strategic mgmt 2

ASSIGNMENT COVER SHEET

Unit Code	Unit Name	Due Date
TMGT 601	Strategic Management	04/10/2020
Assignment Number: 02
Lecturer Name:	Tutor Name:
Dr Mo Kader	Dr Mo Kader
Students
Student Number	Given Name	Family Name
2020002691	suman	karki
S2019002492B	Binju	Khadka
2020016782	Karuna	khadka
2020001641	Subash	Karmacharya
Declaration
I/we have read and understood the Institute policy on assessment and academic honesty (which deals with issues such as plagiarism and recycling assignments) and certify that this assignment is my own work and complies with those policies. 1. I/we hold a copy of this assignment which can be produced if the original is lost/damaged. 2. This assignment is my/our original work and no part of it has been copied from any other students work or from any other source except where due acknowledgement is made. 3. No part of this assignment has been written for me/us by any other person except where such collaboration has been authorised by the lecturer/teacher concerned. 4. I/we have not previously submitted this work for this or any other course/unit. 5. I/We give permission for this work to be reproduced, communicated, compared and archived for the purpose of detecting plagiarism. 6. I/We give permission for a copy of my/our marked work to be retained by the Institute for review and comparison, including review by external examiners. I/we understand that: 7. Plagiarism is the presentation of the work, idea or creation of another person as though it is your own. It is a form of cheating and is a very serious academic offence that may lead to expulsion from the Institute. Plagiarised material can be drawn from, and presented in, written, graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited. 8. Plagiarism includes the act of assisting or allowing another person to plagiarise or to copy my/our work.
Student Signature(s)
Signature	Date	Signature	Date
1suman karki	3/10/2020	5
2Binju khadka	3/10/2020	6
3Karuna khadka	3/10/2020	7
4subash Karmacharya	3/10/2020	8

IKEA

IKEA is a Swedish Multinational group situated in the Netherlands that designs and sells ready to assemble furniture, kitchen, kitchen appliances, among other useful goods & occasionally home services too. It was founded on 28, July by Ingvan Kamprad who was 17 years old by then. The firm is currently responsible for approximately 1% of world commercial product wood consumption making it the world`s largest furniture retailer since 2008. IKEA has around 433 stores operating in 52 countries and 211,000 workers. By 2019, it had a total revenue of $45.4 billion and a net income of 3 billion. It has its headquarters in Delft, Netherlands under the management of the founder`s sons (Shaw, 2019).

AMAZON

Amazon was founded in 1994 by Jeff Bezos. It is bases in Seattle, Wash and is currently the top ecommerce company in the world. Amazon uses cloud technology platform over internet to retail several products globally. With around 1 million workers and more than 175 fulfillment centers across the globe, Amazon has a revenue of $ 280.522 billion. This makes it among the Big Four companies in the US. Amazon recently launched its two private-label furniture brands; Rivet and Stone& Beam. This are the home furnishing brands that offer a wide range of furniture categories to their customers. The categories catered for include kitchen, bedroom, outdoor, dining room and storage furniture. The company provides various services to its customers at no cost EMI, early installation, free scheduled delivery and high-quality genuine products. It also offers good discount for its customers. As a provider of various furniture products, it is considered IKEAs topmost competitor. The free shipping policy has over time given its edge over IKEA who charge a considerable amount for their delivery (Shaw, 2019).

ASHLEY FURNITURE

This is IKEAs biggest rival. Ashley furniture industry is a US based manufacturing and retail company. It deals with the home furnishing retail sector. The company was founded in 1975 by Carlyle Weinberger in Arcadia, Wisconsin. By 2005, Ashley Furniture was the largest furniture manufacture in the world up top 2008 where IKEA outrivaled it. It produces quality furniture at budget friendly prices. The company also boasts of a good image as it has an excellent reputation when it comes to speed production and delivery. Mostly, the company resorted to 3D printing for parts of their furniture. It currently has 31,000 employees in its 800 stores globally. Its approximate revenue is $ 5.7 billion (Whatcompetitors, 2020).

ANSOFF MATRIX

1. Market Penetration

This is a marketing strategy used by IKEA to sell existing products to existing markets. It is less risky bur rigorously competitive with existing competitors or entrants in order to gain a greater market share and maintain its leadership position at all costs. For decades now, IKEA has used effective marketing and the famous IKEA catalogues to increase their efficiency of furniture retail market penetration. New product range with aggressive promotional activities encourage more existing customers to visit the available stores. Before advertisement is done, IKEA should study target customers then encourage them to buy the brand based on the advantages, benefits and competitive edge of the home furniture pieces. Sales promotion strategies are famous for attracting the customers; they can take the form of half/ cut prices, buy one get one free method, promotions and many others. On the other hand, customer loyalty schemes should be incorporated to make customers do regular purchases since they feel appreciated. Mergers and acquisitions too will help in leveraging the brand’s good reputation while increasing its production capacity. An improvement in IKEAs distribution network will go a long way in enabling it penetrate market wise (Dudovskiy, 2019).

