3SG395 INTERNATIONAL BUSINESS STRATEGY

2023/2024

GROUP 6
DE CASTRO ALFERES PALMA GOMES CAROLINA (DECC01)
GRANILLO IBANEZ RODRIGO (GRAR04)
IERARDI NICHOLAS ROYAL (IERN00)
O'KEEFFE GAVIN DAVID (OKEG00)
RASCONA CHIARA PIERINA (RASC00)
TIN CHUNG SHING (TINC01)
STEPHAN FRANCA STELLA (STEF07)
 Table of Content

01 The company 06 SWOT Analysis

02 Corporate Statements Analysis 07 Current Strategy Evaluation

03 Stakeholder Analysis 08 Hofstede and CAGE

04 External Environment Analysis 09 Recommendations

05
Internal Resources and 10 Executive Summary
Capabilities Analysis
 IKEA = Ingvar + Kamprad + Elmtaryd (farm where he grew up) + Agunnaryd (nearby village)

01.The Company
IKEA is the world’s largest seller of furniture in the early 21st century.
Founded in a small Swedish town, Älmhult, in 1943 by Ingvar Kamprad who
began selling household goods at the age of 17.
IKEA started as a catalogue business and initially sold products such as pens,
purses, and picture frames, but in 1950 the goal of the company changed to
selling quality furniture at affordable prices until today.

1951 1956 1958 1983

FOUNDER
First annual Flat-pack First Latest IKEA Ingvar Kamprad
catalogue concept was showroom logo released
introduced opened

(Our History, n.d.), (Frizzell, 2020)

 01.The Company
It has 457 open stores in 62 different markets and in the 6 different continents.
As of right now, IKEA is one of the most well-known furniture shops in the world, bringing affordability, design, and
everyday comfort to its clients
(How We Work, n.d.)

Leading five selling countries for IKEA products as share of sales in 2022
Catalogue
Germany

US
Home Décor Top-Selling Products:
Lightning France
Cooking & Eating
1. Billy bookcase
Textiles UK

Flooring 2. The Poäng chair

Italy
Storage (1.5M units a year)
0% 5% 10% 15% 20%
Electronics
3. Malm bed frame (Top Retail Selling Countries IKEA 2022, 2023)

Children
Pets
Gardening
(Robinson, 2016)
75% 22% 3%
FY22 products sold FY22 products sold FY22 services to
(The Year in Review, n.d.), (Top Retail Selling Countries IKEA 2022, 2023) through stores online customers
 01.The Company
01. 02. 03.

PEOPLE
&
PLANET
Healthy and Circular and Fair and
sustainable living climate positive equal
“Inspire and enable more than 1 “Become circular and climate “Play our full part in contributing to
billion people to live a better positive, and regenerate a fair and equal society by
everyday life within the resources while growing the respecting human rights, creating a
boundaries of the planet.” IKEA business.” positive impact for people across
our value chain and contributing to
(People & Planet, n.d.), (People & Planet, n.d.) resilient societies.”
 01.The Company
In 2020, IKEA ranked as the 7th most valuable retailer brand on a global scale, valued at nearly $19 billion.
Germany is IKEA’s largest market, representing 15.6% of its retail sales.
(Szecsei, 2023)

Total retail sales for FY22 reached EUR 44.6 billion (EUR 41.9 In FY22, the Inter IKEA Group tax charge was EUR 221 million –
billion in FY21). This includes sales of IKEA products, food and equal to 23.7% of pre-tax income, compared to 16.0% in FY21.
(FY22 Financial Results, n.d.)
services to customers. Compared to FY21, retail sales grew by
6.5% (+3.5% when adjusted for currency effects).

Taxes incurred in FY22 Taxes incurred in FY21

IKEA retail sales in billion EUR Taxes collected in FY22 Taxes collected in FY21
50
Corporate Income tax

40 Customs

30
Other

VAT
20
Payroll
10
0 200 400 600 800
0
FY20 FY21 FY22 FY22/FY21 total tax contribution by type of tax in million EUR

(Inter IKEA Group Reports Lower Profit Absorbing Increased Costs and Investing for the Future, n.d.)
 01. The Company
In millions of EUR FY22 FY21

Sales of goods 26,148 24,282

After financial income and expense, and income taxes, Franchise fees 1,285 1,273

the net income of EUR 710 million was substantially

lower compared to FY21. Other income 145 60

Total revenues 27,578 25,615

Summary Cost of goods sold 23,404 21,137

Even though IKEA’s sales increased compared to PY, Gross Profit 4,174 4,478

facing the current Ukraine war, the increase in the cost of

goods, and inflation the company was forced to absorb Operational Cost 3,140 2,622

these costs instead of charging them to the customer.

