Question

Discuss : What are IKEA’s competitive priorities?

List up 2~3 competitive dimensions that you think they have chosen to compete on.

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Answer 1

Ikea’s competitive priority is producing quality products at a low cost. “Price with meaning”, this is Ikea’s company mantra that reflects the concept of how each product is done in the company. Ikea creates inexpensive products without making its customers feel cheap.

KEA starts the process by picking what the new product will cost. This will help to determine color, materials used, and design. Next they choose a manufacturer using their network of manufactures throughout the world. Then they design the product, keeping in mind efficiency, (packaging, shipping etc.).Every inch of the product is reviewed in order to maximize their ability to manufacture, ship and store the new product. Finally the product is shipped to the different distribution centres and in some cases straight to the stores. While shipping, IKEA’s key word is flat, from vacuum packing pillows to exclusively producing disassembled furniture, IKEA is committed to not shipping air.

Form, function, and quality are each interrelated from the perspective of IKEA. IKEA captures the value associated with form, function, and quality by focusing its promotion strategy on telling stories relevant to the consumers in each market. This process is possible because of the exhaustive data collection IKEA conducts on each market.

Competitive dimensions:

1. Price- It is the most important component of IKEA’s plans to create value. Putting price first ensures the products that the company designs are affordable for all.
2. Sustainability is also a key consideration in the company’s approach. IKEA’s famed flat-packs, slim rectangular boxes, allow the company to reduce shipping costs and the carbon footprint associated with transportation. In addition, IKEA operates 224 wind turbines and plans to derive all of its power from renewable sources by 2020.
3. Focus- This is the direction that IKEA takes in an attempt to narrow the competitive scope within the industry. Under the focus strategy, IKEA selects a group of segments or a segment in the industry and then tailors strategies to serve that market.