2. Product Development

This involves developing new products to sell to existing markets. IKEA has thoughtfully used this as a growth strategy. With over 9500 types of products, it regularly launches about 2500 new products annually. This strategy can go into two ways; first is to come up with innovative designs every now and then or secondly, modification of the existing products to suit customer’s tastes. This is done in bid of giving customers an increased value to customers for their purchases. IKEA has an added advantage due to the strong supplier relationship they hold Using their in-home designers as well as outsourcing, the company is able to continuously develop its product range. Improved quality of the new products maintains their customer base too.

3. Market Development

This is finding new market for its existing products, mainly by exploration and targeting of new geographic areas. IKEA engages in market development extensively. The group operates 422 stores in 52 markets around the world. In 2018, it opened its first IKEA store in India and projects to have 25 of those by 2025. It has also taken important steps towards expansion into the South American continent with 15 more retail locations being identified. The UK, North America, Asia and the Middle East also saw expansion. The strategy has proved to be successful for IKEA in the recent years (Hanlon, 2020). A good example of this is China where it had to design products that fit the local taste of the Chinese people. This was well received and there was a sales maximization. In order to become the largest furniture retailer, Ikea first targeted markets close to Sweden its origin country before venturing into diverse and challenging geographic areas. IKEA should consider doing a feasibility test report to whatever target market it wants to develop, then determine which channels have a good audience interested in furniture. From there they can proceed to increase the suitable sales channels (Intense School, 2020).

4. Diversification

This involves developing new products to sell to new markets. Of all strategies this is the riskiest. IKEA has experimented with diversification of business a few times. First is its restaurants which are famous for good food worldwide because of the amazing quality and taste. IKEA creatively incorporated this with various openings of their stores., in that when people visit their stores, shop for hours, they get hungry and therefore can order fresh meals within the premises. This is conglomerate diversification. In addition to that, IKEA has diversified into the smart Home business by integrating the furniture with technological items. They introduced wireless charging furniture such as tables and lamps for compatible phones. Furthermore, it has introduced Wi-Fi speakers, smart lighting and smart blinds as an advanced furnishing method. IKEAs success in this risky strategy mainly lies on the proper planning they do before diversifying. Studying the new market keenly, analyzing risks involved, market trends and product differentiation contribute to success too (Sahin, 2020)

Boston Consulting Group Matrix (BCG MATRIX)

Stars

These are the best product segment for the business since they have a high market share along with a high level of growth rate. Whatever the investment the products get allocated for during the production process, the products bring in higher return. IKEAs furniture falls under this category. They are ready to assemble, flat packed and pocket friendly much to the satisfaction of the consumers. To sustain it at star category, IKEA has to regularly study the prevalent market trend, considering its pricing strategies and bring in unique and innovative designs for their consumers. Also, they have to ensure that they are conveniently available (portfolio, 2020).

Ansoff Current Strategic Stance

IKEA is currently at market development. It has successfully penetrated market in 52 countries currently, meaning that a large part of Africa, South America and some parts of Middle East are yet to be explored. There is huge opportunity in the unexplored market and they should consider putting in strategies that will enable them open stores in those areas successfully. The strategies can be high profile advertisement campaigns with public endorsements by well-known persons to the target consumer’s in the prospective markets (Bartleby, Laura Burns, 2012).

Boston Consulting Group Current Strategic Stance

IKEAs furniture is currently at stars’ level because the furniture has a high market share and a high level of market growth. Of all the companies’ products, they bring in the largest profit margin. The company has continued investing in furniture and using advanced technology to come up with new attractive products (Joe Manget, 2009).

CONCLUSION

IKEAs mission is to offer a broad range and variety of house furnishing products at best quality and reasonable pricing. It is facing fierce competition but through its marketing strategies, it has continuously managed to maintain the leading position. It provides innovative designs that are relevant to existing social trends and patterns. Indeed, IKEA has great potential to gain more and more market share (IKEA UK, 2018).

References Bartleby, Laura Burns, 2012. Strategic Analysis of IKEA. International business strategy. Dudovskiy, J., 2019. IKEA Ansoff Matrix. Business Research Methodology. IKEA UK, 2018. Reaching more of the many people. Opening doors to new home horizons. Intense School, 2020. The Product Market Strategy (Ansoff Matrix). The Ansoff Matrix. Joe Manget, C. R. F. M., 2009. Capturing the Green Advantage for Consumer Companies. The Boston Consulting Group. portfolio, A. b. p. t. u. t. e. t. s. p. o. a. f. b., 2020. A business planning tool used to evaluate the strategic position of a firm's’ brand portfolio. A business planning tool used to evaluate the strategic position of a firm's’ brand portfolio. Sahin, D., 2020. Ikea marketing management presentation. Marketing management presentation. Shaw, A. (. A., 2019. Amazon. Top Ikea Competitors. Whatcompetitors, 2020. Top 10 IKEA Competitors in 2020. Ashley furniture industries.