Total operating income 1,034 1,856
Similarly, the situation in Russia led to the closing of local
offices, resulting in one-time costs of write-offs.
Financial income and expense -103 -151

We can see that the company is financially healthy, yet, it

Result before tax 931 1,705
was forced to reduce profits for the customers’ sake and
due to geopolitical reasons. Income taxes -221 -272

Net income 710 1,433

(Inter IKEA Group Reports Lower Profit Absorbing Increased Costs and Investing for the Future, n.d.)
02. Corporate Statements
VISION MISSION MANTRA

“To offer a wide range of well-

"To create a better everyday life for “Whatever we are doing today, we can
designed, functional home furnishing
the many people" do better tomorrow.”
products at prices so low that as many
people as possible will be able to
If we think about it, the statement afford them.” We believe the matra could be more
provided by IKEA reflects its vision specific. If on one hand it is suggesting:
accurately: innovation – encouraging the culture
The mission is clear and straightforward,
the company is known for its efforts of improvement.
with a focus on:
in promoting eco-friendly products, employee engagement – the use of
affordability - aligning with our vision
energy efficiency, and sustainable "we" invites employees to contribute
of creating a better everyday life for
practices in both its manufacturing their ideas and creativity.
many people
processes and the products it sells. customer focus – striving to do
aesthetics – pointing out that we
our focus is on "many people": it may better for the customer satisfcation.
provide a combination of quality and
sound generic at first, but truly, the On the other hand, “whatever” is too
value in home furnishing
effort is not limited on the generic. For example, we could use: “By
functionality – the flat-pack form
customers, but it extends, for embracing change today, we can create a
reduces packaging costs and shipping
example, to the communities, better tomorrow”. This statement would
costs, and offers the customers the
employees, shareholders, and many not only be clearer, but also in line with
maximum flexibility for transportation
more. all the previously mentioned.

(Our Culture and Values, n.d.), (Vision, Culture and Values, n.d.)
 The 8 IKEA Key Values

Caring for
people and Cost- Renew and Different with Give and take Lead by
Togetherness planet consciousness Simplicity improve a meaning responsibility example

We are the We want to be a Everyone should Simple, Finding solutions We like to Giving and taking We look for
strongest when force for positive afford a straightforwar to almost question responsibility. peoples values
we trust each change. We have beautiful and d, down-to- impossible excisiting Trusting each before
other, pull the the possibility to functional home. earth. We are challenges is solutions, think in other, being competence
same direction make a significant Make more from informal part of our unconventional positive and and
and have fun and lasting less without pragmatic and success and ways, experiment forward-looking experience.
together. impact. compromising do not like source of and dare to make inspires to
on quality. bureaucracy. inspiration. mistakes. contribute to
development.

IKEA’s values contain a lot of popular values like environmentalism, cost-consciousness and their view on responsibilities. But they also mention
things like togetherness and that their leadership is different than others which makes their values more special. IKEA sounds more like a
futuristic company.
IKEA has already taken steps to improve sustainability, reduce waste, and maintain affordability, which shows a commitment to their values in
their operations. By entering new markets while maintaining affordability, sustainability, and quality, they've continued to reinforce their brand
identity. Further internationalization would likely follow this same path, expanding their reach while staying true to their core values.
However, they do not necessarily fully reflect what the company does and can be misleading on some points, for example IKEA claims to be a
green company aiming for global and social sustainability, but they are still a mass furniture manufacturer selling products that could have
higher durability and quality in terms of materials used.

(Our Culture and Values, n.d.), (Vision, Culture and Values, n.d.)
 Trending Countries
BRAZIL SOUTH AFRICA NEW ZEALAND

Member of BRICS, continuous A developing country in Africa, member of Low barriers of entry alongside with a
deregulation in FDI, large middle-class BRICS, considerable middle-class, linked to strong economy and important population.
and important domestic market. western culture and relatively large amount Has a wealthy, sophisticated market with a
Natural resources and privileged location. of white population very stable, transparent and open business
As one of the few fast-developing One of the wealthiest countries in Africa environment.
countries without IKEA presence, the Over 7000 USD (2021) stable democratic system, at the top of
growing economy contains an important Member of BRICS (one of the strongest anti-corruption rankings
untapped market. developing countries) ranks high in measures of business honesty
Hefty import taxes, ranging from 30% to Historically linked to Western culture and integrity
75% represent the main barrier of entry British colony strong financial system, low
to companies like IKEA. About 4.6 million white population (7.65%) unemployment rate
Despite this, recent FDI encouragement Considerable middle-class population Higly moral society
from the Brazilian government could 24% middle-class or above (2014) EU and New Zealand concluded an free
represent new opportunities. Over 20000 ZAR (1100USD) per month trade agreement (FTA) in June 2022 which
Hefty import taxes/tariffs => local Mild economic growth with high reduces market entry barrier
production with abundant natural unemployment rate 5.1 Million People, largely focused in urban
resources Import tax => increasing cost areas (87%)
Weak local currency => Strong exporting Government’s support of local black Linked to Western culture due to British
position + prime geographical location enterprise => No/limited benefits for FDI colonies

