RUNNING HEAD: Introduction to Operations Management and Strategy

Written Assignment Unit 1

Introduction to Operations Management and Strategy

University of the People

Word Count 939

Abstract

In this week’s written assignment, we are picking a company whose SWOT analysis was

completed in 2013 by Strategic Management Insight. We are required to review the performance

of the picked company since 2013 and help answer the given questions.

I have picked IKEA, a multinational group that “designs and sells ready-to assemble

furniture, kitchen appliance and many useful home goods and services”. (Wikipedia, (n.d.)).
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“A SWOT analysis is a technique used to determine and define your Strengths,

Weaknesses, Opportunities, and Threats. It is the most powerful way to evaluate a company”.

(Shewan, 2020).

According to the SWOT analysis of IKEA from Strategic Management Insight, in 2013

IKEA’s strengths were: Customer Knowledge, New Innovations, Supply Change Integration,

Brand reputation and Diversified product portfolio. Their Weakness were: Negative publicity,

Decreasing quality and Standard products. Their opportunities were further expansion into

developing economies, growing online sales and expansion to growing grocery market. Threats

were their competition and growth of an average consumer income. (Jurevicius, 2013).

Since 2013, the major strength of IKEA is that it is now a market leader in Europe and

North America. Their weakness is setting their strong foot in Asia. Opportunities are adding

premium products in their portfolio and threats are lawsuits that they are facing. (Dudovskiy,

2019).

Since 2013, IKEA’s strengths evolved as they are now considered a global leader with

strong financial position with their presence in many countries around the world. Besides

physical locations, “their products are available online through their website and can be

purchased through their store app”. (Taylor, 2019). IKEA’s products are considered affordable,

easy to assemble and they attract customers of all ages and from various backgrounds.

IKEA follow “an intricate business model which means they are not public but run by a

trust INGKA holding, headquartered in Delft, Holland. The Kamprad family is very focused on

key values surrounding quality, heritage, market difference, customer loyalty and sustainability”.

(Loeb, 2012). The reason their products are considered affordable globally is because of their
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strategy to “first decide on the price of the furniture and then reverse engineer the construction”.

(Clifford, 2019).

During this period, IKEA weaknesses’ have been “weak foothold in Asia, negative media

attention and their standardized and low-quality products. (Farooq, 2019). The one weakness that

I will be discussing for the purpose of this assignment is the challenges IKEA is facing in the

Asian market.

Although IKEA is doing great in Europe and North America, it is not able generate the

same revenues in Asia and Australia region. According to 2018 numbers, IKEA was able to

generate only 5% of revenues from Asia while the rest were from Europe and North America.

(Dudovskiy, 2019). For IKEA, setting their foothold in Asia is challenging due to cultural

differences. Customers in Asia are price conscious and their buying habits are unique. Due to

these reasons in some countries IKEA could not be successful. This draw back did not stop

IKEA to review their strategies and to overcome this challenge. Till now they have entered joint

ventures, changed their business style and product models to attract the local consumers. These

strategic moves helped IKEA and they have been successful in China and India. There are still

many other countries in the Asian region where they need to apply these strategies and perhaps

add more to win the hearts of the local consumers.

Opportunities that have evolved during this period for IKEA are strategic partnership

with other brands, adding premium products and expansion in grocery markets. Adding premium

products in their portfolio is a great opportunity for IKEA, “which will enable the company to

expand its customer base and loyalty to their products.” (Taylor, 2019). IKEA understands this

opportunity very well and wouldn’t want to lose its market share to competitors like Amazon,
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Alibaba etc. For this reason, “they now copy the auto industry strategy by focusing on

developing of platforms for five product groups for economies of scale”. (Ringstrom, 2016).

Threats during this period for IKEA are constant competitions, Lawsuits and increasing

customer income. (Farooq, 2019). IKEA faced various lawsuits during this time period due to

poor quality of some of their products and due to employee discrimination in certain situations.

They had to pay millions of dollars in settlements and have ensured to make amendments to their

products by adding safety features and adding HR policies to avoid lawsuits in future.

In conclusion, IKEA has built a business model which keep its consumers in mind while

making their products. This business model has helped bring strong revenues and provided new

opportunities to strengthen their market share. Along with strengths and opportunities comes

weaknesses and threats. IKEA is aware of their constant competition and threats and is coming

up with strategic moves to overcome these challenges.

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References

Wikipedia (n.d.). IKEA

Retrieved April 13th from, https://en.wikipedia.org/wiki/IKEA

Shewan, D. (2020, February). How to do a SWOT Analysis for your small business

Retrieved April 13th from, https://www.wordstream.com/blog/ws/2017/12/20/swot-

analysis

Jurevicius, O. (2013, February). SWOT analysis of IKEA

Retrieved April 13th from, https://strategicmanagementinsight.com/swot-analyses/ikea-

swot-analysis.html

Dudovskiy, J. (2019, November). IKEA SWOT Analysis

Retrieved April 13th from, https://research-methodology.net/ikea-swot-analysis/

Farooq, U. (2019, April). IKEA SWOT Analysis

Retrieved April 13th from, https://www.marketingtutor.net/ikea-swot-analysis/

Taylor, J. (2019, July) SWOT Analysis for IKEA

Retrieved April 13th from, https://www.essaytyping.com/swot-analysis-for-ikea/

Loeb, W. (2012, December) IKEA is a worldwide wonder

Retrieved April 13th from, https://www.forbes.com/sites/walterloeb/2012/12/05/ikea-is-a-

world-wide-wonder/#40f25f6c27b9
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Clifford, C. (2019, October) Meatballs and DIY bookcases: The psychology behind IKEA’s

iconic success.

Retrieved April 15th from, https://www.cnbc.com/2019/10/05/psychology-behind-ikeas-

huge-success.html

Ringstrom, A. (2016, July). IKEA pushes for quality as shoppers get choosier.

Retrieved April 15th from, https://www.reuters.com/article/us-ikea-quality/ikea-pushes-

for-quality-as-shoppers-get-choosier-idUSKCN0ZK1IX