IKEA Case study:

IKEA is a well$-$known global brand with hundreds of stores across the world. IKEA responds to both internal and external issues in a proactive and dynamic manner by using its strengths and reducing its weaknesses. Through this, IKEA is able to generate the strong growth it needs to retain a strong identity in the market.

IKEA$$s passion combines design, low prices, economical use of resources, and responsibility for people and the environment. The company$$s products, processes, and systems all demonstrate its environmental attitude. For example, clever use of packaging and design means more items can fit into a crate, which means fewer delivery journeys. This in turn reduces IKEA$$s carbon footprint.

IKEA believes that there is no compromise between doing good business and being a good business. It aims to go beyond profitability and reputation. IKEA is intent on becoming a leading example in developing a sustainable business. This will create a better everyday life for its customers. IKEA has discovered a business truth $$ being sustainable and responsible is not just good for customers and the planet, it is also good for business!

For this reason, IKEA has increased the usage of renewable materials and $$Smarter$$ use of raw materials $$ IKEA increased the use of recycled or reclaimed waste products in energy production across all stores from $80\%$ to $90\%.$ Moreover, IKEA believes in creating long$-$term partnerships with its suppliers in order to achieve this. By committing to buying large volumes over a number of years IKEA can negotiate lower prices. This also benefits the suppliers because they enjoy the greater security of having guaranteed orders. They focused on the economy of scale for bulk buying at cheaper unit costs. They were sourcing materials close to the supply chain to reduce transport costs. They also deliver products directly from the supplier to IKEA stores. These slashes handling cost, reduce road distance and lowers the carbon footprint.

IKEA is large enough to enjoy economies of scale. This lowers average costs in the long run through, for example, better use of technology or employing specialized managers. Economies of scale also give a business a competitive edge if cost savings are then passed on to customers in the form of lower prices. This puts up high barriers to entry for smaller companies entering the market. In addition, IKEA$$s low prices create appeal amongst its customers in tough financial times. It is vital to keep prices as low as possible when the retail sector is depressed. IKEA$$s pricing strategy targets consumers with limited financial resources. Its products will also appeal to those with higher budgets through good quality and design. The company must ensure that it is always recognized as having the lowest prices on the market in the future.

Communication plays an important role here.

IKEA takes advantage of different opportunities by leveraging the growing demand for greener products and the growing demand for low$-$priced products. Trends in the current financial climate may result in consumers trading down from more expensive stores and the demand for reduced water usage and lower carbon footprints.

The social trends $$ such as the slowdown in first$-$time buyers entering the housing market and other market factors such as more competitors entering the low$-$price household and furnishings markets drove IKEA to build online help to guide customers to a more sustainable life. Here it can focus on home improvement in the slowing housing market. It supports customers with tips and ideas on its website to reduce their impact on the environment. This will also save them money. Staff is trained on sustainability, both on what IKEA is doing and how they can take responsibility to become sustainable for themselves.

Finally, IKEA needs to reinforce its unique qualities to compete with these economic factors $$the recession slows down consumer spending and disposable income reduces. End!