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How to Create a Strategic Plan
Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.
What Is a Strategic Plan?
When it comes to business and finance, strategic planning will help you allocate your resources, energy and assets. When implemented, a strategic plan will begin to move your operations in a more profitable direction. The primary goal of the plan is to ensure you and any other stakeholders are on the same page and striving to reach the same goal.
Creating a strategic plan requires a disciplined effort. Once you put the plan into action, it will influence the segment of customers that you target, how you serve those customers and the experience those customers have.
Assess the Current Infrastructure and Operations
The first step in creating a strategic plan is to carefully assess your existing infrastructure and operations. You can do this through a SWOT analysis, which is an analysis of the company’s strengths, weaknesses, opportunities and threats. The goal here is to pinpoint the resources that you use to carry out your day-to-day operations, to look at your monthly revenue patterns, to list any company challenges related to the customer experience and, most importantly, to look at your marketing methods and ways to improve the overall customer experience.
Creation of Mission Statement and Objectives
The next step is to create a mission statement. You may already have one, but it’s important to note your mission at the top of the strategic plan document you create. This ensures everyone is focused on the same goal. Your mission statement should cover why you started the company and what you intend to accomplish through the products and services that you offer.
In addition to the mission statement, make sure to outline both short- and long-term objectives. List the objectives according to their priority and designate certain managers or employees to be responsible for each one. Also, jot down the resources that will be used to achieve each objective.
Now that you know what you’re trying to achieve and who is responsible for each goal, it’s time to deploy the plan and measure its progress. A weekly meeting is extremely important for all managers and stakeholders provide feedback. Your goal is to determine if the company is headed in the right direction. If not, you’ll need to revise the strategic plan accordingly.
Strategic Plans Are Ongoing
Once your strategic plan helps you achieve several objectives, it’s smart to regroup and set new objectives. As your company grows, you can set new goals to ensure the company keeps moving forward. You can share the success of your strategic plan with potential investors as a way to tap into new capital funding.
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IKEA Strategic Management Plans in Europe
- Brown Miller Linköping University
- Davis Smith Linköping University
IKEA is a home-furnishing store founded by Ingvar Kamprad in Sweden in 1943. IKEA uses a franchising business format in order to reach as many people as possible with their products. Their franchise system allows for the company to expand internationally while protecting the IKEA Concept. IKEA sells furniture, electronics, beds and mattresses, and every other tool and appliance that is required in a home. IKEA’s vision is to create a better everyday life for the most people. Its mission is to offer a wide array of functional and well-designed furnishings for homes at low prices that are affordable to everyone. IKEA’s goals are in keeping with its mission. Its objective is to provide an array of home furnishings that are of good quality and that are well designed and well-functioning at low prices that are affordable to the majority of people. To achieve this goal, IKEA uses strategies such as marketing its products to individuals rather than to the masses, using a standardized selection of retailers, using country-specific management styles to optimize the way IKEA stores are managed, instead of opening large mall-like stores. Just like any other business, IKEA faces challenges in its journey to make the business profitable while delivering affordable products. One of the biggest challenges facing IKEA is an increase in the number of competitors that are adopting IKEAs low price strategy, this in addition to the rise in prices of raw materials which led to IKEA hiking up its price for the first time in five years. In conclusion, IKEA is a widely recognized global brand with stores all over the world. It needs to assess its SWOT analysis statistics and its competitors in order to make sure it always stands out in its market. IKEA’s need to stay true to its mission sets it apart from most of its competitors; it always strives to offer its customers a large array of high-quality, low-cost products. All its systems, from production to delivery, shows the business's commitment to stay environmentally friendly. One of the ways it reduces its carbon footprint is by using designs that allow more items to be packaged in a crate that is usual, thereby reducing the delivery journeys. IKEA is focused on becoming a leading example in developing a sustainable business. It refuses to compromise doing good business and being a good business. It always aims more towards making life better for most people rather than a profit or having a good reputation. IKEA has stayed true to the vision of its founder, and it is clearly working for the business, as shown by its success and prestige.
Brown miller, linköping university.
Davis Smith, Linköping University
Bartlett, C. A., & Nanda, A. (1990). Ingvar Kamprad and IKEA.
Batarfi, S., & Attia, A. (2021). Measuring the Effect of Quality Management Practices on Company Financial Performance-A Case Study on IKEA. PalArch's Journal of Archaeology of Egypt/Egyptology, 18(15), 113-121.
Cosmo, D. E., & Yang, K. (2017). A Further Strategic Move to Sustainability—A Case Study on IKEA. Journal of Strategic Innovation and Sustainability, 12(2).
Daunfeldt, S. O., Mihaescu, O., Nilsson, H., & Rudholm, N. (2017). What happens when IKEA comes to town?. Regional Studies, 51(2), 313-323.
Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence, 22(5), 535-551.
Goel, R., & Garg, S. (2018). India as a Marketplace: A Case Study of IKEA. Available at SSRN 3282924.
Hagberg, H., & Sterner, H. (2019). A study about possible digitalization of a product development process: A business case at IKEA of Sweden.
IKEA.(2019).Retrieved from: http://www.ikea.com/ms/en_GB/about_ikea/press_room/student_inf o.html
IKEA. (2019). from: http://www.ikea.com/ms/nl_BE/pdf/yearly_summary/Welcome_insi de_2010_update.pdf
Kim, S. Y., & Lee, S. M. (2020). Vying with IKEA: HANSSEM’s Competitive Advantage at Marketing Frontier. Asia Marketing Journal, 22(2), 87-98.
Maheshwari, A., & Marriaga Diaz, D. (2021). An Exploratory Study of Sourcing Options for Alternative Materials to Leather-A Case Study at IKEA of Sweden.
Sandybayev, A. (2017). Strategic Supply Chain Management Implementation: Case Study of IKEA. Noble International Journal of Business and Management Research, 1(1), 5-9.
The official board. (2011). Retrieved from: http://www.theofficialboard.com/org-chart/ikea
Vergassola, I. (2019). Prerequisites and outcomes of glocalization of marketing strategies by international retailers: the case study of IKEA and home depot in China.
Wu, Y. (2020, February). The Marketing Strategies of IKEA in China Using Tools of PESTEL, Five Forces Model, and SWOT Analysis. In International Academic Conference on Frontiers in Social Sciences and Management Innovation (IAFSM 2019) (pp. 348-355). Atlantis Press.
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IKEA Business Strategy and Competitive Advantage: Capitalising on IKEA Concept
IKEA business strategy is built upon the IKEA concept. The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few. It is achieved by combining function, quality, design and value – always with sustainability in mind. The IKEA Concept exists in every part of the company, from design, sourcing, packing and distributing through to business model. 
The following points constitute integral elements of IKEA business strategy.
1. Offering the lowest prices . Cost effectiveness is one of the solid bases of IKEA competitive advantage. The global furniture retailer is able to offer low prices thanks to a combination of economies of scale and technological integration into various business processes.
2. Increasing variety of products . Great range of products also belongs to the list of IKEA competitive advantages. There are 12000 products across in IKEA portfolio and the company renews its product range launching approximately 2000 new products every year.  The company is also increasing its presence in food and catering industries.
3. International market expansion strategy . The home improvement and furnishing chain has traditionally engaged in new market development in an aggressive manner. IKEA has11 franchisees operating in more than 500 locations in 63 countries.  Furthermore, The Swedish furniture chain has long-term plans to establish its firm presence in many developing countries.
4. Benefiting from strategic alliances . The global furniture retailer benefits from strategic alliances to a maximum extent. The formation of strategic alliances is placed at the core of IKEA business strategy. The list of the most successful collaborations include partnership with Apple to explore the possibilities of Augmented Reality as a tool for home-furnishing, partnership with LEGO for new product development and partnership with Adidas in knowledge sharing about customer behaviour. Experience and competency in the formation of strategic alliances can be specified as one of the most important IKEA competitive advantages.
Currently, IKEA is in the middle of transformation of its business model that made it successful in the global scale. Specifically, for many decades IKEA business strategy was largely based on having giant out-of-town warehouses, where shoppers pick their own furniture and then build it at home. But now it is looking increasingly at city-centre stores, online shopping, home delivery and assembly, and more radical ideas such as leasing furniture and selling on websites such as Alibaba. 
IKEA Group Report contains the above analysis of IKEA business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.
 The IKEA Concept (2019) IKEA, Available at: http://www.ikea.com/ms/en_US/this-is-ikea/the-ikea-concept/
 Sustainability Report FY 2021,IKEA
 Inter IKEA Holding B.V. Annual report FY21
 Milne, R. (2019) “Inter Ikea’s Torbjorn Loof: making the vision clear” Financial Times, Available at: https://www.ft.com/content/6b250c0a-2486-11e9-b329-c7e6ceb5ffdf
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The IKEA Sustainability Strategy
We have big ambitions for 2030. We are committed to doing our part to tackle climate change, unsustainable consumption, and inequality. Our three major focus areas are Healthy & sustainable living, Circular & climate positive and Fair & equal.
Circular & climate positive
Becoming circular and climate positive, and regenerating resources while growing the IKEA business.
Transforming into a circular business
Becoming climate positive
- Product information page
Regenerating resources, protecting ecosystems and improving biodiversity
Fair & equal.
Creating a positive social impact for everyone across the IKEA value chain.
Providing and supporting decent and meaningful work in the IKEA value chain
Being an inclusive business
35% more efficient.
