Assignment Task

Case Study: IKEA Sweden in detail

Current Challenges:

IKEA Sweden is navigating a complex landscape characterised by multiple challenges requiring strategic and innovative responses. One of the foremost challenges is managing supply chain disruptions and the escalating costs of raw materials and transportation. These issues have been exacerbated by global events, leading to significant operational hurdles. Additionally, IKEA strives to address growing sustainability concerns, focusing on reducing the environmental impact of its operations and products. This includes implementing more sustainable practices and materials to meet both regulatory standards and consumer expectations.

The shift in consumer preferences towards online shopping and home delivery presents another significant challenge. As more consumers opt for the convenience of online purchasing, IKEA must adapt its business model to enhance its e-commerce capabilities and provide a seamless digital shopping experience. Furthermore, geopolitical tensions and trade conflicts risk IKEA’s global operations, potentially disrupting its supply chains and affecting market access.

In the labour market, IKEA faces the challenge of attracting and retaining talent, particularly for frontline positions. The competitive nature of the labour market requires IKEA to implement effective strategies to become an employer of choice, ensuring it can maintain a skilled and motivated workforce.

Future Challenges (3 – 5 years):

Looking ahead, IKEA Sweden anticipates several challenges over the next five years. A key priority will be accelerating the transition towards a circular business model, increasing the use of recycled materials, and minimising waste. This transition is crucial for sustainability and long-term operational resilience. Additionally, IKEA must continue to adapt to evolving consumer preferences, particularly the rise of conscious consumerism where customers prioritize ethical and sustainable products.

Leveraging technology and data analytics will be vital for enhancing the customer experience and optimizing operations. As technology advances, IKEA will need to integrate innovative solutions to meet customer expectations and streamline its processes. Expanding into new markets and adapting to local cultural preferences will also be essential for growth. This expansion requires a deep understanding of diverse market dynamics and the ability to tailor offerings accordingly.

The impact of climate change on raw material sourcing and supply chain resilience will remain a critical concern. IKEA will need to develop strategies to mitigate these impacts, ensuring the sustainability and reliability of its supply chains.

Increasing competition

The competitive landscape for IKEA Sweden is expected to intensify with the increased presence of several significant players. Amazon, with its vast e-commerce platform, is expanding its home goods and furniture offerings, posing a substantial threat to traditional retailers. Wayfair, another major online furniture retailer, is rapidly gaining market share and challenging IKEA’s dominance. Alibaba is also making significant inroads into the global furniture market through its various platforms, further intensifying competition. Additionally, local startups are innovating with smart furniture and sustainable materials, appealing to environmentally conscious consumers and adding pressure on IKEA to continuously innovate.

The entry of Amazon and Wayfair will push IKEA to further develop its online shopping experience and logistics capabilities. As Alibaba expands globally, IKEA will need to enhance its digital presence and adapt to different market dynamics. The innovation from local startups with smart furniture and sustainable materials will require IKEA to continuously innovate and improve its product offerings to stay competitive.

Assessment 1

Brief Description

For this assessment, you will be provided with a case snippet of a company, including basic background information about its structure, operations and performance. You are to assume the role of a new CEO brought in to formulate a new strategy for this organisation

Unit Learning Outcomes (ULOs)

This task assesses your achievement of the following ULOs:

ULO1: Research and analyse the organisational environmental and governance factors to assist in the diagnosis of complex organisational issues and formulate evidence-based recommendations.

ULO2: Utilise analysis and decision-making tools of strategic management to support the activities of strategy evaluation, formulation and implementation in a variety of organisational contexts.

Assessment 1: Environmental Analysis and Strategic Assessment

Introduction

You are the newly appointed CEO of the organisation. The Board of Directors has tasked you with conducting a comprehensive analysis of the external environment to identify trends, opportunities, and threats that the organisation will face in the next 3-5 years. This analysis will form the foundation of your strategic recommendations and is crucial for your confirmation as the permanent CEO.

