COST MANAGEMENT

EXCELLENT CLASS PROGRAM 2015

FACULTY OF ECONOMICS
TRISAKTI UNIVERSITY

PBL REPORT TASK 2

“SWOT STRATEGY OF IKEA AND EXERCISE 2-28”

CREATED BY :
ANGELA AVITA SUGIARTO (023151176)
DYAH EKA PRATIWI (023151223)
HANI PERMATASARI (023151245)
RENA NUR PADILLAH (023151252)
AULIA ULFAH RACHMAN (023151254)
Task 2 : SWOT Strategy of IKEA

SWOT analysis is a systematic procedure for identifying a firm’s critical success factors:
Its internal strengths and weaknesses and its external opportunities and threats. SWOT can help
company to explain how to implement a competitive strategy by using strength – weaknesses –
opportunities – threats (SWOT) analysis.

SWOT strategy of IKEA

IKEA is a brand known for its quality and affordable furniture. it sells an affordable
range of home furnishing products. affordable pricing and good quality have resulted in high
popularity and great sales for the brand. IKEA has achieved this by combining several factors.
It provides utility, quality, design, and value in its products. Sustainability also fuatures
importantly on its agenda. From design, packaging and sourcing to distribution, its focus has
remained on affordability and quality in all its products.

 Strengths:
1. Worldwide presence
2. Excellent store design
3. Market leadership
4. IKEA has is its clear vision, which is to add value to its customers irrespective of the
market conditions.
5. Ikea’s biggest strength lies in the kind of product it manufactures and designs. Its DIY
kind of products are pretty famous among customers and that makes them a primary
choice for many of them.

 Weaknesses :
1. IKEA operates in multiple countries around the world, it is a high scale and a large size
business meaning that it is difficult to control standards across locations.
2. There are environmental concerns about IKEA’s operations and the company faces
challenges in communicating and articulating its environmental policies to its
customers, shareholders, and other stakeholders.
3. Damaged reputation due to a series of incidents
4. Lack of differentiation of IKEA products and services
  Opportunities :
1. Strategic partnerships with other brands
2. Adding premium quality products
3. Strengthening cost leadership competitive advantage through technological innovation

 Threats :
1. Weak position in Asian markets
2. Demographic design concept not a major source of competitive advantage
3. Increase in demand of premium products
4. Increase competitive pressure from the rival brands
5. increasing cost of raw materials

2-28 Strategy
1. Determine Joel’s competitive strategy (cost leadership or differentiation) and use this
strategy to analyze the choice Joel faces.
Joel’s competitive strategy is differentiation. He sells to high end retail clothing
stores and not to department stores so that his brand can be unique. The dilemma he
faces is that he would have to change his strategy to cost leadership because he will not
be able to produce the amount the department stores wants unless he mass produces
and if he finds a way to cut costs on his products. He can increase his profit if he takes
the offer of the department store and he will have a guaranteed high income for the next
2 years. If he leaves the retail clothing store he would most likely lose the title of being
unique. Either way he goes he will be at a loss. If he stays with the retail clothing stores,
than he remains unique. If he chooses the department stores he has to mass produce and
he loses the chance of the title of being unique.

2. Explain two means Joel can use to implement his strategy.

Here are a few ways that Joel can implement his new strategy:
• Have tight cost control
• Have frequent, detailed control reports
• Have structured organization and policies
• Have incentives based on meeting strict quantitative targets.