The new SOLHETTA LED bulbs are much more energy effecient - and affordable - than previous IKEA LED bulbs.
100% renewable electricity in IKEA factories
During FY21 we reached 100% renewable electricity for all IKEA-operated factories, packaging and distribution units globally.
55.8% renewable materials
Of the materials we sourced in 2021, 55.8% were renewable and 17.3% were recycled.
Less waste with rechargeable batteries
We no longer sell non-rechargeable alkaline batteries and have replaced them with our LADDA rechargeable batteries. This helps customers to significantly reduce waste and save money in the long run.
99.5% of the wood used for IKEA products is either Forest Stewardship Council®-certified (FSC®) or recycled.
Want to know more?
- Read our People & Planet Positive sustainability strategy Open PDF ( 6.46 MB )
Climate and environment
The IKEA vision and values
Mmmm... cookies 🍪
Spotlight: IKEA Strategic Considerations
Get out the toolkit and read on as Georgina gives her thoughts on IKEA’s strategic considerations… 🛒
Table of Contents
Spotlight: IKEA Strategic ConsiderationsBuilding a strategy is like building furniture. Stick with me on that analogy… you have different pieces of your business, different objectives, and they need to be linked together to make each part stronger and your overall vision a reality. One company that most likely sees it’s strategic plans in that way is IKEA.
The company was originally founded in 1943 by Ingvar Kamprad in Sweden and expanded to the UK in 1987. The UK market itself is under great change due to the recent political decisions, so what strategic considerations should IKEA have? Let’s take a look…
PESTLE Analysis for IKEA in the UK
The impact of Brexit has already affected IKEA. Brexit caused prices to increase in 2017, but this did not end up hindering sales. However, the uncertainty of the pound to euro exchange rate could affect IKEA in the long run.
Climate change is a major issue that big corporations like IKEA need to evaluate. Their process of improving their sustainable image has begun by selling and using solar panels as well as beginning to eliminate one use plastic products. They are aiming to become a fully circular business by 2030 to eliminate waste and reuse resources.
The social cultural trend that could benefit IKEA in the future is the increase in online shopping. IKEA could use this to their advantage to push online sales to increase overall sales.
- UK leaving EU
- Minimum wage in UK due to increase to £10.50 by 2024
- Will affect trading deals with EU, meaning higher barriers to entry.
- Harder for smaller companies that do not have the infrastructure.
- Effect will vary depending on company but retail is said to find increases harder to manage
- Have already been affected by import costs as prices raised by 3.6% in 2017, but sales still increased despite this.
- Uncertainty of the pound exchange rate will affect prices of products.
- Employees’ wages might increase – more costs for IKEA. Increase in customer income could persuade them to a premium brand.
- 1.7% inflation rate – Lowest rate since 2016
- GDP growth predicted to increase to 2% by 2022
- Will increase consumer spending on non-essential items.
- Could benefit or harm companies based on their target markets.
- Will increase sales, but inflation rates could be unpredictable with Brexit looming.
- If customer’s income increases them other premium companies could gain IKEA’s customers
- UK online spend is forecast to increase 29.6% between 2019 and 2024
- Aging population in UK
- Companies would want to alter companies to keep up with trends.
- Will be more of an emphasis on targeting the older population.
- Emphasis on online sales and incorporate online promotional tactics into their strategy
- Should be taken into consideration for future target market – older demographic not the main target market
- £6.3billion total venture capital investment in UK technology in 2018
- “UK homeowners are starting to show greater interest in smart home technology and awareness is growing fast
- Will be necessary to invest to keep up with competition
- Force companies to match this trend to compete
- Possible threat but IKEA have already implemented augmented reality and virtual reality, putting pressure on competition. This technology merges the store experience with the visual experience.
- Already implemented smart lighting, blinds, speakers and charging devices, but will need to make sure its functions correctly and they stay ahead of competitors.
- The UK is installing solar panels faster than any other European country
- Threat of climate change
- Possibility of companies changing to solar panels due to new customer expectations
- Could change how corporations are run. New laws could be implemented to improve corporation pollution
- Already implemented in stores and have now made it available to buy solar panels for customers to use at home
- Aiming to no longer produce one use plastic free products by 2020.
- Creating sustainable store in London run by solar panels
Read the Ultimate Guide to PESTLE Analysis.
Five Forces Analysis for IKEA in the UK
While IKEA have proven themselves by maintaining their strong sustainable competitive advantage, there are threats in the competitive environment that should be analysed. Due to the volume of competitors in the furniture industry, IKEA needs to make sure that they are innovating and maintaining their large market share.
There is a threat of substitutes for IKEA due to the innovation of new furniture outlets like Gumtree. Additionally, because there are lots of choice for furniture stores, the bargaining power of buyers poses a threat for IKEA.
