Retrieved from https://latinamericanpost.com/21354-learn-how-ikea-will-arrive-to-latin-america

Schirone, D., & Torkan, G. (2012). Food in IKEA: A Strategy to Support the Core Business. Business And Management Research1(4). doi: 10.5430/bmr.v1n4p81

Warren, M. (2018). Can this robot build an IKEA chair faster than you?. Science. doi: 10.1126/science.aat9251

 

 

 

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Introduction

Management performance tends to handle the operational process in organizations through regular feedback. The scope of business management is enhanced when a business model is invigorated. It is vital for a company’s success that several changes should be implemented (Korsgaard, Rask &Lauring, 2007). The process of strategic management is to implement a strategy in an organizational framework that allows the accomplishment of strategic goals. This kind of operation is to get more customers who spend more, so longer retention is made. (Lechehab&Kamassi, 2016) The monitoring and planning analysis in an organization need specific processes to meet the objectives. This report will discuss international strategic business management in IKEA regarding Malaysia. The report will discuss the mission, strategic goals, and SWOT analysis.

Company Overview

IKEA is a global brand that was found in 1943 by Ingvar Kamprad. The company is famous for its famous and modern stores. Its different kinds of products are eco-friendly and cost-effective. IKEA operates in 389 stores worth of 42.9 billion. It also has few branches across the world with such as KungensKurva, in Shen Zhen, and Texas. It has presented an example of trendiest with low-cost furniture. IKEA is considered a recognizable brand at the globe with best practices. The trademark of the company is well designed and functional regarding frugality experience. These practices are related to the principle that offers competitive advantage (Soh, Wong & Chong, 2015). The image, quality, and affordability of products is an asset for the company. The company has the opportunity to be streamlined about its customs, franchising, and popularity.

IKEA is successful in terms of its management operations. Its formulation processing is based on the right demographic framework. IKEA stores are customized to offer a better experience to customers in terms of fluid shopping (Hultman, Johnsen, Johnsen & Hertz, 2012). The living room and domestic style experience for customers are exciting. They need to take a code linked to the selected item when they buy furniture. The functional layout of products is seen as a mass service for a product offering that fulfills the basic needs of consumers.  Some basic features of the firm are high quality, wide variety, the flexibility of products, less disruption, and easy supervision.

Mission

The mission of the company is to build a strong culture that will deploy crucial factors for the continued success of IKEA. The concept of sustainability is inherent because furniture is considered a necessary value for people’s lives (Korsgaard, Rask &Lauring, 2007). The recognizable brand name and concept are linked to low valued price and home furnishing products. The company has a wide range of its products and allow frugality practices for being the first choice of consumers as compared to other brands. The culture of IKEA is to work within everyone, create and develop it further, so people live with this vision. This concept is building a core competency of the company against others. IKEA has established its long going capacity in Malaysia with the science and technology concept and managerial practices. The developing economy of Malaysia is offering huge potential to the company to produce furniture due to newly identified competitive advantages (Garnier&Poncin, 2019).

SWOT Analysis

IKEA is a valuable furniture brand in the world, and in 2019, its worth is estimated at US$45.4 billion. The strengths of the company are its brand image and brand name. The reputation and awareness of the company are its key strengths (Johansson &Thelander, 2009). A most significant strength is its low-cost affordable furniture because it aims to sustain in the lives of people, so it is cost-conscious. The philosophy of IKEA is to keep costs low and incorporate new technologies, advances, and innovation to allow profit margins(Arrigo, 2005). This is associated with the profitability, efficiency solutions, and cost-effectiveness methods in handling products. In Malaysia, IKEA has a competitive advantage in producing products.

The combination of effective packaging and low price furniture startup in Malaysia is a big strength for the company. The products of the company are new, different, and allow extraordinary shopping experience to people, so consumers are engaged in decision making (Soh, Wong & Chong, 2015). It is different from other brands because of the wide variety, selection, and offering a chronological order. Just as its competitors are working in Malaysia, IKEA aims to maintain long term relationships with customers, so optimizing its cost and transport timing.

Its weaknesses are less focused on improvement policies while working in less developed countries like Malaysia. It also has inadequate support policy as well as limited visibility regarding marketing and promotion. The sparsely located few stores in Malaysia can be less responsive to increased demand of the population (Minkes&Minkes, 2005). It has to employ more staff to enhance the buying experience of customers by attracting them. The packaged furniture and its technical nature is different and needs more focus on assemblage. It depends on the third party to assemble and assist in purchasing products that can be a weak point for IKEA. There is an absence of detailed instructions that can accompany products and retain consumers when they go for detailing.