Requirements

1. Industry and Sector Performance Analysis

• Conduct a detailed analysis of the furniture retail industry, focusing on supply chain dynamics, sustainability trends, consumer behaviour, and competitive landscape.
• Identify key performance indicators and benchmark the organisation against its competitors.
• Use scoring and weighting to assess the significance of different industry trends and their potential impact on the organisation. Include a prioritisation matrix in the appendix to visually represent the most critical trends. Include all source citations.

2. Macro-environmental Analysis:

• Use PESTEL analysis to explore political, economic, social, technological, environmental, and legal factors impacting the organisation.
• Assess how these factors will influence the operations and strategic positioning of the organisation.
• Evaluate the potential impact and likelihood of each PESTEL factor. Apply a scoring system to prioritise which factors are most critical for strategic planning. Include this prioritisation in the appendix. Include all source citations.

3. Competitor Analysis:

• Identify and evaluate a minimum of three direct competitors, and not less than two potential or emerging competitors.
• Conduct a SWOT analysis of each competitor (direct and potential/emerging) strengths, weaknesses, market strategies, and potential impact on the organisation.
• Compare these against the organisation’s position in the market to highlight potential strategic responses. Include all detailed SWOT analyses in the appendix, including source citations.

4. Industry Forces Analysis:

• Apply Porter’s Five Forces model to assess the competitive intensity and attractiveness of the industry.
• Discuss the implications for the organisation’s strategic decisions.
• Score each force based on its impact on the organisation. Use a prioritisation matrix to identify which forces are most significant for strategic decision-making. Document the analysis and scoring in the appendix, including source citations.

Assessment 2

Brief Description

Congratulations. Although the board has not reviewed your report, they have approved for you to move forward with the second half of your proposal.

Building on the insights gained from your environmental and strategic assessment analysis in Assessment 1, your task in Assessment 2 is to develop strategic recommendations that leverage the organisation’s capabilities and address the identified opportunities and threats.

You will formulate actionable strategies that demonstrate your ability to create and implement effective business strategies.

Unit Learning Outcomes (ULOs)

This task assesses your achievement of the following ULOs:

This task assesses your achievement of the following ULOs:

ULO3: Evaluate an organisation’s strategic capabilities in improving organisational performance.  

ULO4: Select appropriate concepts, theories and tools in order to aligning internal and external resources to build strategic capability. 

Assessment 2: Strategic Recommendations and Capability Development

Introduction

Based on the insights gained from your environmental and strategic assessment analysis in Assessment 1, you are now required to utilise additional strategic frameworks to develop actionable recommendations for IKEA Sweden.

Your task is to propose actionable strategies that leverage the organisation’s capabilities and address the identified opportunities and threats identified in Assessment 1. This will demonstrate your ability to formulate and implement effective business strategies.

Requirements:

1. Overview of External Environmental Conditions:

• Provide a brief summary of the key findings from your analysis in Assessment 1.
• Highlight the most critical trends, opportunities, and threats facing the organisation.

2. Internal Environmental Conditions:

• Analyse the organisation’s internal environment, focusing on strategic and dynamic capabilities.
• Discuss the organisation’s resources, competencies, and distinctive capabilities using the value chain framework.

3. Business and Corporate-Level Strategies:

• Evaluate the organisation’s current business-level and corporate-level strategies.
• Assess the effectiveness of these strategies in the current environment and identify areas for improvement.
• Note: use two subsections – 1) Corporate Level Strategies; and 2) Business Level Strategies

4. Organisational Design and Strategy Implementation:

• Examine how the organisation’s organisational design supports its strategies.
• Discuss recent structural changes, centralisation levels, and their appropriateness for the strategic direction.

5. Strategic Recommendations:

• Develop strategic recommendations to enhance the organisation’s competitive advantage.
• Address the capabilities and competencies of the organisation of prioritised areas identified in Assessment 1.
• Provide detailed action plans for implementing these strategies.