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The points of the Porter's Diamond are described as four broad attributes. And these attributes promote or impede the creation of competitive advantage. These attributes are: Factor conditions -- a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Demand conditions -- the nature of home demand for the industry's product or service. Relating and supporting industries -- the presence or absence in a nation of supplier industries and related industries those are internationally competitive.
Firm strategy, structure, and rivalry -- the conditions in the nation governing how companies are created, organized, and managed and the nature of domestic rivalry. National Competitive Advantage of IKEA IKEA Group, a Swedish company founded in 1943 with its headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and furniture. It is the world's largest furniture retailer, which specializes, in stylish but inexpensive Scandinavian designed furniture. At the end of 2002 (1 September 2001 - 31 August 2002), the IKEA Group of Companies had a total of 175 stores in 31 countries. In addition, there were 19 IKEA stores owned and run by franchisees, outside the IKEA Group, in 12 countries. During the IKEA financial year 2001 - 2002, 323 million people visited our IKEA stores around the world.
Factor Conditions of IKEA's National Competitive Advantage IKEA's Heritage -- -- the Swedish Root It's no accident that the IKEA logo is blue and yellow. These are the colours of the Swedish flag. In Sweden, nature and the home both play a big part in people's lives. In fact, one of the best ways to describe the Swedish home furnishing style is to describe nature -- full of light and fresh air, yet restrained and unpretentious. In the late 1800 s, the artists Carl and Karin Larsson combined classical influences with warmer Swedish folk styles. They created a model of Swedish home furnishing design that today enjoys world-wide renown.
In the 1950 s the styles of modernism and functionalism developed at the same time as Sweden established a society founded on social equality. The IKEA product range -- modern but not trendy, functional yet attractive, human-centred and child-friendly -- carries on these various Swedish home furnishing traditions. Many people associate Sweden with a fresh, healthy way of life. This Swedish lifestyle is reflected in the IKEA product range.
The freshness of the open air is reflected in the colours and materials used and the sense of space they create: blond woods, natural textiles and untreated surfaces. In a climate that is cold and dark for much of the year, these light, bright living spaces create the sensation of summer sunshine indoors all year round. The IKEA Concept, like its founder, was born in Poland. This is a part of southern Sweden where the soil is thin and poor. The people are famous for working hard, living on small means and using their heads to make the best possible use of the limited resources they have. This way of doing things is at the heart of the IKEA approach to keeping prices low.
But quality is not compromised for the sake of cost. Sweden has an international reputation for safety and quality you can rely on, and IKEA retailers take pride in offering the right quality in all situations. IKEA was founded when Sweden was fast becoming an example of the caring society, where rich and poor alike were well looked after. This is also a theme that fits well with the IKEA vision. In order to give the many people a better everyday life, IKEA asks the customer to work as a partner.
The product range is child-friendly and covers the needs of the whole family, young and old. So together we can create a better everyday life for everyone. Demand Conditions of IKEA's National Competitive Advantage Figures of IKEA Worldwide turnover for all IKEA stores The turnover for the financial year 2002 (1 September 2001 - 31 August 2002) was 12 billion Euro (sales tax not included). turnover per region Middle East, Australia, Asia 4 % North America 19 % Europe 77 % purchasing per region Asia 30 % North America 4 % Europe 66 % co-workers per region Middle East, Australia, Asia 3 500 North America 10 000 Europe 62 000 IKEA employs a total of 75 500 co-workers. co- workers per function Range, purchasing / trading , wholesale and others: 8 400 The Swedwood industrial group: 9 600 Retail: 57 500 top five sales countries Germany 20 %United Kingdom 13 %USA 12 %France 9 %Sweden 8 % top five purchasing countries China 15 %Sweden 12 %Poland 10 %Germany 6 %Italy 6 % According to the chart, we can see the turnover of IKEA mainly come from Europe market. The demand is still high in Sweden where IKEA original comes from.
The Sweden market still has high sales (8 %) and high purchasing (12 %). Relating and Supporting Industries of IKEA's National Competitive Advantage IKEA Supply Net Worldwide In general, IKEA does not manufacture its own products, but works through a complex network of suppliers around the world. However, in the past few years, IKEA has acquired a number of its own factories, some of which function as training units and set standards for other suppliers for production economy, quality, and environmental awareness. To secure supplies and help suppliers develop, IKEA has launched partnerships as joint owners or financiers in a number of countries including Poland, Slovakia, Russia, Romania, and China... In addition to working with around 1, 800 different suppliers across the world, IKEA produces many of its own products through sawmills and factories in the IKEA industrial group, Swedwood.
Swedwood also has a duty to transfer knowledge to other suppliers, for example by educating them in issues such as efficiency, quality and environmental work. Swedwood has 35 industrial units in 11 countries. Purchasing IKEA has 42 trading service offices (TSO's) in 33 countries. Proximity to their suppliers (1, 800 of them in 55 countries) is the key to rational, long-term co-operation.
That's why TSO co-workers visit suppliers regularly to monitor production, test new ideas, negotiate prices and carry out quality audits and inspections. TSO staff are also responsible for the important tasks of developing and checking working and social conditions, and environmental work among IKEA suppliers. Distribution The route from supplier to customer must be as direct, cost-effective and environmentally friendly as possible. Flat packs are an important aspect of this work: eliminating wasted space means we can transport and store goods more efficiently. Since efficient distribution plays a key role in the work of creating the low price, goods routing and logistics are a focus for constant development.
Now 25 regional distribution centers in 14 countries are responsible for supplying goods to IKEA stores Firm Strategy, Structure, and Rivalry of IKEA's National Competitive Advantage The Business Idea of IKEA The IKEA business idea is to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them. And still have money left! The company targets the customer who is looking for value and is willing to do a little bit of work serving themselves, transporting the items home and assembling the furniture for a better price. The typical Ikea customer is young low to middle income family. The Competition Advantage Strategy of Ikea's product IKEA's success in the retail industry can be attributed to its vast experience in the retail market, product differentiation, and cost leadership. Over all IKEA is doing differentiation and cost leadership.
Differentiated because their products are different compared to the conventional ones already in the market. They defy the norms in terms of furniture style. They go with furniture with simple design. And they are a cost leader in terms of the price of their products are cheaper compared to other retailers.
It is also shown by their company being cost conscious in everything that they do. IKEA Product Differentiation -- -- A Wide Product Range The IKEA product range is wide and versatile in several ways. First, it's versatile in function. Because IKRA think customers shouldn't have to run from one small specialty shop to another to furnish their home, IKEA gather plants, living room furnishings, toys, frying pans, whole kitchens - i.
e. , everything which in a functional way helps to build a home - in one place, at IKEA stores. Second, it's wide in style. The romantic at heart will find choices just as many as the minimalist at IKEA. But there is one thing IKEA don't have, and that is, the far-out or the over-decorated. They only have what helps build a home that has room for good living. Third, by being coordinated, the range is wide in function and style at the same time.
No matter which style you prefer, there's an armchair that goes with the bookcase that goes with the new extending table that goes with the armchair. So their range is wide in a variety of ways. Cost Leadership -- -- Low Prices Strategy A wide range with good form and function is only half the story. Affordability has a part to play - the largest part.
A wide range with good form and function is only half the story. Affordability has a...
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Research essay sample on Swedish Furniture Giant Ikea Case Study
