Ikea Porter's 5 Forces Analysis

1168 Words5 Pages
Introduction Due to globalization and the increasing complexity of business environment, companies face a couple of new challenges. In order to remain competitive, it is not sufficient for an organization to focus only on its own strategy but inter-organizational relationships should be rather emphasized. The purpose of this paper is to analyze the implementation of the strategic inter-organizational approach in the multinational enterprise IKEA with a special focus on its relationship with Swedwood. Firstly, the theoretical framework of SMA and IOMA is presented and linked to those two companies. Secondly, several management accounting tools which facilitate the adoption of the strategy in daily business are introduced. Finally, the findings…show more content…
Firstly, the fierce competition due to globalization has severely affected the way companies operate in today’s business world. They need to respond faster to changes and be ready to satisfy the rapidly changing needs of their customers. Secondly, the quick pace of technological improvementshas made it impossible for organizations to keep up with all this technical expertise required. Finally, companies nowadays are expected to be in the forefront producing technical, complex products to meet their clients’ needs (Hopper, Northcott&Scapens,…show more content…
All of those methods focus on cost comparison but reveal a different level of detail. (Source lecture, how?) Since the purpose of cost tables is to compare different suppliers and their respective costs (Andersson&Larsson, 2006), Swedwood might use this model in order to compare the costs of its suppliers. Furthermore, cost tables often serve as instrument to make a comparison between the own and external supplier’s production costs (Andersson& Larsson, 2006). Therefore, cost tables are a suitable tool for IKEA to compare Swedwoods cost structure with that of other suppliers. Cost Split-Ups offers and demands more detailed insights since certain cost drivers are specified; Cost Breakdowns provide an allround overview over all costs and therefore require open books for all cost related information (Andersson& Larsson, 2006). Those particularities are valuable for IKEA in order to compare Swedwoods cost structure with other suppliers. However, the processing of more detailed data causes costs, so that the usage it is only valuable in case of expected benefits. Furthermore, for a comparison on a detailed level, benchmarking data of suppliers are necessary which requires open books in term of cost information to a certain
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