(Causey, 2023), (SALDRU, n.d.), (New Zealand - Market Overview, 2023)

(Foreign Investment in Brazil, n.d.) (Staff Writer, 2023), (NZ Reclaims Top Spot in Anti-corruption Rankings, n.d.)
(Furniture - South Africa, n.d.) (Expanding to New Zealand? Here’s What You Should Know, 2022)
(Tariffs, 2023)
(EU Trade Relations With New Zealand, n.d.)
 03.Stakeholder Analysis Brazil
Primary
Shareholders: Make sure that new expansion efforts do not hurt
Power Interest matrix for Stakeholders
shareholders stake in the company, gain more profit from new markets
Employees: Brazil has a large population of possible employable people.
Investors: Make sure that new expansion efforts become profitable,
Employees
expansion has potential to hurt IKEA's profitability. Brazil receives high
amounts of foreign direct investment.
Suppliers: There is a lot of cheap suppliers for natural resources and Investors
Media
manufacturing in Brazil Local government
Customers authorities
Customers: Brazil has a big consumer population and ranks in the middle
for GDP per capita in the world
Customers
Competitors: Hope the expansion won’t decrease the number of their sales. Suppliers
There are many competitors for IKEA in Brazil
Comptitors
Secondary Employees
Local communities IKEA Shareholders
Local/foreign authorities: Brazil favors business expanding into Brazil and
the government supports foreign direct investment.
Local communities: Many in Brazil live under the poverty line, however
the middle class is growing.
Media: Determines public opinion on IKEA's expansion efforts
(Brazil Furniture Market Insights, n.d.), (Masani, 2022)
 03.Stakeholder Analysis South Africa
Primary Power Interest matrix for Stakeholders
Shareholders: Make sure that new expansion efforts do not hurt shareholders stake
in the company, gain more profit from new markets.
Employees: Trade unions also have a lot of power in South Africa due to the amount
Employees
of members and legislation.
Investors: Make sure that new expansion efforts become profitable, expansion has
Customers
potential to hurt IKEA's profitability
Investors
Suppliers: South Africa has a large amounts of suppliers and resources for furniture. Media Local government
Customers: Consumers in South Africa are cautious and price sensitive, they are Customers authorities

also brand loyal. There is a growth in housing in South Africa

Competitors
Competitors: There are many established furniture companies within South Africa

Secondary
Local/foreign authorities: Furniture manufacturing and retail in South Suppliers
Local communities
Africa has government support. Limited foreign direct investment IKEA Shareholders

Local communities: South Africa has a high unemployment rate and Ikea
can provide a lot of jobs.
Media: The media in South Africa favors MNCs because they boost the
economy and provide jobs (Eksteen, 2023), (“Analysis of the Furniture Industry
(Including HS9404: Mattress Supports; Articles of
Bedding and Similar Furnishing),” 2022)
 03.Stakeholder Analysis New Zealand
Primary Power Interest matrix for Stakeholders
Shareholders: Make sure that new expansion efforts do not hurt
shareholders stake in the company, gain more profit from new markets
Employees: There are a lot of employee unions in South America however
they do not affect employees heavily.
Investors: Make sure that new expansion efforts become profitable,
expansion has potential to hurt IKEA's profitability
Media Investors
Suppliers: Free trade between New Zealand and EU as well as strong natural Local government
Customers authorities
resources.
Customers: Consumers in New Zealand have high disposable income do to a
Suppliers
high GDP per capita. New Zealand consumer confidence is also high. Customers
Competitors: There is rising competition in the furniture market

Secondary Employees
Competitors

IKEA Shareholders
Local/foreign authorities: New Zealand’s government has created tax laws to Local communities

favor foreign direct investment.

Local communities: Provide job opportunities, do no harm to the environment/
improve it(more modern international stores)
Media: Citizens of Ikea have strong values of fairness and equity that determines (Insights Into the Kiwi Upholstery Trade
Employees
opinions on companies entering New Zealand - a Sector Review, 2023)
 03.Stakeholder Analysis
Breakdown of Key Stakeholder Groups

Co-Workers 231,000 IKEA co-workers (High Power)

Communities IKEA strives to create positive impacts on the environment, livelihoods, and local economy

Suppliers IKEA has over 1,600 direct suppliers and service providers

Customers IKEA's goal is to engage with customers and understand their needs

Collaborators Partners and collaborators include businesses, governments, universities, and NGOs (High Interest)

(Stakeholder Engagement, n.d.)

