Question

Is strategic positioning of IKEA based on cost, value or both ? Why? Include examples in your explanation

Answer 1

Strategic Positioning of IKEA is based on cost as well as value both.

Because of its competition strategies, IKEA has been the market leader in the Swedish furniture industry. All aspects of the company are focused on the production of high quality furniture at low and affordable prices.

IKEA’s strategic capabilities are their strengths, such as their skilled human resources and their efficient value chain and distribution channels. The standisation of the production process in the manufacture of their furniture allows IKEA to increase its production output with increased accuracy and efficiency.

IKEA’s mission is to provide low-cost furniture, of high quality which would satisfy the needs and expectations of their customers. Their workforce is highly trained and empowered with the authority to make decision and to take responsibility for their decisions

For example, the furniture are easily made available packed in boxes by the company where the customer do not have to pay added costs to have the product delivered, they can self transport and assemble themselves.

IKEA provides a unique shopping experience space, children’s camp which no other competitor offers. Thus, it gains over the competitors also.

IKEA has a low-cost base and reinvests in low price and differentiation, simultaneously seeking differentiation and price lower than that of competitors as evidenced by added value, store design, durability and functionality of products at a low-price. IKEA therefore follows a hybrid strategy.