ASSIGNMENT

STRATEGIC OPERATIONS

Table of Contents
INTRODUCTION....................................................................................................................................................... 2
MARKET ANALYSIS AND PERFORMANCE PRIORITIES................................................................................................ 3
RESOURCE MANAGEMENT AND KEY DECISION AREAS............................................................................................. 3
S/L MATRIX ANALYSIS: STRATEGIC DECISIONS IN THE OPERATING SYSTEM..............................................................5
IKEA'S OPERATIONS STRATEGY................................................................................................................................ 6
BALANCING MARKET AND RESOURCES: RISK ASSESSMENT IN STRATEGY.................................................................7
REFERENCES............................................................................................................................................................ 8

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INTRODUCTION

IKEA, a well-known retailer, was established in 1943 by Ingvar Kamprad in Sweden and is well-
known for its creative and reasonably priced furniture and home accents. IKEA stands out for its
large stores, furniture that can be assembled by hand, and its distinctive self-service shopping
concept, all of which highlight the company's goal of improving everyday living for many people
(Kippenberger, 1997). This ground-breaking strategy has transformed the furniture retail scene
and democratized home furnishing.

IKEA's success depends on its cost-effective and customer-focused business practices. IKEA
keeps costs low while guaranteeing customer satisfaction through cleverly designing products
for mass production and optimizing its supply chain (Normann and Ramirez, 1993). Their
functional and aesthetically beautiful products are also made to be easily assembled and
transported, demonstrating a deep awareness of the needs of their customers.

With operations in over 50 nations, IKEA adeptly navigates the delicate balancing act between
maintaining its core principles and effectively catering to a wide range of global markets.
Alongside their growth, they are committed to environmental stewardship and community
engagement, as evidenced by their energy-efficient operations and sustainable sourcing.

Source: IKEA Stores' Global Presence

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Market Analysis and Performance Priorities

A combination of accessibility, affordable prices, and eye-catching design characterizes IKEA's

strategic positioning in the retail furniture market, drawing in a wide spectrum of consumers.
This approach goes beyond simple low-cost retailing and becomes part of IKEA's brand identity
as a supplier of high-quality, widely accessible furniture.

IKEA's design balances practical functionality with visual appeal. The company's design
philosophy incorporates functionality into every facet of its products, going beyond simple
aesthetic appeal. IKEA applies this concept to the way materials are used and the
manufacturing process, emphasizing economy and efficiency over product quality. Porter's
(1985) competitive strategy principles are in line with this strategic approach to design, which
prioritizes cost- effectiveness and functional aesthetics.

One reason for IKEA's success on a global scale is that it can easily adapt to different market
conditions. IKEA adapts its product offerings and store experiences to suit local cultural tastes
and living conditions, even though a core product range is standardized across all its
international stores. To make sure that IKEA's products are appealing to local customers, this
localization strategy, as noted by Hill (2009), entails thorough market research as well as
modifications to product lines and store layouts. As an illustration of the company's market-
sensitive strategy, IKEA may change furniture styles and sizes to better suit the smaller living
spaces that are frequently found in Asian cities.

IKEA's market strategy, taken as a whole, is a clever fusion of local responsiveness and global
efficiency. The business has established itself as a leader by deftly navigating the complexities of
the global furniture market and combining competitive pricing, eye-catching design, and
adaptability to the needs of the market. In addition to maintaining IKEA's competitive edge, this
approach establishes new standards for global retail strategy (Porter,1985).

Resource Management and Key Decision Areas

IKEA's remarkable success on a global scale in the furniture retail sector is primarily due to its
strategic decision-making and excellent resource management. The operational excellence of
the company is largely dependent on its comprehensive control over its supply chain, which
includes sourcing raw materials and managing manufacturing, distribution, and sales.

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Careful monitoring of each production step is essential to IKEA's supply chain management.
High- quality, reasonably priced, and ecologically friendly products are guaranteed by this. To
maintain competitive pricing, IKEA's close relationships with suppliers enable a steady and
dependable supply of materials. (Jonsson and Rudberg, 2013) state that one of the main
reasons IKEA can offer lower prices than its competitors is because of its extensive control over
production and supply chain logistics.

IKEA takes a creative and useful approach to product design. The company's designers prioritize
manufacturing, transportation, and assembly efficiency over aesthetics. 'Democratic Design' is a
design concept that incorporates affordability, environmental concerns, functionality,
durability, and aesthetics into all its products (Kapferer, 2012). IKEA's flat-pack furniture, which
is well- known for its affordable shipping, low environmental effect, and simplicity of assembly
for consumers, is a shining example of this concept.

In addition, IKEA's logistics administration is an efficient role model. The business uses cutting-
edge inventory control techniques to guarantee ideal stock levels and prevent stockouts or
overstocking. According to (Aggarwal and Vaidyanathan ,2015), the strategic placement of their
distribution centers facilitates the prompt and effective transportation of goods to retail
locations worldwide, thereby augmenting the efficacy of the supply chain.

SOURCE: IKEA's Key Resources and Decision Area

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S/L Matrix Analysis: Strategic Decisions in the Operating System

By analyzing the function and focus of operations, the Slack and Lewis Matrix provides a
framework for analyzing an organization's operational strategy. Understanding IKEA's
operational strategy, which is spread across several of the matrix's quadrants, requires an
understanding of this matrix (Slack, Lewis & Bates, 2010).