 03.Stakeholder Analysis
IKEA Stakeholder Issues Matrix

Co-Workers Communities Suppliers Customers Partners and

Collaborators

Brand awareness in new

3 3 3 4 4 3 2 2 2 3 4 3 5 5 5
market

Labor price concerns 5 5 5 3 3 3 2 2 3 2 2 1 5 4 4

Cultural Adaptation 3 3 3 5 5 4 3 3 4 5 4 3 5 4 3

Supply Chain Efficiency 2 2 2 1 1 1 5 5 5 3 2 3 4 4 4

1 3 5

Not very important to stakeholder Somewhat important to stakeholder Critical importance to stakeholder
03.Stakeholder Analysis

Ikea has many different stakeholders that play major roles in their operations and success.
From shareholders who Make sure that new expansion efforts do not hurt shareholders' stake
in the company and gain more profit from new markets, to their customers by maintaining the
same quality of goods produced as they did before expansion, expansion has potential to
undermine quality of products. However there secondary shareholders also have strong
impact on expansion efforts especially in local communities where Ikea can provide job
opportunities, additionally do no harm to the environment/ improve it. New Zealand having
consumers and competitors that don‘t have much power in the power matrix, while having a
lot of interest allows for high success. Additionally, New Zealand's incentives for foreign
direct investment promotes business.
 4.1. External Environment Analysis
BRAZIL SOUTH AFRICA NEW ZEALAND

The furniture industry in Brazil is The South African furniture New Zealand also shares a strong
fast-growing with a CAGR of industry is valued at US$2bn in and growing furniture market but
5.90%, fragmented, and 2023 with the largest market being with bigger impacts after COVID-
competitive. The abundance of Home Décor. The industry has a 19, dumping the CAGR to 1.9%;
natural resources has led local CAGR of 4.39%. Similar to other even so, discretionary spending
companies, backed by the federal countries, COVID-19 increased has risen. The largest markets
government, to cut prices and working remotely, hence investing include lounge and dining room
increase quality. The market is in better furniture. The long-term followed by bedroom furniture.
heavily based on bedroom outlook is aided thanks to a large Cultural shifts have led to remote
furniture with important millennial demographic with working, making customers buy
investments in production changing preferences and seeking more furniture while seeking high
improvements from local brands. high-quality products at value for money. Industry valued
competitive prices. at US$1.4bn in 2023.

(Brazil Furniture Market Insights, n.d.), (ANZSIC G4211NZ, 2023), (Furniture - South Africa, n.d.)
 4.1. External Environment Analysis
PESTEL

POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL ENVIRONMENTAL

Brazil has the

worlds
Falls in the middle
Politically Population of leading Brazil's
ranking for
stable 210 million information legal
income
High Levels of Government and system
Has a big Brazil suffers
corruption has brought communicatio does not
consumer market from
Good millions out of n technology require
Big growth environmental
Diplomatic poverty market business to
potential issues
relations with 10% of Brazil's have
13th highest GDP Brazil's
United States population technology written
of 1,9 20.10 government
and other lives under sector is employmen
billion has taken
Countries poverty line growing t contracts
83rd per capita septs to fix
Membership Facing social The Governmen
income this
with many issues government t promotes
World's highest
international Middle class is and foreign
direct investment
orgnizations increasing corporations investment
Member of BRICs
are investing
heavily
(Shaw, n.d.), (Adamkasi, 2023b)
 4.1. External Environment Analysis
PESTEL

ENVIRON
POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL
MENTAL

South Africa
South Africa
has a strong
currency is at a low
The unemployment technology
Political The reserve bank
rate affects the sector
corruption does not take steps
buying power of Has made
Violent to improve the
citizens enormous
outbreaks currency Labor
Large population of progress in the No
Political GDP of $405 billion laws are
61.3 million people technolgoy strong
instability and Member of BRICS similar to
People are moving to secotr environ
social unrest Weaker economy laws in the
starting startups The goverment mental
Politcal South Africa is open United
Not great healthcare heavily laws
problems to companies Kingdom
system and criticism investes in the
often affect expanding outside
of education system technology
economic business in South
Consumer spending secotr through
development Africa
is increasing grants tax
Slow GDP growth
incetives, and
rate
(Adamkasi, 2023a) startup funds
 4.1. External Environment Analysis
PESTEL
POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL ENVIRONMENTAL

