IKEA Essay

1. Explain, in detail, the aspects of IKEA strategy that make it a Hybrid strategy. IKEA is understandably a fol grimer of a strategy clock approach, which is characterised by both distinctive features it is more focused on impression termss to customers, not solitary(prenominal) low lives to organisation, and its strategic decisions ar made to create the isotropy between damage/cost go forthership and differentiation, creating unique benefits and features that provide war-ridden advantage. Home furnishings market is highly segmented with mostly local opposition of the several kinds multinational furniture retailers, companies specialising in just a dismantle of furniture product ambit, non-specialized retailers where furniture as part of their product range and small companies/producers.IKEA strategy is characterised by cost saving, where managers fly economy and voice rooms in the hotels, salaries are hardly generous, advertising is d sensation in-house, their office s do not look like typical offices of a multinational companies receivable to fanatical devotion to cost cutting. With this cost cutting urge, the company is confident of gaping prices much lower than the competition. Such pricing strategy makes IKEA by choice focusing on younger raft and middle class buyers, those who do not wish or stick outnot afford buying expensive furniture. IKEA is wellspring aware of who are their key-customers, which is 25-50 years old people, majorly families with kids.Thus, there is a reliable focus on a segment, which is another part of hybrid strategy, although IKEA is claiming they are for everyone. Although IKEA designer will always sacrifice the design to lower cost (if a requested chair came up at a price of 12 pounds instead of 10, it will be re-designed), IKEAs concept is to offer designed products. They have in-house designers who give a lot of attention to personalisation of interiors, re expectable to traditional importance of home dec orations for the Swedish people, who spend most of the clock at their homes. Among other unique benefits to customers are the flat pack of the furniture, which can be this instant taken home and egotism assembly of well-nigh any item. This is a great benefit for people who choose IKEA among others.2. why is this strategy severe for competitors to imitate? IKEA has been in the market since 1950s and has positive from a local shop to a multinational company with figurehead in 24 countries and accounting to about 2.5 percent of the world gross sales of home furnishings, which is a lot given the high segmentation of the market. Since one of the competitive advantages of IKEA is low pricing to customers, it will be very difficult for a competitor to offer even lower prices in shape to win market share, especially given the fact that low price is not the only characteristic that makes IKEA a shopping destination for consumers all over the world. The optimized balance between the p rice and the design is what makes IKEA unique.Especially in the post-recession environment, when IKEA itself cannot shove a commodious high growth, the important benefit for this company comes from its worldwide presence and overbold shops opening, when the winning combination of low price and fancy design immediately attracts people and wins market share. It is not an easy task to achieve by a competitor. Moreover, recognized international brand, specific layouts of shops, patented flat packs and self assembly are also one the features differentiating IKEA from all other furniture retailers. Their specific HR policies are also unique, when they hire young people and utilize their enthusiasm to the full with not so generous pay offs. If any competitor wished to adopt a similar strategy, it would require life-size investment and costly reorganization of all the processes. Such reorganization would sum up costs and will not make it possible to offer low prices.3. What are the per ils of a hybrid strategy and how can managers guard against them? The main danger of a hybrid strategy is that a combination of low price and differentiation normally cannot be supported in the long run. It is mostly used to win the market share in a new market or to win market share from the competition. backup such strategy for a long time involves a danger for requirement to increase differentiation which involves increased cost and can lead to the stuck-in the middle position, where a company will stop having a correct strategy. The only way managers can guard against this danger is either to distinctly stick to the once chosen strategy, or reconsider it when cost is uncontrollably increasing due to the growing differentiation demanded by the customers. In such cases a company can adopt one of the generic strategies to act up being competitive.