lii order to hold a permanent and effecti e stature in the competitii e market. a company has to be able to gcncratc fcw’ strategies to continue its further business transactions. Conccming this agenda to secure a market value in the international market. competitive ad outages are the factors thnt enables a specific compare to bc able to pcrform ii’ith its competitors in the business. Thcsc adi’aniagcs comprises of skillcd and cheap labour. improi’iscd marketing strategies and at ailabilitj of natural resources etc The coiiibined result of implementation of market strategies and company policics cnhances thc arca of business »’hilc improi’ing the capacity to coinpctc
» ith the present competitors in the market.
BacLground of the Company
The IKEA is as foundcd in 1943 to salc mainly ordcrs scnt bi mails bj Ingi’ar Kainprad. Latcr after fcis i cars it came into business of supplying hoinc appliances and furniture This compare is a multinational group that deals in sc eral pan of the » orld (ikea.in. 201S). The company has startcd its busincss on the basis of thcir thought that hoincs are thc most important and rcliablc aspect in people’s life They aim to decorate homes ii ith their unique designs of appliances and furnitures. The company is not restrictcd i 'ithin the short boundan of anj country’ It has cxpandcd its branchcs from South Korea to India With the positii’c attitude ton ards business and implication of effective competitive strategies. the company has been able to conduct its business smoothly
The key element to run a business successfully is to apply strategies to enhance the area of business. Talking about the effectii e business strategies of IKEA group, the hat e chosen the three strategics of Ansoff Matrix. S Generic Sfratefff! of Porter and International Strotefff!.
Considering the strategies of marketing IKEA follows Ansoff Matrix, Thc baslc 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 ef al. 2016, p.5691). It suggests the plan to imply the market pOliGlgS tO gflllB¥ate 8 demBRd 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 out do 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 has been in the area of focus for ZKEd. 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.
Porter’s 3 Generic Strategy
Anothcr important stratcgj npplicd b; the companies to reducc competition in the innrkct is P‹irtc•r’s 3 Gcnc•ric .Srrarcgy In order to defend the competition in the iiiarket. the company IKEA also follow s this strategy ii’hilc conccntrating on the focus of their business. Differentiation of the strategies compared to thc strategies of thc other companies and ‹n erall cost leadership (Por tci and Magictia. 2t) 14. p o7) As the company produces home appliances and fiimitiirc its central focus lics on thc affordability of the products ii hilc balancing it ii’ith thc custoincr s need. In a narrow market, it is important to analj se tlic importance of focusing on the product i alue On the other hand, in a broad market » hcre a unique competency is requircd, thc company chooscs to differcntiatc its stratcgics from thc othcrs. It has hclpcd thc compare IKEA to acquire an unique place in the market. While talking about the lot cost competent markct. IKEA chooscs to control thcir oi’crall cost leadership.
5. International Stratc
According to Badn c/ rr/. (2t) 1 h. p.71)()). the business strategies are the master kejs to conduct a business successfully. Talking about the Intc•rnational .Str‹Hc•gy, it is to proc ide a guide for the busincss transactions that arc going to help the company ii hilc acccssing thc business in an international field. The major philosophies based on this strategy are of three tj pcs, firstly resource-baseJ that deals with the spccific business of a company The second philosophy is in Justr,y-based that dei’clops thc concepts of strategics dctermincd by a spccific compare Thc last one is based on the instituti‹›n that argues on the supplementation of the previous tit o stratcgies on the basis of the social diffcrences.
