Inimitability Analysis Of IKEA

A business model describes how an organization manages incomes and costs through the structural arrangement of its activities in nine areas which are key partners, key activities, key resources, value proposition, customer relationships, channels, customer segments, cost structure and revenue streams (Johnson et al. 2015). IKEA as the world’s biggest furniture retailer (IKEA web page, 2017) focuses on sustainability activities within its business model. Therefore, multiple strategies towards sustainability have been applied by IKEA which could be explained by analysing different areas of its business model.

Key partners:

To partner with suppliers sustainably, IKEA encourages and enables its suppliers to increase their efficiency of energy.

(2015) state that capabilities that create a sustainable competitive advantage in a market are called distinctive capabilities, and the resource must have four characteristics which are Value, Rarity, Inimitability and Organisational support. IKEA’s distinctive capabilities are mainly reflected on two aspects, physical resources and human resources. In FY 16, 100% of cotton and 61% of wood used by IKEA were from more sustainable sources, and IKEA is trying to use whole parts of the raw materials to produce (A. Zinnerfors, personal communication, September 25, 2017), so that the energy efficiency could be increased. Furthermore, IKEA has outstanding contributions on the gender equality which supports the UN Sustainable Development Goal 5, Gender Equality. IKEA wants to create a fairer society and 50% of leadership positions are held by women. According to FY 16 sustainability report, IKEA has 48% of female managers (IKEA Group, 2016).

Value proposition:

IKEA has a clear vision and business idea to operate the organization. Johnson et al. (2015) claims that vision is concerned with the future the organization seeks to create. For IKEA, it is focusing on providing high quality simple furniture at low prices for the many people. Therefore, “IKEA always combines function, quality, design, value and sustainability in mind when they produce the products, and a product can be said perfect if it reaches these five dimensions” (A. Zinnerfors, personal communication, September

One way for IKEA to utilize to lower the price is letting consumers to assemble the products by themselves. For most of families, it is convenient for them to assemble the products through following the steps given by IKEA. For some cost-conscious customers, especially for the young people, IKEA is the best choice for them to obtain nice-looking, good quality products at the prices for most of them can afford (A. Zinnerfors, personal communication, September 25, 2017).

Cost structure:

IKEA’s competitive strategy is cost-leadership strategy which means to become the lower-cost organization in a domain of activity (Porter, 1985). IKEA seeks to access to large economies of scale to offer a wide range of home furnishing products with reasonable price to the customers. “We try to reduce the air among our products” (A. Zinnerfors, personal communication, September 25, 2017), so that the products will be lighter to transport, and IKEA’s transport costs which is a part of input costs could be