There are some opportunities for IKEA to further develop and boost its concept in Malaysia. It can increase its clientele by educating people more about environmental waste and pollution. If wastes are reduced regarding furniture usage, it can develop a strong concept as an opportunity in corporate social responsibility (Hultman, Johnsen, Johnsen & Hertz, 2012). With Malaysia and other less developed counties like India and Indonesia, IKEA can fully develop its network of furniture supply. It has the advantage of working on broader concepts by developing effective solutions for business. This will provide solutions to reduce environmental pollution, so a sustainable life at home will be easy. In Malaysia, the potential exists regarding natural resources and others like advanced technology and science, so it can promote a technical friendly product (Garnier&Poncin, 2019).

Some external factors can work as threats to the company in Malaysia. There are many low-cost retailers in Malaysia that can share market value and specialty of furniture with IKEA; there is a need to produce more economical and consumer-friendly products to compete with the rivals. The financial conditions of a country are other luring threats for IKEA. Any financial crisis and economic downturn in the economy can cause threats to IKEA (Lechehab&Kamassi, 2016). The size and scale of the company is also a threat because it has to focus on the operating economy where experts believe watering down of innovation due to less targeted consumers in Malaysia. The company is steadily acquiring a household place in masses, so it has to improve quality and standard with its expansion (Fröding& Lawrence, 2017).

IKEA strategies and its associated plans

IKEA’s marketing strategy through which the organization searched out cultural and advanced customers and also searched a sufficient market to sell its products. IKEA sends its designs to concern professional people to its homes and provide them feedback(Arrigo, 2005). This strategy allows the ministers to make the market decisions that are based on people’s life’s experience; this experience might be collected from survey and data collection. IKES Strategies considered all elements that are involving around product and price into mixed marketing. IKES tries to present its best product on the lowest market rate, and it is also called the 7Ps of marketing, in which position, development, methods, characters, and material elements are taking place (Hultman, Johnsen, Johnsen & Hertz, 2012). IKEA was established by Kamprad in 1943; this term developed when the home furnishing stores are used for monetary purposes around the world. All IKEA retailers are running their own franchise business.

IKEA of Sweden concerns all product ranges, which are associated with IKEA; the entire production differentiated with tags, designs, and quality. To start IKEA’s strategies, find the solution to various questions.  IKEA knows about consumer satisfaction and how much it is important. Consumer relations influence the business significantly (Stanciu, Zlati, Antohi&Bichescu, 2019).

Different research objectives also take place in this term, like investigating the consumer demand theory. Establish a referencing and suggestion system for company development. The basic purpose of this theory is to satisfy the consumer at any cost, either the consumer belongs to any category of life. In those days’ customers have awareness about the brand and its worth; at first, the consumer judges the product, and its services afterward estimate his personal experience and, at last, make a decision whether the product is appropriate and meets its exceptional level or not. After using the product, if the product fulfills its requirements, then the customer will purchase it again. Otherwise, he contacts any other commodity. In this fast business establishment affairs, customer relations are critical to managing. Customer satisfaction shows that he will purchase the commodity afterward to satisfy the demand that would be a long-term relationship to company and customer till then the other product may not facilitate its needs. An efficient marketing program consisted of all terms and conditions to evaluate the mix marketing concerning the market objectives which a company has to occupy to compete for the other rivals (Fröding& Lawrence, 2017).

IKEA base the business success on superior marketing strategies that must be the same around the world, which consisted of the description list it must be in written form in 17 languages and color should be blue and yellow, the color of the Swedish flag. This technique applied to the customer that they are free to purchase any commodity. The price also is shorter than other brands because the consumers, first of all, focused on the price (Johansson &Thelander, 2009). To understand the IKEA business strategy, it is necessary to be based on business conception and formulation prepared by IKEA 12th January 2009. It also provides a wide variety of sketches, functional, and other home decorating products at a low price thus can purchase every kind of class. The main objective must be centralized the objectives and purposes of IKEA’s business strategy. It also provides a guideline on work; these rules implement all sectors of the strategy, whether they belong to the country or around the world. IKEA focused that the environmental designs are presented into its home decor items; for this purpose, it launched a plan in 2015(Arrigo, 2005). This plan will combine the cultural, environmental, and financial and commercial crises. IKEA follows SWOT analysis to gain its objectives (Carter, 2009). This is a developmental business tool. It also assists the business to focus on its fundamental issues. SWOT is a planning stage and focuses on strengthening and weakening and also deals with the internal and external aspects of the business, and also face all threats that are affecting the company matter and associated with other business merchants. The SWOT business plan also concerns retailing, production departments. It also can deal with economic situations, social variations, and technological advancements. IKEA also emphasizes that every business holder has to sense its strengthening aspects to overcome its future challenges. IKEA also focuses on attracting the fundamental group of customers to establish a brand in a world community. It also provides different business techniques at a low price (Alänge, Clancy &Marmgren, 2016).

