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Ikea: Porter’s Five Generic Strategies & Means for Achieving Strategy

Essay by   •  October 24, 2017  •  Case Study  •  436 Words (2 Pages)  •  2,999 Views

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Michael Porter’s Five Generic Strategies

IKEA uses Cost Leadership-Best Value strategy. IKEA has control over its value chain. They have a strategy to cut the production and delivery cost as much as possible to give lower price compared to its customers. However, IKEA also pursue differentiation strategy. This is shown by them putting 2,500 new products each year, with new designs that can keep up with the ever-changing industry. Collaboration with designer in the fashion industry is also done to give IKEA’s customers the latest style in the industry.

IKEA’s design is called ‘democratic design’, giving a wide range of products at an affordable price so that as many people as possible can enjoy them.

Means for Achieving Strategy

In China, IKEA’s store was built through Joint Venture. This was done to make it easier for IKEA to gain consumers. Considering the language barriers and how China was a really closed country up until recently, Joint Venture seems like the best strategy to enter Chinese market. Lack of information regarding the market and consumers’ preferences can be easier to manage by Joint Venture. Up until now, IKEA’s stores in mainland China is owned by IKEA Group.

Recently, IKEA bought TaskRabbit. This acquisition was done to increase its digital customer service capabilities. In a world where trend moves fast and digitalization has become an important factor in any industry, this can be seen as a great move done by IKEA. One of the product that came up from this acquisition is an augmented reality app for iPhone called ‘ÍKEA Place’. With this app, customers can scan a room and place IKEA’s furniture product virtually to see how it would look like. The furniture’s position can be moved and rotated to any angle. This makes it even easier for customers to decide what product they should buy for their room.

IKEA

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