The New Zealand

economy is strong and Small
New Zealand has
prosperous population size
made many
Mixed economy with free of 5.1 million
advancements in
trade and open economy people
Stable technology
Main industry is One of the
political The technology
agriculture countries with
system industry is growing New
GDP of 205 billion highest life New Zealand is
with rapidly and there is Zealand
New Zealand has very satisfaction, air facing similar
lowest high demand for ranks
low unemployment rate quality, social environmental
corruption software engineers, high in
Has a high GDP per support, and challenges
rate IT, and development having
capita that ranks 23rd in employment other countries
Very New Zealand plans on business
the world High level of
strong becoming a leading
New Zealand lead the disposable
democracy country in technology
world in economic income
and signicantly
freedom, transparency, Strong values
adding to the world's
protection of civil of fairness and
economy
liberties, and education ethics
(Rahman, 2022) system
Pestel summary

New Zealand stands out as a country with the most political stability as well as low corruption
rate, while Brazil and South Africa have high corruption rating. New Zealand also possess a
strong and growing economy with a high GDP per capita that ranks 23rd in the world. New
Zealand also has a very low unemployment rate. New Zealand lead the world in economic
freedom, transparency, protection of civil liberties, and education system. One drawback of
New Zealand is that they have a relatively low population size in comparison to Brazil and
South Africa. New Zealand technology sector is very strong and continuing to grow. New
Zealand plans on becoming a leading country in technology and significantly adding to the
world's economy.
 4.2. External Environment Analysis
CLC Theory (Brazil)
Rivalry:
High levels of competition from
established brands

Competitive adv.:
Cheaper alternative and large
amounts of capital

Entry Barriers:
Not larger barriers for entry for IKEA

Buyers’ power:
Have a lot of options and increase
disposable income

Suppliers’ power:
Many alternative suppliers for IKEA
(“Brazil,” 2019)
 4.2. External Environment Analysis
CLC Theory (South Africa)
Rivalry:
Large retailers share 80% of the
market

Competitive adv.:
See competitive analysis

Entry Barriers:
Low for large companies (like IKEA)

Buyers’ power:
Limited choices

Suppliers’ power:
Many alternatives

(“Analysis of the Furniture Industry (Including HS9404: Mattress Supports; Articles of Bedding and Similar
Furnishing),” 2022)
 4.2. External Environment Analysis
CLC Theory (New Zealand)
Rivalry:
Top 4 share 40% to 70% of the market

Competitive adv.:
See competitive analysis

Entry Barriers:
High operating cost, considerable
rivalry

Buyers’ power:
Have options to choose from

Suppliers’ power:
Many alternatives

(ANZSIC G4211NZ, 2023), (Furniture - New Zealand, n.d.)

 4.2. External Environment Analysis
Competitive Analysis (Brazil)

(Top 10 Furniture Manufacturing Companies in Brazil by Revenue for December 2023, n.d.), (About Ornare, n.d.),
(Mohdsuhel, n.d.), (Sobre a Mobly, n.d.), (Sobre a Tok&Stok, n.d.), (Our Brands - Grupo Casas Bahia, n.d.),
 4.2. External Environment Analysis
Competitive Analysis (South Africa)

(Top 15 Furniture Suppliers in South Africa: The Ultimate Guide, n.d.), (Our Profile, n.d.), (The Lewis Group, n.d.), (Coricraft Information, n.d.), (Our
Heritage, n.d.), (Top 10 Furniture Manufacturing Companies in South Africa by Revenue for December 2023, n.d.), (About Us, n.d.-a)
 4.2. External Environment Analysis
Competitive Analysis (New Zealand)

(Overseas Market, n.d.),

(Price Match Guarantee, n.d.),
(Winter, 2018),
(Who Is Mocka NZ, n.d.),
(Who Is Target Furniture, n.d.),
(Who Is Nood, n.d.),
(Harvey Norman Global, n.d.),
(Freedom, n.d.),
(About Us, n.d.-b),
(Target Furniture NZ, n.d.),
(Nood - Furniture & Homeware, n.d.)
4.2. External Environment Analysis

New Zealand’s furniture market is in the stage between growing and mature but the locals are
familiar with brands from similar culture (Western culture) and its government has been
promoting trade between NZ and Europe. IKEA can get considerable market share if it enters
as IKEA already has great attractiveness and reputation in NZ and it can differentiate itself
with wide range of furniture with modern Scandinavian design in good price for most NZ. Also,
local companies have little share of the furniture market in NZ meaning international
companies like IKEA is welcomed while in the other two, people like to consume in local based
companies.
 4.3. External Environment Analysis
BARGAINING BARGAINING THREAT OF THREAT OF NEW RIVALRY
POWER OF POWER OF SUBSTITUTES ENTRANTS
SUPPLIERS CUSTOMERS
THINGS LEFT
IKEA manufactures some Buyers have many As sustainability becomes There are few or none IKEA has numerous
of its products internally, options to choose from increasingly important, regulatory or legal competitors, among
5F analysis
but majority of products There are no switching more consumers are barriers to entry the which there are Ornare,
(89%) are sourced from costs for customers to considering buying market Coricraft, Tok&Stock and
external suppliers buy from other suppliers, second-hand furniture However, the size of Casas Bahia
IKEA has access to many and they can find prices However, IKEA’s demand and industry Among these, Tok&Stock
suppliers, and it is one of as low as IKEA’s for a affordable pricing growth is shrinking, offers the option of
the few customers for similar quality strategy paired to the making Brazil a less transportation and
most of them, if not the availability of a large attractive market assembling by
only range of products under customers. This
The size of suppliers in one roof is a great represents one of IKEA’s
relation to IKEA is advantage main strengths, making
infinitesimal, which makes the rivalry very high
it very difficult for them to The size of demand and
shorten the distribution industry growth is less
channel to the end than proportional
customer

