Ikea Analysis

2. INTRODUCTION

As the management consultant group of IKEA, we are requested to perform a systematic analysis of IKEA China’s business situation for the CEO of IKEA. This report covers the competitive advantages & disadvantages and core competencies of IKEA. At the same time, we identify the challenges IKEA will face while expanding in China. From our findings, we have come up with a clear action agenda and developed relevance information for sustainable business development.

Up till the end of 2013; there are 16 stores in China (Appendix a), they are located in the 4 municipalities (Beijing, Tianjin, Shanghai, Chongqing) and the other 8 stores are located within the 23 provinces. According to BrandFinance Global 500(100) in 2013, brand value of IKEA’s group was USD16,570 Million – located at the 8th position (Appendix a). The main question that would be addressed in this business evaluation report will be “How IKEA can further extend their business in China in order to contribute to the growth of IKEA group?”

3. IKEA’s COMPETITIVE ADVANTAGES

This section critically lists out the internal and external competitive advantages and disadvantages for IKEA to extend their market in China (Appendix c and d).

The core value of IKEA lies within products (brand equity) and vision. This helped IKEA to be accepted by countries around the globe. IKEA’s unique green business model and eco-friendly products are also aligned with requirements from many countries that exist because of globalization. In modern China, young and middle class consumers are looking for high quality products that are environmental friendly. IKEA’s products are able to meet their needs. However, the philosophy of producing high standard products with a low cost may be risky in the long term development. IKEA needs to limit the cost for its whole supply chain which may not be easy to achieve.

China has an emerging market with great development potential. Unfortunately, their...