Internal Focus External Focus

Internal  Cost-effectiveness: Focus on  Customer Satisfaction:
Support internal efficiencies such as Prioritizing the customer
Quadrant cost control through strategic experience in all aspects of the
sourcing and manufacturing business.
processes.  Service Quality: High standard
 Product Quality: Assurance of customer service in stores
of quality in IKEA products, and online platforms.
ensuring they meet customer  Experience: Creating a unique
expectations and brand and memorable shopping
standards. experience through store
 Innovative Manufacturing: layout, product placement, and
Efficient production overall environment.
methods, including flat-pack
design to reduce shipping
and storage costs.
Internal  Creative Product Design:  Global Reach: Strategic
Driver Emphasis on designing planning and operations to
Quadrant products that are not only expand market presence
aesthetically pleasing but globally, adapting to various
also functional, durable, and market demands and cultural
affordable. preferences.
 Supply Chain Efficiency:  Environmental Sustainability:
Continual enhancement of Commitment to sustainability
the supply chain process, through responsible sourcing of
focusing on logistics, materials, reducing
inventory management, and environmental footprint, and
supplier relationships. offering sustainable product
options.

Key Insights:
 Internal Support Quadrant: IKEA focuses on maintaining high internal standards through
efficient operations, ensuring both affordability and quality.

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  Internal Driver Quadrant: The company drives innovation in product design and supply
chain management, aligning them with their business objectives.
 External Support Quadrant: IKEA places a high emphasis on customer satisfaction and
service quality, making shopping a pleasant and engaging experience.
 External Driver Quadrant: The company strategically adapts to global markets,
emphasizing sustainability and responding to diverse consumer needs.

IKEA's Operations Strategy

The multinational furniture retailer IKEA is a master at coordinating its operations strategy (OS),
effectively managing resources and responding to market demands. This tactic is all about
balancing the prudent use of resources with the development of customer-focused products.
A thorough analysis of IKEA's operational strategy demonstrates a fair emphasis on resource
management and market demands. On closer inspection, though, there seems to be a slight
leaning toward market orientation.

IKEA's market-driven approach is evident in multiple crucial domains

Customer-Focused Product Design: IKEA carefully crafts its product designs to meet customer
needs, guaranteeing both usability and visual appeal. Since IKEA customizes its products to fit
the unique tastes of consumers in different areas, this strategy aligns with the market-centric
principle(Kotler&Keller,2016).

Global Market Adaptation: IKEA's ability to adapt its goods and store designs to fit various
cultural contexts is indicative of its strong focus on the market. IKEA's strategy to match its
products with regional tastes and preferences is supported by extensive market research,
demonstrating the company's dedication to meeting a range of market demands (Hill, 2009).

Brand Identity and Positioning: With its reputation for stylish design and affordability, IKEA
demonstrates a thorough comprehension of contemporary consumer preferences. IKEA's
market-sensitive approach is evident in its strategic market positioning, which is a clear
response to changing consumer preferences (Porter, 1985).

IKEA places a strong emphasis on market orientation, but it also prioritizes resource
management. The resource-oriented strategy of the company is demonstrated by its effective
supply chain, emphasis on cost control, and sustainable sourcing practices. This dual focus
ensures a balanced and forward-looking operations strategy by highlighting IKEA's commitment
to sustainable and efficient resource utilization as well as its market responsiveness (Jonsson &
Rudberg, 2013; Aggarwal & Vaidyanathan, 2015).

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Balancing Market and Resources: Risk Assessment in Strategy

IKEA is a leader in the fiercely competitive furniture retail sector because of its operational
strategy, which combines excellent resource management with market responsiveness.

Market Orientation: A thorough grasp of customer needs is the cornerstone of IKEA's business
strategy. The business expertly creates products that appeal to consumer tastes and modifies
these designs to suit a range of regional markets. As a key component of their market-driven
strategy, IKEA's customer-centric approach demonstrates their dedication to matching their
products with what customers want (Hill, 2009).

Resource Management: IKEA excels in resource stewardship in addition to its market focus. The
organization prioritizes cost-effectiveness, efficient logistics, and sustainable material sourcing.
IKEA's market-oriented initiatives are carried out sustainably and effectively thanks to this
thorough resource management, which also upholds the company's dedication to
environmental stewardship and operational excellence (Jonsson & Rudberg, 2013; Aggarwal &
Vaidyanathan, 2015).

The strategy's risks are as follows:

Market Volatility: IKEA runs the risk of being negatively impacted by market trends, especially
when there are abrupt changes in consumer preferences or the state of the economy. Such
volatility may make it more difficult for IKEA to make quick adjustments (Porter, 1985).

Supply Chain Vulnerabilities: Supplier problems or logistical obstacles could cause disruptions
in IKEA's vast and complex supply chain. These could influence product availability and present
a serious risk to operations (Kotler & Keller, 2016).

Sustainability Balancing Act: It's difficult to uphold environmental commitments while

guaranteeing quality and affordability. IKEA's operational effectiveness and brand credibility may
suffer if these factors are not properly balanced (Larsson & Gadde, 2016).

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