LEVEL: LOW LEVEL: HIGH LEVEL: LOW LEVEL: LOW LEVEL: HIGH
(Faustina, 2023a)
 4.3. External Environment Analysis
BARGAINING BARGAINING THREAT OF THREAT OF NEW RIVALRY
POWER OF POWER OF SUBSTITUTES ENTRANTS
SUPPLIERS CUSTOMERS
THINGS LEFT
IKEA manufactures some Buyers have various As sustainability becomes There are few or none IKEA has a considerable
of its products internally, options to choose from increasingly important, regulatory or legal number of competitors,
5F analysis
but majority of products Even though there are no more consumers are barriers to entry in the among which there are
(89%) are sourced from switching costs for considering buying market few large firms and over
external suppliers customers to buy from second-hand furniture There are not 1100 small formal firms
IKEA has access to many other suppliers, it is However, IKEA’s particularly high capital Among these, IKEA’s main
suppliers, and it is one of almost impossible for affordable pricing requirements competitors are Lewis
the few customers for them to find a similar strategy paired to the Group, Coricraft, Ukhuni,
most of them, if not the quality as IKEA’s for such availability of a large and Weylandts. However,
only prices range of products under none of them has the
The size of suppliers in one roof is a great level of globalization and
relation to IKEA is advantage differentiation that IKEA
infinitesimal, which makes has
it very difficult for them to The size of demand and
shorten the distribution industry growth is
channel to the end consistent
customer

LEVEL: LOW LEVEL: MEDIUM LEVEL: LOW LEVEL: HIGH LEVEL: LOW
(Faustina, 2023b)
 4.3. External Environment Analysis
BARGAINING BARGAINING THREAT OF THREAT OF NEW RIVALRY
POWER OF POWER OF SUBSTITUTES ENTRANTS
SUPPLIERS CUSTOMERS
THINGS LEFT
IKEA manufactures some Buyers have quite few As sustainability becomes There are few or none IKEA has a low number of
of its products internally, options to choose from increasingly important, regulatory or legal competitors, among
5F analysis
but majority of products Even though there are no more consumers are barriers to entry in the which there Harvey
(89%) are sourced from switching costs for considering buying market Norman, Freedom
external suppliers customers to buy from second-hand furniture However, the entry Furniture, Mocka, Target
IKEA has access to many other suppliers, it is However, IKEA’s barriers are high given and Nood
suppliers, and it is one of almost impossible for affordable pricing the remarkable operating Among these, Harvey
the few customers for them to find a similar strategy paired to the costs and the Norman has the highest
most of them, if not the quality as IKEA’s for such availability of a large considerable rivalry level of globalization and
only prices range of products under differentiation. Even
The size of suppliers in one roof is a great though it is not as
relation to IKEA is advantage globalized as IKEA, it is
infinitesimal, which makes quite popular in New
it very difficult for them to Zealand
shorten the distribution The size of demand and
channel to the end industry growth is
customer consistent

LEVEL: LOW LEVEL: MEDIUM LEVEL: LOW LEVEL: LOW LEVEL: HIGH
(Furniture - New Zealand, n.d.)
4.3. External Environment Analysis

Among these countries, New Zealand seems to be the most convenient market to enter. In
fact, there are no regulatory or legal barriers, and given the dimensions of our enterprise, we
can easily bear the considerable costs required.
Even though the rivalry is high, the demand is expanding and our “flatpacking” method and
customer service gives us advantage over our competitors. Additionally, customers have few
options to choose from. Therefore, adding to what previously mentioned the value for money
of our furniture, we are confident that we can have success in this market.
 05. Internal resources and capabilities analysis
VALUABLE RARE INIMITABLE ORGANIZATION

