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Business Analysis and Functional Areas of IKEA

University: Regent College London

  • Unit No: 5
  • Level: Post Graduate/University
  • Pages: 9 / Words 2331
  • Paper Type: Assignment
  • Course Code: MGT6206
  • Downloads: 20
Question :

This assessment will cover the following question:

1.  Elaborate the macro and the macro analysis of various functional areas of the organisationand also their functions and purpose.

Answer :
Organization Selected : IKEA

INTRODUCTION

The present report is in context to IKEA, a leading retail business in the UK that operates in different countries. There are various factors that affect an organization while operating its business functions in a market (Cunningham, 2017). This report will determine the current competitive position and advantages of the organization along with its strategic planning. Furthermore, the study will also describe the various functional areas of IKEA. The report also identifies the unique elements of the selected organization that differentiate it from its competitors. In addition, this study will also determine the recent changes in the position of the organization along with some recommendations that can help IKEA to achieve success in the next 5 years.

Background of the company

IKEA was established in the year 1943 which achieved growth rapidly and became the largest furniture retailer since 2008. It is known as the first self service furniture retailer in the United Kingdom. It is a Swedish founded multinational group that designs and sells ready to assemble kitchen appliances, furniture and home accessories.

Company's value:

  • High quality products and services
  • Sourcing integrity
  • Making positive differences within the community
  • Respect for environment

Size of the company:

IKEA is a furniture retailer with more than 253 stores in more than 24 countries all over the world. According to recent report it serves more than 565 million visitors in a year. The organisation is offering more than 9,500 products which are produced by company itself including home accessories and furniture. Ikea has employed more than 1,00,000 employees in their organization.

Structure:

In order to fulfil customer needs IKEA furniture retail sector or market area is segmented into various customer led formats. There are two main format segments of the organisation -

  1. Ready to assemble products – These stores offer a wide range of accessories and furniture which are ready to be assembled, these products are the major source of income for the organisation.
  2. Convenience stores – IKEA convenience stores are located within the high street suburban and urban areas. They are specifically developed and operated in order to cater for the furnishing solutions and convenience customers.

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Exploring that how business organisation and its positioning itself in its efforts to gain/maintain competitive advantage 

Positioning level of business itself is the big opportunity for the business to get the better outcomes. Every business has their own market value and goodwill in front of their customers. Positioning itself helps to gain customer, loyalty and faith on the particular product services. On the other hand, small or large business needs a competitive advantage to distinguish itself from the competition (Edwin and et.al., 2016). It helps to get the best possible action plan to get the best outcome results. Gaining a competitive advantage itself is the competitive market goal which needs to be gained by IKEA.

Examining the business: it is very necessary for the company to examine the factors which helps to gain competitive market position. Competitive advantage itself is the significant tool for the business which distinguish the business growth. Competitive advantage is a way in which company can create value for the customer. There so many reasons which company get position in the market such as higher quality, lower cost, faster service, the best customer service etc. On the hand it also necessary to maintain business profitability along with a good position in the market to achieve overall growth in the market. IKEA take care of the quality and pricing of their products to ensure it attract potential customers and achieve competitive position in the market.

Work to understand customer needs: Demographic qualities of the business customer base. It is another positioning quality which affect the business into more advantageous manner. Overall, it helps to bring the new business growth and make the new managing successful business growth. IKEA understand its customer potential needs in order to gain its competitive advantage growth. It helps to keep the long-term goals alive to get the market high position. Understand the need of customers means to understand which type of customer company would target. It helps to get the best possible action plan to make and take the best possible action plan. In order, in order to meet out the best possible action. If a company fails to understand the needs and demand of the customers, it becomes difficult for the organisation to sustain its position in the market.

Examine the business unique strengths: in order to keep the best possible action growth, this is another benefited growth for the business which makes good impact on the business target market growth. Unique business strength of IKEA is low based prices or good quality of product or services which makes them benefited to gain competitive advantage growth. In order to achieve and sustain the competitive advantage in the market it is very essential to identify the unique strength of the company so that it can further develop for achieving higher growth and development. 

Examining the competitor’s profile: It also helps to take care the best form of results and better growth services. IKEA has to analyse or examine the competitive positioning level and their strategies which is very helpful to make some new ideas. Competitive analysis is also very essential for identifying the weaknesses and opportunities for the business. It targeting the weaknesses of competitors and developing strength of the company.

To examine the growth and long term leading effective growth meets the profitability growth for the business growth (Tchokogué and et.al., 2017). All the above discussed way through which company can easily explore its competitive growth within the competitive environment. Overall, business growth will help to explore the good managing effective channel which helps to describe the long-term market existence growth.

Firms decision making been always affected the competitive position and profitability strategic planning helps IKEA in essential marketing growth. Overall, marketing positioning is very much attractive in the market that helps to gain good return outcomes.

