Introduction

This particular case study looks at an international retailer, IKEA. It is one of the largest furniture retailers in the world. The firm specializes in selling furniture in their stores located in various areas around the world. The organization pioneered flat packaging of products at an affordable price. IKEA hired me as an international consultant to come up with solutions to predicaments their organization faced. The essay wills identify and group various issues facing the firm, come up with a strategy that exposes the underlying causes and suggest a solution to the problems.

Defining problems

Political Studies reveal that governments have a heavy influence on firms. Thus, in case of a political shift from stable to unstable it affects the business environment. For instance, in Poland, after the demise of the governance, the political upheaval affected the business surrounding which in turn affected the relationship of suppliers with IKEA. Consequently, honoring contracts became a challenge (Jonsson, & Foss, 2011). IKEA is an international retailer, which relies on foreign policies and a good stable environment. Any hitch and business becomes sour.

The second type difficulties are economic factors. Financial recessions often vary with the economic strength of the host country, the weaker the economy the higher the effects of an economic recession. IKEA established its business across various countries hence with the outbreak of a financial recession in 2008; it could not rap its head around the fluctuating rate across various host nations (Jonsson, & Foss, 2011). For example as the as the Swedish currency gained against the US dollar, importing resources from Sweden became expensive which in turn affected the price of the furniture.

In social spheres, Europe and America have different cultural practices. A business cannot establish an effective strategy without factoring in culture. European love detailed furniture designs hence their products must be perfect at first glance. On the other hand, American emphasize on functionality of items. Thus, coming up with a strategy that covers all-cultural aspects are difficult.

Developing a diagnosis

Internationally, there are many entrants in the furniture industry. More so, retailing is no longer a unique business venture. Hence, new entrants increased competition among key players such as IKEA (Norman, 2010). More competition implies that buyers will have more bargaining power due to the existence of numerous alternatives in the furniture market.

Since time immemorial, humans used furniture. Styles keep on changing based on emerging trends. The industry shifts from wood to plywood, iron and plastic. The market becomes more environmental friendly with time (Norman, 2010). However, despite of the change, the fundamental function of furniture remains. In other words, shifting a business strategy to suit trends is not an easy task.

Developing a solution

In order to come up with a sustainable strategy, IKEA should focus on its objectives. Initially, IKEA targeted middle and lower classes clients (Norman, 2010). The strategy worked well but IKEA can extend its aims so that it can cater for clients who would not mind paying more for their well-designed furniture. Again, expanding into interior design and kitchen items would increase their market share. Thus, it increases a client’s alternatives when he or she walks into any IKEA store.

In summary IKEA can also tailor its products to suit the needs of specific clients. Customization of furniture will bring in new ideas that can service not only one client but others as well. The main problem facing IKEA is the increase in rivalry among new entrants thus giving more bargaining power.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Jonsson, A., & Foss, N. J. (2011). International expansion through flexible replication: Learning from the internationalization experience of IKEA. Journal of International Business Studies, 42(9), 1079-1102.

Norman, D. A. (2010). THE WAY I SEE IT The transmedia design challenge: technology that is pleasurable and satisfying. interactions, 17(1), 12-15.