VRIO

Brand Image and Recognition YES YES YES NO YES NO YES YES YES YES YES YES

Competitive prices YES YES YES YES YES YES YES YES YES YES YES YES

Distribution Network YES YES YES NO YES NO NO YES NO YES YES YES

Innovation YES YES YES NO NO NO NO NO NO YES YES YES

Global presence NO NO NO YES YES YES NO NO NO YES YES YES

Financial stability YES YES YES YES YES NO NO NO NO YES YES YES

Quality of products YES YES YES NO NO NO YES YES YES YES YES YES

(Country Comparison Tool, n.d.), (IKEA Stores Across the World, n.d.), (Shared Passions: The Key to Success, n.d.)
 05. Internal resources and capabilities analysis
VALUABLE RARE INIMITABLE ORGANIZATION

High financial strenght:

Brand image for social enables IKEA to invest in
Global presence Quality of products: known by the
responsability: department R&D and be aware of
and operation in IKEA’S internal management
well defined and IKEA takes market tendencies and
multiple Product Portfolio can be imitated
social responsability consumer behaviour
countries: IKEA Location: are in regions where it is easier
initiatives Technological
has a very to access (main cities)
High-quality product advancements: enables
expanded Marketing Communication: IKEA’s
offerings IKEA to keep their
consumer base strategies are particular to the company
High brand recognition efficiency in operations
High capacity --> inimitable resource
IKEA’s distribution network Employee training:
for cultural Customer experience: unique and wide
valued on a global scale enables its employees to
adaptation: because of the product offer and
Innovation (marketing): grow personally and
crucial for experiences provided by IKEA (service
allows IKEA to decrease professionally --> creates
penetration in of delivery, 2nd life furniture selling)
operational costs and achieve more commitment
various Competitive prices: IKEA has an
economies of scale Organizational culture:
countries with extremely high demand and maintains
Equity through internal supports innovation, team
different its costs through new technology -->
sources: important for building, onformation
cultures inimitable resource
expansion and diversification sharing and listen to its
empolyees

(Country Comparison Tool, n.d.), (IKEA Stores Across the World, n.d.), (Shared Passions: The Key to Success, n.d.)
05. Internal resources and capabilities analysis

Taking all the previous mentioned into account, we can conclude that, in general, for all three
countries, IKEA can be considered to have valuable, rare, and inimitable capabilities and
resources and to be organized as well. As a result, IKEA has a sustainable competitive
advantage. Therefore, we are all comfortable in expanding IKEA to New Zealand because of
what we conclude with VRIO analysis.
 06. IKEA SWOT analysis
Strengths Weaknesses
Decreasing Quality-
Supply Chain-
IKEA continues to innovate by finding new cost efficent ways to
IKEA’s supply chain is both time-efficent and cost-efficent.
run the company. Unfortunately, consumers have accused IKEA
Effectiveness is achieved through clear expectations and good
of decreasing quality which is bad publicity for the company.
working conditions
Negative Publicity-
Diversified Product Portfolio-
IKEA has had a few advertising campaigns that have generated
IKEA specializes in furniture, but also runs restaurants, houses,
unwanted negative publicity. The brand was accused of having a
and apartments. This protects IKEA from the changing furniture
sexist advertisement in China. IKEA went on to apologize for the
market that affects their competitors
ad, and pull it.

Opportunities Threats
Intensifying Competition-
Further Expansion-
New companies continue to enter the market. IKEA is, of course, a
IKEA is a company that has expanded to many locations around
very strong and stable company, but competition is quickly
the globe. However, there is still opportunity for further
intensifying in the furniture industry.
expansion into developing economies.
Growth of Average Consumer Income-
Online Sales-
Since IKEA sells lower priced and lower quality items, it is a threat
IKEA has increasing numbers of online sales each year. About 23
to the company that their consumers have growing incomes. The
percent of the sales for the entire company are online. The increase
company will lose business if their customer base decides to shop
in online sales in the industry as a whole is an opportunity for IKEA.
for higher quality furniture.

(Jurevicius, 2023)
 06. SWOT analysis Brazil
Strengths Weaknesses
Brazil’s stable government High taxes on imported goods
Brazil leads the furniture industry in Established Furniture companies with
South America similar business models to IKEA (ex.
IKEA’s prices would be competitive in Tok&Stok)
Brazil’s market Questions of conumers receptivity to
the concept of building the furniture

Opportunities Threats
High population Stores such as Etna and Tok&Stok are
Growing economy established in Brazil
Large and growing middle class The threat of new entries in the
Possible partnership with Brazilian industry are considered to be strong
government through various programs

(Duran, 2013), (anapaulapicasso, 2009), (A Case Study IKEA in Brazil Marketing Essay, 2015)
 06. SWOT analysis South Africa
Strengths Weaknesses
Low threat of subsitutes High unemployment rate makes
Current competition can not for less potential customers
compete with IKEA’s prices and Political instability
quality Slow GDP growth rate
Weak economy

Opportunities Threats
High population Threats are limited to a few large
Size, demand, and growth of the firms and over 1100 small formal
industry is increasing firms
Political unrest

