Competitive Strategy IKEA

Question: Discuss about the Competitive Strategyfor IKEA. Answer: Key Ideas of the Strategy The strategy is the set of plan or rules to accomplish the long term goals (Dixit and Skeath, 2015). There are different key ideas which can be identified from the academic and non-academic sources. These ideas are list below: Where the organisation competes? What unique value the do organisation bring for the customers? What are the key resources and capabilities organisation utilise? How organisation sustain its values? According to the (Bryson, 2011) the first important thing for the organisation to know where the organisation competes in the marketplace (industries, target markets and geographical markets). It is important to evaluate its competitiveness of the company in the marketplace. Secondly, the organisation should know what are the unique values brings for the customers i.e. image, brand, customization, style and cost. Thirdly, the key resources and capabilities the organisation can utilise to remain competitive in the market like a good reputation, superior technology, good network and financial resources. Lastly, the important thing is how an organisation can sustain its values for the long term (innovations in products, strong R and D and customised according to the changing trends. IKEA is the largest furniture retailer which specialises in flat pack furniture, accessories and bathroom and kitchen items around the world. The company applies the idea of flat-pack design furniture around the world. IKEA also applied the key ideas of the strategy to become competitive in the marketplace (Zahra and Nambisan, 2012). The organisation sells the low-cost stylish design furniture all over the major markets of the world. Secondly, IKEA supplies the high volumes of furnitures into flat boxes that lower its transportation costs. This idea of IKEA depicts the unique image and customization for their customers and suppliers. Thirdly, IKEA has the good network of suppliers and manufacturer all over the world. The company uses the concept of flat box method to lowers the shipping costs. Lastly, it finds that the company innovate their products and services according to the changing needs. The company uses the different types of wooden material into a single product to increase its quality. Business Model Innovation (Key Ideas) The business model innovation refers that the development of innovative and new concepts into their structure, resources, processes and values. It has been identified from the video material that the successful business models adapts the four steps approach to become successful in the market i.e. initiation, ideation, integration and implementation (Massa and Tucci, 2013). During initiation process, companies analyses the current business model (target customers, offer to the customers, value proposition and how to generate revenue).Secondly, ideation approach indicates that the company compares the existing business model to 55 different business models and develops the successful business model. For e.g. Nespresso has changed the product and selling the concept to make innovations. Thirdly, Integration approach checks the consistency of the business model with the organisational fit. Lastly, Implementation stage refers that the company needs to implement the new business models aft er testing. These phases develop the four key important things for successful innovation which are listed below: Learn from the experiment of others and implement successful factors into the new business model Only implement one business model at a time Communication should be clear regarding new business model and need for change Key performance Index of the business should be in long term. Get the support from the top management, without this, the business model will not success (Amit and Zott, 2012). Dell has emerged as one of the leading players in the PC industry through its direct selling model. The company adopts the low-cost strategy idea to analyses its current business model and delivers the computer at low prices to capture the major market share. Moreover, Dell implements the single innovation in their products and services like it sells the PCs from stores to online. This innovative concept is fruitful for the company to sell their products online to their targeted customers and gives value added services to the customers while ordering online from the website. It includes real-time tracking, purchase history and paperless purchasing. Dell follows the ideation stage, where it sells the PCs online and changes its selling concept to satisfy its customers (Casadesus?Masanell and Zhu, 2013). Thirdly, Dell effectively checks the consistency of the business model with organisational resources. CAGE Framework to Evaluate International Trade Opportunities CAGE framework is developed by the Pankaj Ghemawat who depicts that how companies or organisations can use effectively to develop successful international trade opportunities. According to the visual material of the CAGE framework, it explains that how two different countries trade with each other effectively while considering some important factors i.e. Cultural, Administrative, Geographical Distance and economic factors. It is identified that these factors play an important role in increasing or decreasing of merchandise trade at international levels (Ghemawat and Siegel, 2011). The cultural factors represent the differences exists between the cultures of two countries that impacts the product preferences. For e.g. North industry Fast food industry demand is higher in Germany due to the modern standard of living. On the basis of CAGE matrix, it indicates that if the company can trade with any country while considering the CAGE matrix the country can trade 10-15 times with each othe r. The Canada and Mexico analyse the CAGE framework and trade with the United States that is a tenth largest economy in the world. The example of Googles business difficulties with China and Russia due to some factors, the company analysed through the CAGE distance framework and finds the following barriers and difficulties (Canals, 2012). 1) Cultural Distance: The company biggest problems in Russia seem to have been related to the language problem. The difficult language is a barrier to diversifying their operations in core areas. 2) Administrative distance: The strong government policies and censorship depict the difference between the Chinese administrative and policy framework which is different from the home country i.e. United States. 3) Geographic Distance: Googles product is digitised and it is difficult for the company to set up their offices in Russia due to distance. 4) Economic Distance: The economy and payment systems are not good in Russia is another problem for the company to compete with its local rivals (Peh and Low, 2013). References Amit, R. and Zott, C., (2012) Creating value through business model innovation.MIT Sloan Management Review,53(3), p.41. Bryson, J.M., (2011)Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement(Vol. 1). John Wiley Sons. Canals, J., (2012)Leadership Development for a Global World: The Role of Companies and Business Schools.UK: Palgrave Macmillan. Casadesus?Masanell, R. and Zhu, F., (2013) Business model innovation and competitive imitation: The case of sponsor?based business models.Strategic management journal,34(4), pp.464-482. Dixit, A.K. and Skeath, S., (2015)Games of Strategy: Fourth International Student Edition. WW Norton Company. Ghemawat, P. and Siegel, J.I., (2011) Cases about redefining global strategy. Massa, L. and Tucci, C.L., (2013) Business model innovation.The Oxford Handbook of Innovafion Management, pp.420-441. Peh, L.C. and Low, S.P., (2013)Organization design for international construction business.Germany: Springer Science Business Media. Zahra, S.A. and Nambisan, S., (2012) Entrepreneurship and strategic thinking in business ecosystems.Business horizons,55(3), pp.219-229