Essay Example on IKEA's Strategic Triumph: A Deep Dive into Innovative Business Strategies

Published: 2024-01-20
Essay Example on IKEA's Strategic Triumph: A Deep Dive into Innovative Business Strategies
Type of paper:  Essay
Categories:  Company Strategy Business
Pages: 6
Wordcount: 1619 words
14 min read

All companies use effective, unmatched, and efficient business strategies to maintain an edge in the current competitive market. IKEA’s success and dominance in the market have been spearheaded by factors such as a positive brand image, operational efficiency, an appropriate supplier network, and a well-organized leadership system. Due to this, the company has grown into one of the most notable world companies. The leading cause of success has been its ability to prioritize customers' preferences rather than focusing on other developments. There have, however, been divergent views on IKEA’s single and overall strategic initiatives. Some competitors have claimed that the company has been applying inappropriate ways to gain a competitive advantage over them. On the contrary, loyal customers to the company have been in full support of the company’s initiatives. Despite this controversy, a deep insight into the issue reveals that applications of appropriate strategies have mainly attributed to the company’s success.

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Since the target market of the company has been the millennial generation, it develops and designs products concerning the preferences of the modern customer. However, the leading cause of disparity between IKEA and its competitors has been its pricing and marketing strategies (Kim & Lee, 2020). Other than the product’s design, the pricing strategy has been one of the foundations of business strategies. In comparison to the competitors, the company quotes low prices on its products. This strategy has enabled IKEA to make more sales than the competitors since most customers prefer affordable prices. Selling their products more cheaply, however, does not imply that they are of low quality. Their products are of high quality, but they prefer to lower the prices to capture their primary consumers which comprise middle-class people. The company’s primary consideration when formulating this policy was the fact that the majority of the consumers of their products belonged to that group. Not only does this pricing strategy attract more consumers, but it also ensures that the company’s brand is unique.

Another key reason that has enabled IKEA to flourish is the creation of a positive brand image with customers. This has been achieved because the company’s main objective has been customer satisfaction. Due to this action, the company has been ranked as one of the best globally in the furnishing market category. To maintain this status, the company has to use innovative methods of operations. Because technological advancement has been on the rise in this century, being innovative in business has been inevitable. As a result of this, IKEA has ensured categories such as marketing, production, and sales are using up-to-date methods. For instance, the company’s more significant percentage of sales is done online (Mochon et al., 2012). Not only does this improve the image of the company but also increases its revenue due to the widened market. This action dramatically outshines the rival companies and makes consumers render it more reliable.

Although the company’s product prices are low, its profits are considerably high. Its supply chain and the company’s operating model are the key to the company’s profit sustainability (Sarstedt et al., 2017). This, however, does not imply that the raw materials used in the company are of low quality. But to compensate for the low pricing, the company fetches the raw materials in bulk. In addition to that, it has developed appropriate cost-reduction measures in the supply chain. The inclusion of such factors in the innovative model already in existence has significantly contributed to the formation of a sustainable, highly efficient, and profitable business design. For the company to maintain a competitive edge in the market, ensuring that the business is cost-efficient is crucial. As a result of the efficiency, IKEA products have high demand globally due to their affordability. In addition to that, the company also saves money in the logistics category.

Another reason that gives IKEA a competitive edge is its marketing strategy. It applies innovative methods in its marketing activities, just like in manufacturing and supply chain. It blends advertising, branding, and digital marketing to attain formidable results. Besides, IKEA uses social media and promotional catalogs in its advertising. Through the use of social media, the company has been able to engage customers more. This action creates the necessary bond between the company and its customers. Moreover, the company uses virtual and AI reality to enhance the customer relationship. This also exposes them to a different in-store encounter. The majority of companies do not incorporate such aspects in their businesses hence giving IKEA an advantage. Due to its ability to mix offline and online sales, the company has scaled to greater heights in terms of profitability. Besides, its website presents customization options for its customers a feature which has been implemented by very few businesses.