To maximize the profit, the brand has to establish a trustful relation to the supplier, retailer, and customers. It also embraces several strategic techniques to create customer trust and gain worth in a market. Long term relations to customers or retailers also provide a profitable sense to the business. IKEA emphasizes making good relations with customers by fulfilling their expectations and trying to find out how the new customers ties in a long-term relationship (Baxter & Landry, 2017).

Successful Strategic Goals

The world economy is booming, so the furniture market is also going up with rapid development. 70% of the global market is acquired by traditional furniture companies. The scenario is easy to understand due to increased production capacity, technical advancement, and strategic management. IKEA has also managed to enter in China, Indonesia, and Malaysia by focusing on the key significant strengths and its strategic goals. In many less developed countries, it has developed its concept of competitive advantage and working to show greater potential. Its production is increasingly focused on matching quality standards in Malaysia and beat its competitors. The clear mission of the company is to sell a wide range of furniture with reasonable prices that allow people to buy and get involve (Baxter & Landry, 2017). The wide range offering is a keyword in functionality because consumers, in this way find a place where everything is present. The strategic goals that IKEA has considered to enter in Malaysia are creating high efficient sales department, offering best ideas for home furnishing and serving customers with the best shop of furnishing ideas.

The aim of IKEA at Malaysia to offer them successful appearances and a perfect shopping experience for whole family (Carter, 2009). The people and environment is always a concern for IKEA so its management try to manage every day’s life with a better notion of commitment. It has also responded any rising public concern regarding sustainability, choice of the communication and product range. In Malaysia, effective focus on transportation and raw material was easily maintained due to easy access and prevalence of raw material. This situation helped company get its green targets and spread impact. In Malaysia, it is working on the original approach of dealing customers, i.e. self-serving method. The catalog allow people select whatever they want so they choose their products and put and assemble at home.  The centralized strategic direction at IKEA is increased with its expansion (Alänge, Clancy &Marmgren, 2016).

The rapid internationalization has enhanced the challenges for company in a broader scenario so there is also increasing difficulty of managing and responding needs. It is considering cultural and social factors while operating in new premises so emerging demographic trends are easy to tackle with a focused strategy(Arrigo, 2005). IKEA is also focusing on varied level consumer groups by implementing its strategies. The power of strategic management is significant under the organizational structure. It is focusing on maintaining a balance between autonomy and country-level centralized intervention, which will be attributable to franchisee autonomy and subsidiaries. Its suppliers are located in low-cost countries that are an advantage for Malaysia based IKEA (Stanciu, Zlati, Antohi&Bichescu, 2019). They can access raw materials so effectively reach out to distribution channels. The suppliers are selling standard products with broader dealing at the same time.

IKEA’s brand is focusing on innovation mix, advanced, and quality furniture. A combination of low-cost high quality furniture is the business model that is further being tackled with new innovations and techniques to expand and cut costs. Its simple idea of keeping costs low for manufacturers and customers is workable because it doesn’t own its sole manufacturing facilities. The upstream innovation and research & development activities are centralized in Malaysia. The strategic and operational strategies are workable and acquired a steady scope due to global policies.

Challenges

While operating in a global market, an international brand may face some challenges. For instance, while operating in Malaysia, it has to focus on its internal capabilities, ceasing activities, and incorporate key strategies to make its reputation (Carter, 2009). It has to work in an intensely competitive environment because targeting consumers is not easy, and there are multiple brands considering similar operations. It has been facing external and internal challenges in Malaysia regarding raw material, transportation, and availability of the latest technology. Some competitors are focusing on influential corporate decision-making strategies to make effective decisions for the firms. The management team has identified key threats from this business point objective so IKEA has to implement consumer related methods. It is facing diversification issues to boost sales (Alänge, Clancy &Marmgren, 2016). Some internal cultural issues are also prevalent. Due to geographic factors, IKEA is facing different taboos in Malaysia so it has to focus on to improving furniture design.

Conclusion

IKEA in Malaysia is working on competitive strategy with low cost initiatives. It has opened new stores, with an aim to use stability strategy. This will be helpful to monitor performance of the products and allow well operating conditions for business. The stability factor increases productivity of a company so it can take profit based features. Low cost operating methods, effective decision making approach and a business formulating method for its consumers are main pillars of Malaysian market that company is focusing. IKEA is working at global level so a focus on price and differentiation is a key to maintain. The price cost of company is linked to the cost of production, under strategic management framework, this scope is maintained. Globalization is a central aspect of strategic management, so IKEA in global market places, is expanding this view by gaining better competitive advantages and profits. The trend of consumer products at global marketplace is emerging and IKEA is viewing this phenomenon in Malaysia to reap a better growth.

References

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