Concerning the market policy of IKEA, the main focus of the company lies on Ion ering the cost of their products. The company believes by lot ering the cost. it i ould be easy to reach the basic necds of pcoplc to promote the i’aliie of their goods (Daiinfcldi e/ ri/ 2tl 17. p 321). The initial step of lo» ering the prices i as adapted by the company i lien they realised it is cheaper to outsourcc compared to implementation of labour in thc county'. With this thc company has applicd its stratcgy in accordance ii ith the supplier netii’ork and lowcring the cost
Comyctiti›”c anal¿”sis of thc strategies comj›arc‹l to othcr strategies
Thc aboi’c-mentioned strategies hai’c hclpcd ?ZfM to cxpand the arca of its busincss While implementing the three strategies into the field of business. the coinpanr has to go through sci’cral iss@s likc understanding the customer dcmand and markct penctration. According to thc Ansoff Matrix. thc four major factors that arc to be mnintaincd to lcad the market succcssfulli are the di ersificatioii of the product, de e lopment of the market and the product and market pcnctration Thc combined effort of these four factors arc to bc follo»’cd to kccp thc demand of the product in the market (Gabric lsson ci il 2t) l C. p.1 4‘9). The Intc•rnationaI Strategy for competitii c marketing has also created somc hurdles for the company as it chooses to conduct thc business through opcning a ii hollj oii’ncd siibsidian’. It cnablcs thc risk of h;n’ing problems to accommodatc i 'itli the economic and socio-cultural aspccts of the foreign country (Mcndibil e/ r/. 2tJ 1 I›. p 111). Thc correct implcmcntation of thcsc coinpctitii’c inarkct stratcgics ii’ould hai’c ii orkcd as an instrumcnt of loci ering thc cost and rcducing competition in thc inarkct On the contrarr. a tendency among tlic consumers to usc foreign goods has lielpcd the company to promotc its goods The homc appliances and furnitures arc dcsigncd to incur an tiniqucncss in the market Hot ct er. sometimes this ideology of the diversification appears as a barrier as the scope of reliability is put to a Ion er le eI. Along ii ith these stratcgies IKEA has strate gically connccted thc rational bcncfits of thc products ii’ith thc cmotional bcncfits. that has hit thc dcinand of thcir products in the market This strategy has ii orLed more effectii ely compared to other strategies choscn bi thc company. /Refer Io the Appenilix I J.
Challenges faceil for the implication of the strategies
There are set eral tj pes of ents mode to establish a business in the international market (Madscn and Walker. 2() 15. p.oo) These process of marketing comprises of their on n features to conduct the business
As the company has chosen to follow the New wholly owned subsidiary which is knosn as Greenfield Vvnturv, it has to undergo some challenges. It is the process of entering a new international market with the farm and business sector of own without the cooperation of other company. Although there is a no sharing of profits and assets, there remains some risks as well. In this process of entering the market, ZAEd bears a high risk as they has to develop a foreign presence s ithout any support from other existing companies. The issues of economic and culture sovereignty of the host country remain along with a risk of nationalisation (Rugman and Verbeke. 2017. p.89).
In order to conduct a successful business in India, ZRW has invested a large amount to open stores in India.
Advantagcs and Disadvantages of Ncx x holly o»'ned subsidiary (Source: Gamble and Thompson 2(I1 4 p.72)
The coinpan› IKEA proc ides the home appliances and furniture in se eral countries of the u orld including India. Concerning the demand of Indian market. the company focuses on lou’ering the cost to create a high demand in the market The main problems that the company is facing to conduct the business m India is the at ailability of the stores and the cost of it (Areal ct o/. 201fi, p.119). Along u ith this comes the problem of productii’ity due to the technological issues. Besides. there are the issues of self-see ice, supply chain issues and negotiations of i endors
In this modern competitii’e market. there are sei’erals companies that are prompt to act according to the demands of the customers. Keeping that in mind. the company IKEA should improi’e its competitii e strategy plans to cope up u'itIi the current market. In order to improi e the current status in the market. the best applied strategy is of Porter ’s €renerics as it proi’ides the correct path the develop a high market value u hile reducing coinpetitix eness Concerning the current status of the company, they should conduct more charity and ct ents to dev elop public relations to get accoinodated u ith the culture of India In order to attract more consumers to their shop the company should establish stores near the city or u'itliin the city, as it mould allou the people to i isit the stores. Another important measure that can be applied to the competitii e strategies of the aforesaid company . is to keep the prices of the products low’ so that it u ould be affordable for the people of the specific progressing country to buy. With the application of these fen strate s es along u ith their coinpetitii’e strategies. the company » ould be able to conduct its business smoothly in the foreign market.
The various marketing strategies are used as the tools to manage the business of a company In order to maintain that. it is important to ei aluate the programmes of the studies to enhance the scope of busincss in thc compctitii’c market. In this modcrn era of compctition. it is must to gain competitii e add outages to reduce competition in a market that is highly saturated » ith the altcmntix’cs for thc customers Talking about dccorating one’s home. pcoplc desires to choosc thc best but is only ablc to choose thc affordablc Thcrcforc. thc motii’c of choosing thc cheap and best » orks in the consumers’ minds to satisfy the demand of the goods » hile implementing the coinpctitii’c stratcgics
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