Ready-to-assemble Furniture and Cost Leadership Ikea
1. Explain, in detail, the aspects of IKEA strategy that make it a Hybrid strategy.
IKEA follows a combination of 2 generic strategies, making their strategy one that is considered a ‘hybrid’strategy.
Cost leadership –
• IKEA’s strategy is based on selling high-quality, Swedish designed, self-assembly furniture products at low price. The low price strategy seeks a achieve a lower price than competitors while maintaining similar perceived product and service benefits to those offered by its competitors.
• IKEA is able to costs low due to the following reasons as well – o Keeping a good relation with suppliers, enabling a good quality supply of products bought in bulk. o Flat packed furniture, reducing transportation and assembly costs. o Manufacturing usually takes place in developing countries to keep costs to a minimum.
• The company has been able to sell their products across Europe, achieving economies of scale.
Differentiation –
• The IKEA product range is modern and trendy and such that it appeals to people of all ages and is designed to cover all functions in a home.
• The products are practical and easy to assemble and use.
• The most important area of differentiation for IKEA is their concept of ‘one way’ layout which leads customers along the natural way of the store in order for them to be able to view it entirely.
Briefly we can conclude that a hybrid positioning is when the strategy of an enterprise is between a low price and differentiation strategy.
2. Why is this strategy difficult for competitors to imitate?
Ikeas strategy is difficult for competitors to imitate due to the following elements that are part of their business strategy –
• The ikea concept is based on offering a wide range of products, which fulfill various functions in a home/work setting and don’t require complicated or expensive delivery and assembly as well as are modern, easy to use and affordable.
• Ikea is focused on segmentation of its target customers,
IKEA follows a combination of 2 generic strategies, making their strategy one that is considered a ‘hybrid’strategy.
Cost leadership –
• IKEA’s strategy is based on selling high-quality, Swedish designed, self-assembly furniture products at low price. The low price strategy seeks a achieve a lower price than competitors while maintaining similar perceived product and service benefits to those offered by its competitors.
• IKEA is able to costs low due to the following reasons as well – o Keeping a good relation with suppliers, enabling a good quality supply of products bought in bulk. o Flat packed furniture, reducing transportation and assembly costs. o Manufacturing usually takes place in developing countries to keep costs to a minimum.
• The company has been able to sell their products across Europe, achieving economies of scale.
Differentiation –
• The IKEA product range is modern and trendy and such that it appeals to people of all ages and is designed to cover all functions in a home.
• The products are practical and easy to assemble and use.
• The most important area of differentiation for IKEA is their concept of ‘one way’ layout which leads customers along the natural way of the store in order for them to be able to view it entirely.
Briefly we can conclude that a hybrid positioning is when the strategy of an enterprise is between a low price and differentiation strategy.
2. Why is this strategy difficult for competitors to imitate?
Ikeas strategy is difficult for competitors to imitate due to the following elements that are part of their business strategy –
• The ikea concept is based on offering a wide range of products, which fulfill various functions in a home/work setting and don’t require complicated or expensive delivery and assembly as well as are modern, easy to use and affordable.
• Ikea is focused on segmentation of its target customers,