Business Case Study: Ikea's Goals And Strategy

Question 1: Structure

Goals and Strategy IKEA’s goal is to “create a better everyday life for the majority of people,” (Armstrong & Daft, 492). Ingvar Kamprad created this goal as he was aware there were a large group of people who wanted fine-looking furniture but whose needs could not be met by the expensive products often found in the home furnishing industry, (Armstrong & Daft, 492). Kamprad stated that IKEA’s strategy is, “to offer a wide variety of home furnishing items of good design and function at prices so low that the majority of people can afford to buy them,” (Armstrong & Daft, 492). IKEA’s strategy explains how they plan on achieving their goal; through offering furnishing items that everyone can buy and take into their living

As described by the textbook, organizations using a low-cost strategy “seek efficient facilities, pursue cost reductions, and use tight controls to produce products more efficiently than its competitors,” (Armstrong & Daft, 63). IKEA embodies this strategy through outsourcing manufacturing to keep their overhead costs low and through their continuous effort to work with supplies to find ways to cut costs while maintaining quality, (Armstrong & Daft, 491). Low cost is one of the main way that IKEA has been able to insulate themselves from the attacks of their competitors, as competitors are unable to come close to competing with IKEA’s

Stability is cemented in the idea of providing customers with the same products they have come to expect from IKEA. Organizations that focus on low-cost, such as IKEA, are often concerned with stability, as stability allows an organization to undercut competitors prices, (Armstrong & Daft, 63, 491). Yet as the case stated IKEA “continues to believe in the power of its ingenuity,” (Armstrong & Daft, 491). An example given in the case was IKEA creating a partnership with ski-makers to IKEA is continuing to work with suppliers create new products that fit into the mold of “the IKEA way.” IKEA recently partnered with ski-makers to help with a design for an armchair, this illustrates that IKEA is continuing to try invent new ways of doing things and creating partnerships with those from different industries to create something unique. In addition IKEA has continued to expand their product lines to now over 9,500 products and while the case did not outline the details of the products,it would be wise to assume that IKEA is not expanding their product lines without the use of innovation, (Armstrong & Daft,