Since the initial step for a company is to establish an appropriate distribution and supply chain, IKEA formulated a reliable network in this section. Not only does an appropriate supply chain assist IKEA to gain a competitive edge, but it also aids it to be one of the most outstanding companies in the world. The primary function of the supply chain is to enable the company to present quality products in the market continuously. To achieve this, IKEA ensures that it maintains a cordial relationship with its suppliers. Since the company has approximately 1800 suppliers managing them can be a hectic task (Mura, 2011). This has resulted in the company establishing services offices whose prominent roles involve establishing and maintaining supplier relationships.

Another cause of the company’s dominance in the market has been its ability to get international recognition. This has been attributed to offline and online sales the company initiated. For instance, noticeable growth was witnessed in 2019 when 12 more stores were opened globally. Further affirmation is the ability of the company to get in touch with customers from 50 markets through e-commerce. Due to this growth, IKEA targets to have interacted with more than 3 billion people by 2025 (Hultman & Hertz, 2011). Being recognized internationally has enabled the target consumers to increase rapidly, consequently leading to an increase in revenue.

The products of IKEA are also designed uniquely. The customer preferences are mainly attributed to their design. Not only does the company have unique products, but it also provides a wide range of them from which the customer can choose. The company has approximately 9500 different products, a number that is continuously growing. In production, however, the company prioritizes the customer’s needs.

Except for the initiatives that give IKEA a competitive edge, the company introduced a sustainability strategy. The main function of the strategy was to ensure that the living standards of people were significantly improved. It involved preserving global resources by using renewable and recycled resources to reduce waste products (Lehner et al., 2020). However, during its implementation in the majority of countries, an innovative and sustainable design had to be used. Not only did the affordable products reach many consumers but also the stores in various locations were environmentally friendly. The implementation of this sustainability strategy gave IKEA a competitive edge since the company’s brand image was much improved (Fröding & Lawrence, 2017). Although the success of IKEA is mainly attributed to its sustainability strategy and the initiatives it incorporates, other factors also come into play. They include management practices and the company’s culture. The company dramatically recognizes creativity and focuses more on people. This philosophy is broadly supported by those in authority and all the employees. In comparison to other companies that afford to cater to the lavish lifestyles of their managers, IKEA managers live a low-profile life. The main objective of the philosophy is to improve the living standards of people and ensure that there is transparent communication in the company.

Due to the high increase in population globally, competition is inevitable. It is hence necessary for the existing companies to research the areas of improvement. In doing so, they should consider the customer’s preferences and the competitor’s methods of operations. IKEA's dominance in the market has hence been attributed to the application of appropriate strategic initiatives which have given it a competitive edge in the market. This has been achieved by a proper understanding of the target consumers, the production of quality products, and the proper delivery of the products. The use of technologically advanced methods in sales, marketing, and production has also impacted its success.


Fröding, K., & Lawrence, G. (2017). Sustainability at IKEA. Linnaeus Eco-Tech, 67.

Hultman, J., & Hertz, S. (2011). Exploring the dynamics of global sourcing development over time – the case of IKEA. International Journal Of Integrated Supply Management, 6(2), 109.

Kim, S., & Kim, J. (2016). Overseas Strategy of Global Furniture Retailer: The Case of ‘IKEA Korea’. International Business Review, 20(1), 199.

Kim, S., & Lee, S. (2020). Vying with Ikea: Hanssem’s Competitive Advantage at Marketing Frontier. Asia Marketing Journal, 22(2), 87-98.

Lehner, M., Mont, O., Mariani, G., & Mundaca, L. (2020). Circular Economy in Home Textiles: Motivations of IKEA Consumers in Sweden. Sustainability, 12(12), 5030.

Mochon, D., Norton, M., & Ariely, D. (2012). Bolstering and restoring feelings of competence via the IKEA effect. International Journal Of Research In Marketing, 29(4), 363-369.

Mura, M. (2011). Democratic Design—Ikea, Die Neue Sammlung. Design And Culture, 3(1), 103-105.

Sarstedt, M., Neubert, D., & Barth, K. (2017). The Ikea Effect. A Conceptual Replication. Journal of Marketing Behavior, 2(4), 307-312.

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