Analysis of functions areas of IKEA

There are various important function performed by IKEA that helps it to achieve its business goals and objectives. These functions assist the organisation to gain competitive position the market. Each and every business function performed by IKEA or its employees contributes in the growth and development of the organisation. The various functional areas that helps in sustaining the market position of the company can be described as below -

  1. Human resources – The first and important functional area of IKEA is the human resource management. Human resource department plays an important role of employing and managing the employees working in IKEA. Employees or human resources are the most vital part of every business and organisation (Lambert and Enz, 2017). In order to perform each and every function in a business it requires effective human resources. Human resource management in the cited organisation perform various functions such as recruitment, training and development of the employees to develop a strong workforce which can help the organisation to improve its performance and profitability. Therefore, it can be summarised that human resource department plays a important role in IKEA to sustain its competitive position in the market. Human resource management plays an important role in each and every organisation as it affects the business both negatively and positively. If management of human resource is not proper the organisation culture and performance can be affected negatively.
  2. Sales and Marketing – Marketing and sales functions are also very essential for every business as it assist in promoting the products and services of IKEA and also increasing sales of the business. The marketing department of IKEA introduced the TV solution idea in order to promote their products through Television. The company promotes its business through various promotional messages and campaigns that helps it to attract more and more customers and obtain competitive advantages in the market. Sales and marketing are also important areas within an organisation that helps to promote good and services of the company. Ineffective sales and marketing of the products get negatively affect the profit of the business.
  3. Customer service – IKEA have an effective and efficient customers service department that handles and manage its huge number of stores in different parts or the country. The customer service staff is trained and developed with an aim to provide satisfactory assistance to the customers. This department helps the organisation to provide effective and efficient services to the customers in each and every store of the organisation. Customers expect that the staff or employees of IKEA treat them in polite and friendly manner while buying a product or receiving any service from the organisation.
  4. Finance – The financial department at IKEA deals with all types of transactions related to business and control the revenue as well as expenses of the company. One of the major part of financial department is the financial accounting. IKEA perform a huge number of transactions every day such as making payments to suppliers, manufacturer or receiving amount from the customers etc. This department ensure appropriate records and management of these financial transactions and help management to make suitable strategies or plans for then business.

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Recent changes in the organisation 

IKEA faced a huge competition with other big players in the retail sector such as Tesco, Morrison etc. In order to sustain its market and competitive position the CEO of the company decided to introduced certain changes recently in IKEA business strategies and operations. The organisation made three strategic changes within the organisation with regard to its relationship with customers, the first change was to improve the communication process between the potential customer base and the business. It was initiated in order to obtain required feedback that can assist the company to determine the current needs and demands of the customers (Kaul, 2017). This strategy was implemented with the help of a programme that included additional market research through in store as well as external surveys and questionnaire. Another change that was introduced in the business was focusing on improving the customer shopping experience. IKEA provided effective training and development program for their customers in order to improve customer services and develop customer relationship. The company also decided to the make significant changes in the marketing and promotion functions of the company. IKEA decided to adopt a new kind of campaign formulated by the corporation over the past four years that has accumulated upon delivering a message that focuses upon the low-price and customer service quality of the business offerings and shopping experience. There are many negative influences identified due to changes in the organisation, such as change in customer’s trends and behaviour affects IKEA to develop and innovate their products & services in order to attract more and more customers in the market. It also helps the organisation to achieve competitive advantages in the market and increase their profit to earn more and more market share.

Future strategies and focus to achieve and sustain its success in the next 2-5 years.

IKEA has adapted and embraced change to secure its position, survival and prosperity in the highly competitive market. In the present challenging business conditions and environment, the company continues focusing on capitalising the recent changes in the organisation. The company needs to identify the current trends and demands of the customers in order to sustain its competitive position in the market. In order to sustain the profitability of the business IKEA can expand its organisation to various other countries in the world. The company can use global market entry strategies such as franchising, licensing, etc. The company also aims at estate development and to step its online resources in both ready to assemble and ready-made furniture or kitchen appliances (Aluko and Knight, 2017). The company can improve its marketing strategies by using more attractive methods of promoting products and services in the market for example – Social media marketing.

Related Sample: Importance Of Different Business Functions - Business Report

CONCLUSION

The above report summarised that IKEA is a leading furniture retailer in UK, this study includes detailed background of the company along with its size and structure. The report identified the ways in which business organisation position and manage itself in its efforts to gain/maintain competitive advantage. Furthermore, the report also included analysis of various functional areas of the organisation that helps in sustaining the competitive position among its competitors such as Marketing, Sales, Human resource management etc. In addition to this the report also included recent changes in the business strategy along with effective recommendations to achieve success in future.

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REFERENCES 

  • Cunningham, I., 2017. The wisdom of strategic learning: The self managed learning solution. Routledge.
  • Lambert, D.M. and Enz, M.G., 2017. Issues in supply chain management:
  • Kaul, D., 2017. Customer Relationship Management (CRM), Customer Satisfaction and Customer Lifetime Value in Retail. Review of Professional Management, 15(2), pp.55-60.
  • Aluko, O. and Knight, H., 2017. From corner store to superstore: a historical analysis of Sainsbury’s co-evolution. Journal of Management History, 23(4), pp.423-435.
  • Edwin, S. F. and et.al., 2016. Generation of competitive advantage through BASC management system in the ironmongery sales. CIENCIA UNEMI. 9(21). pp.27-35.
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