Bargaining power of suppliers have a low impact because suppliers need IKEA more than IKEA needs them. To ensure that the right suppliers are chosen, IKEA uses the IWAY contract (IKEA.com, 2019c), which lists what the supplier is not allowed to do (i.e. child labour). New entrants also do not impact IKEA much because it is hard for start-ups to compete with a company as established as IKEA and in a competitive market.
Industry Rivalry: High
- Highly competitive growing market. High exit barriers.
- Competitors: DFS, Wayfair, B&Q, Wickes, John Lewis, Amazon, Argos
- IKEA should maintain its sustainable competitive advance by differentiating themselves by providing low cost, high quality products.
Threat from New Entry: Low
- High barriers to entry because of established market and high competition. Hard for newcomers due to economies of scale.
- New entrants competing with IKEA is hard and costly as IKEA are such a globally known company, thus making IKEA have a competitive advantage.
- High expertise and innovation in the sector which pushes IKEA to focus on innovating products (e.g. home technology, AR)
Threat from Substitutes: Medium
- Gumtree, charity shops, furniture markets.
- Not many alternatives that are low price, high quality and offer the same variety of products.
- Their brand image aids in preventing substitutes to be a major issue.
Threat from Suppliers: Low
- Furniture industry have the choice of their suppliers.
- Due the substantial amount of suppliers that IKEA are able to acquire means that the suppliers are in a more vulnerable position and do not hold much bargaining power.
- IWAY is the code of conduct that IKEA’s suppliers must follow to be one of their suppliers (if violated, they are removed) create strong relationships with suppliers (IKEA.com, 2019b)
Threat from Customers: Medium
- Customers have lots of choice in the furniture industry so important for companies to differentiate themselves.
- With the threat of a growing market, IKEA should not be too threatened by the competitive environment as they produce high quality and affordable products using a cohesive and thought-out strategy that will satisfy the target audience.
- Follow the customer trends of affordable pricing – IKEA customers are price sensitive.
Complete your own Five Forces here.
SWOT Analysis for IKEA in the UK
- Low price, high quality and stylish products
- Strong global brand image
- Variety of products
- Extensive market research
- Economies of scale – large number of units for cheaper products
- High barriers to entry for start ups
- Has increased renewable resources
- IKEA customer experience – in the store
- Lack of stores in the UK, which makes it harder for customers to get to stores
- Size of the company makes it hard to control standards and quality
- Reliant on suppliers to provide materials
- Demand for sustainability. Reducing carbon footprint
- New, smaller stores
- New technology – smart home technology (Schwartz, 2019)
- Adding premium furniture line – reach bigger demographic
- Celebrity endorsement
- Leasing furniture (Rogers, 2019) – implement in all of UK
- Effects of Brexit – possibility of increased prices
- Highly competitive industry
- If there is an increase in customer household income, then customers likely to buy from higher quality competitor need to keep prices low
- Alternatives to furniture stores leasing them or buying cheaply from charity shops
Read the Ultimate Guide to SWOT Analysis.
Strategic Objective: Digital Marketing
Digital marketing would be a key tool to help implement a market penetration strategy for IKEA. It would bring more brand awareness, which would inevitably increase the market share and increase online sales. This approach would also help to promote the sustainability of the company and would increase the brand image by showing customers that the company is environmentally responsible.
While IKEA has proven its dedication to digital marketing, they could emphasise this to further enhance their position in the market.
Digital Marketing Mix:
- Price: Promotions for buying products online, student discounts, family discount
- Product: Showcasing their smart home technology, continue using their augmented reality (AR) technology to showcase furniture
- Place: Use social media more to reach younger target market, improve online website for customers – make it easier to use and include all products that can be found in the stores
- Promotion: Increase advertisements that highlight the sustainability of IKEA to reach target market (using environmentalist celebrity), continue using guerrilla marketing to get customers involved more
5 I’s :
- Identification: Make customers at forefront of decisions, target students and families that care about the environment
- Individualism: Individual or family IKEA account which helps consumers to see products relating to products that have been previously bought or looked at
- Interaction: Guerrilla marketing in big city stores to interact with customers, social media to increase customer’s awareness of IKEA’s sustainability, virtual reality, augmented reality, getting customer feedback to stay ahead of trends, emphasise sustainably being done affordably
- Integration: Need to make sure that all marketing elements agree with the brand image of the company and have a cohesive message
- Integrity: IKEA should continue to show their down-to-earth values through their marketing (IKEA.com, 2019a), make sure that website is safe for customers to use and online service is positive
Overall, implementing digital marketing further will allow IKEA to achieve their company objectives of financial growth, brand positioning and customer acquisition.
In short, a lot for IKEA to consider! If you’ve enjoyed this article you might like to read our article on strategic considerations for the retail industry .
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