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BUSINESS MODEL AND COMPETITIVE STRATEGY

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THE BUSINESS MODEL AND COMPETITIVE STRATEGY OF IKEA IN INDIA

Introduction 

In order to hold a permanent and effective stature in the competitive market, a company has to be able to generate few strategies to continue its further business transactions. Concerning this agenda to secure a market value in the international market, competitive advantages are the factors that enable a specific company to be able to perform with its competitors in the business. These advantages comprise of skilled and cheap labour, improvised marketing strategies and availability of natural resources etc. The combined result of the implementation of market strategies and company policies enhances the area of business while improving the capacity to compete with the present competitors in the market.

Background of the Company

The IKEA was founded in 1943 to sale mainly orders sent by mails by Ingvar Kamprad. Later, it came into the business of supplying home appliances and furniture. This company is a multinational group that deals in several parts of the world (ikea.in, 2018). The company has started its business based on their thought that homes are the most important and reliable aspect of people's life. They aim to decorate homes with their unique designs of appliances and furniture. The company is not restricted within the short boundary of any country. It has expanded its branches from South Korea to India. With the positive attitude towards business and implication of effective competitive strategies, the company has been able to conduct its business smoothly.

Applied Strategies

The key element to run a business successfully is to apply strategies to enhance the area of business. Talking about the effective business strategies of IKEA group, they have chosen the three strategies of Ansoff Matrix, 3 Generic Strategy of Porter and International Strategy. The strategies that are chosen as the competitive market strategies are discussed below based on market demand and the value of the product.

1. Ansoff Matrix

Considering the strategies of marketing IKEA follows Ansoff Matrix. The basic concept of this marketing system is to evaluate the new market and the existing market while applying market penetration, development of product and the market and diversification (Ghauri et al. 2016, p.5691). It suggests the plan to imply the market policies to generate a demand in the present market as well as in the existing market. The multinational company IKEA follows this policy to enhance the value of their product. This planning tool guides the senior managers and officials of the company to assume the future growth of the company in the market.

This competitive strategy has helped the company to outdo its rivals in a very effective way. With the unique plan to expand the area of business in the present competitive market, the company has to develop its technological advancements to match the required policies to increase the market demand. Innovation or diversification is one of the key elements that have been in the area of focus for IKEA. Besides, the company also focuses on developing the new market and the new product after evaluating the demands of the consumers. This helps the company to expand their business in the international platforms.

2. Porter’s 3 Generic Strategy

Another important strategy applied by the companies to reduce competition in the market is Porter’s 3 Generic Strategy (Porter and Magretta, 2014, p.37).

In order to defend the competition in the market, the company IKEA also follows this strategy while concentrating on the focus of their business, Differentiation of the strategies compared to the strategies of the other companies and overall cost leadership.

As the company produces home appliances and furniture, its central focus lies on the affordability of the products while balancing it with the customer’s need.  In a narrow market, it is important to analyse the importance of focusing on the product value. On the other hand, in a broad market where a unique competency is required, the company chooses to differentiate its strategies from the others. It has helped the company IKEA to acquire a unique place in the market. While talking about the low-cost competent market, IKEA chooses to control their overall cost leadership.

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