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134 - Prajapati Ayush - Assignment 2

IKEA is a Swedish furniture company that operates stores in 43 countries. It aims to offer well-designed home goods at low prices so they are accessible to many customers. IKEA's mission is to offer good quality products at low prices. Its vision is to improve everyday life for people worldwide. A key part of IKEA's strategy is steady price reductions through eliminating unnecessary costs and investing savings back into the business to sustain low prices long-term.

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Abdullah Shoaib
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83 views3 pages

134 - Prajapati Ayush - Assignment 2

IKEA is a Swedish furniture company that operates stores in 43 countries. It aims to offer well-designed home goods at low prices so they are accessible to many customers. IKEA's mission is to offer good quality products at low prices. Its vision is to improve everyday life for people worldwide. A key part of IKEA's strategy is steady price reductions through eliminating unnecessary costs and investing savings back into the business to sustain low prices long-term.

Uploaded by

Abdullah Shoaib
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BRCM COLLEGE OF BUSINESS ADMINISTRATION

ASSIGNMENT -2
(2020-21)
ELEMENTS OF STRATEGIC MANAGEMENT -I
TY BBA (SEM-5)

NAME : PRAJAPATI AYUSH

ROLL NO. : 134

SUBMITTED TO : DR. PRATIK PATEL

SUBMITTED ON : 31/10/2020

SIGNATURE :
IKEA is a Swedish company that was set up in 1943 as a furniture-making company. The IKEA
Group has operations in 43 countries. Total of 315 stores in 27 countries. In 2014, the IKEA
Group stores had 716 million visits all over world. IKEA’s one and only showroom in India is
located in Hyderabad. It’s aim is to open 15 stores in India by 2025. The IKEA range consists of
approximately 9,500 products. The level of customer loyalty that IKEA has built over the years is
outstanding.

IKEA's business strategy is “to offer a wide range of well-designed, functional home furnishing
products at prices so low that as many people as possible will be able to afford them”.

Let’s talk about IKEA’s Business, Vision and Misson:-

1. IKEA’s Business: IKEA is an international home product company that designs and sells ready
to assemble furniture appliances and home accessories

2. IKEA’s Mission: To offer a wide range of home furnishing items of good design and function,
excellent quality and durability, at prices so low that the majority of people can afford to buy
them.

3. IKEA’s Vision: IKEA’s vision is to create a better everyday life for the many people.

Now let’s talk about the strategy, IKEA had used the steady reduction of product prices as a
strategic tool for growth sustenance. This approach became a style, an art that made IKEA’s
growth enviable. The company seeks full knowledge of production costs before taking up any
new project. Low product prices and high product quality became possible because of low
production costs.

Consumers were able to get the same high-quality products at lower prices. How did this
become possible? The company researched, identified, and eliminated all unnecessary
elements that add to production costs.

Next, They invested 100% of its savings in the development of its core business areas. This
investment helped in ensuring the sustenance of these lower product prices.

With the economic downturn, the company maintained its people-focused culture and the
drive to make its products affordable to most of its customers. It did not cut down on capital
expenditure through employee disengagement.

It rather eliminated all negative elements that add to production costs, and this helped boost
the price reduction strategy.

To make the price- reduction strategy sustainable, IKEA had to come up with a four-way plan;
 The first plan was to keep its custom-built properties as well as to develop new retail
stores.

 The second plan entails an increase in the volume of production. This ensured a
reduction in production cost and cost of raw materials.

Next, the company developed a more efficient supply chain protocol.

Finally, more employees assumed decision-making responsibilities for better and prompt
resolution of customer issues. Because of the already established frugal culture in the company,
both current and new employees had no difficulty in adapting to the growth strategy.

Most customers will not buy products they do not need even at low prices. The company
interacts with its customers to know their preferences.

I would like to conclude that, IKEA believes that low prices are possible even with high product
quality. This combination became IKEA’s veritable strategy and drive for its sustainable business
growth.

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