Cutting Costs Strategically
February 12, 2025
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This article analyzes the strategy of the world’s leading furniture retailer, IKEA using the SWOT Methodology. The company was founded in 1943 and is known for its simple yet effective approach to retailing with the DIY or the Do It Yourself concept, which ensures that the company keeps costs to a minimum and passes on the value to the customers.
The products sold by IKEA are mostly ready to use and flat packed meaning that they can be assembled by the customers themselves. The company has a presence in the online world as well and the total sales from its online and offline businesses are more than a Billion Dollars per year. The key strategic driver of IKEA’s success is it’s no nonsense approach to retailing that has paid rich dividends for the company and its shareholders (literally and metaphorically).
The point to be noted here is that it is sometimes difficult to maintain quality in the context of increasing costs and the need to replicate standards across its locations worldwide.
IKEA is a well-known global trend and through its innovative business model and its focus on products, processes, and systems, it has managed to stay ahead of the competition in the furniture retailing business.
The company can diversify into other products and product lines as it can replicate its business model in other realms as well. To do this would require fresh thinking and a new approach to its strategy that would combine low cost leadership with additional drivers of success like scalability and focus on quality.
Finally, the company can enter the emerging markets where its products and its business model are likely to be met with success and the untapped customer base can be leveraged.
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