Strategic Analysis of IKEA

Importance of strategies

As per Govindarajan and Gupta (2008), global strategies provide direction to the organization towards future challenges. The major benefit of global strategy is in a way that it may be more suitable in those organizations where it is very difficult to reduce cost but pressure for local responsiveness is less. Therefore a standardized product is manufactured and sale out worldwide. Global strategy organizes and co-ordinates product, price and placement strategies across international markets and locations, firms that are utilizing global strategies are pretty centralized and integrated with the group stakes and strategies.

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The major reason of using global strategies is that they help to increase and foster economic independence among national markets and multinational enterprise is a key driver of globalization as well. For the purpose of assessing whether these organizations are implementing global level operations, it is possible in a case if firms are global in their real market penetration level across globe. By getting the date of 500 MNEs, it can be stated that some firms are successfully global but most of the firms are not because their operations are based on breadth and depth of market coverage (Rugman & Verbeke 2004).

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Global strategy:

Global strategy means there is only strategy applied on all the branches of the world by a group of companies regardless of any socio-cultural differences. For example, IKEA will be applying same pricing strategies for every country for the same product. Some major characteristics of global strategies are:

  • Every product is similar in all countries
  • Low level of centralized decision making authority at local country levels.
  • This strategy is only effective in case of less differences in countries.
  • It provides benefits such as low cost, standard activities, and quick product development (Porter 1986).

IKEA Global strategy gives results in terms of:

  • Authentic distribution network.
  • One mission statement that was followed closely in all countries for each line of business.
  • Strong financial control.
  • High level of practical research and development.
  • Quick marketability and quality maintenance, as the intended market is global instead of individual.

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