(Wróbel, n.d.)
 06. SWOT analysis New Zealand
Strengths Weaknesses
Low threat of subsitutes High operating costs
High GDP per capita Cosiderable rivalry
Strong economy Small population
Stable government with low Few cities big enough to support IKEA
corruption stores

Opportunities Threats
Consistent growth in the industry Low threat of new entrants
High demand With the lack of legal barriers to enter
Advancements in technology create the market, competition could
online opportunities increase quickly

(Small, 2018)
06. SWOT analysis

IKEA has the potential to thrive in all of the mentioned environments, but the most
favorable for the company based on the strengths, weaknesses, opportunities and
threats of each country is New Zealand. The country’s strong economy and political
stability make for a safe place to expand to. Furniture in New Zealand is in high
demand, the industry is consistently growing, and there are few legal barriers
preventing expansion to the country.
 07. Current Strategy “The IKEA Concept starts with the
idea of providing a range of home
- The IKEA Concept furnishing products that are
affordable to the many people, not
IKEA’s whole company revolves around this just the few. It is achieved by
concept, from their designs, throghout their
business model.
combining function, quality, design
Using this concept, alongside their vision, the and value - always with
company’s business strategy focuses on the sustainability in mind.”
following points. (The IKEA Concept, n.d.)

Low Prices IKEA’s economies of scale and technological integration gives it an unmatched cost effectiveness

Variety of products More than 12,000 current products and 2,000 new ones yearly keep their customers invested

International expansion Effective franchising tactics have helped the company to aggressively expand worldwide

Strategic Alliances Alliances with LEGO, ADIDAS, and Apple aid in product development, tech, and customer

behavior knowledge
(IKEA Business Strategy and Competitive Advantage: Capitalising on IKEA Concept, 2022)
 07. Current strategy
- Structure
IKEA, at a general level, is not owned by anyone
and is ultimately managed by non-profits or
foundations. This complex and intricate
structure enables them to be financially
independent, impossible to takeover and allow
them to control each part of their business.

This interconnected startegy has also been

under scrutiny as it allows for inter-company
lending. This flexible strategy enables the
members of the structure to lend up to €5.4bn
at 6% IR, sharply reducing Inter Ikea’s Dutch
taxes.
IKEA is able to share profits & losses, lend, and
move their fiscal obligations at their
Adapted from Milne and Toplensky (2017) convenience, all within a legal, but strict,
framework.

(How We Are Organised, 2023), (Milne & Toplensky, 2017)

07. Current strategy evaluation - Franchises
IKEA strives to achieve long-term growth and
develop the brand through a franchise system.
Fee charged annually on net
The system promises financial stability, and 3% sales per franchisee
enabling franchisees to reach new markets.
Maintaining the IKEA Concept was a
cornerstone in the developing of the system. Markets
Franchisees are evaluated by IKEA Systems Ingka Group
B.V., if granted, they get acces to trademarks, Ikano Group
products and operations. Al-Futtaim
Dairy Farm
Miklatorg
This strategy allows IKEA to engage in a low- Al-Homaizi
House Market
risk but highly profitable expansion strategy
Sarton
while maintaining control of the brand. IKEA
Al-Sulaiman
differientatiates itself from franshising MAPA
competitors ensuring to mantain the IKEA Northern Birch
Concept through every step in their business. Falabella
0 5 10 15 20 25 30 35
(One Brand, Many Companies – the IKEA Franchise System, n.d.)

(The IKEA Franchise System, n.d.)

08. Hofstede’s 6D Model

Source: Hofstede Country Comparison Tool

Brazil, New Zealand and South Africa compared with Hofstede’s 6D Model. It shows that New Zealand is the best choice for expansion due to
the similary it has with countries were IKEA already exists. It shows the same preferences in cultural dimensions as western countries.
New Zealands Dimensions descriebed in detail
Motivation towards
Power Distance Individualism Uncertainty Long Term Indulgence
Achievement and
Success Avoidance Orientation
Minimizes emphasis on Individuals are In pragmatic societies, In societies with a high
hierarchy, fostering encouraged to give truth is seen as level of indulgence,
Values self-reliance and their best and celebrate
accessible superiors and situational, contextual people value fulfilling
initiative and focuses their successes. This
a consultative culture. No significant and time-dependent. their impulses and
on meritocratic ethos influences
Information sharing is preference They adapt traditions to enjoying life. They are
decision-making in the dynamics in the
frequent, and workplace, where hiring new conditions, value optimistic, value leisure
business world.
communication is and promotion often saving and investing, time, act freely and
informal and depend on emphasize frugality and spend their money as
participative within performance. Conflicts work persistently they please.
organizations. are usually resolved on towards goals.
an individual level.

(Country Comparison Tool, n.d.)

08. CAGE Framework
(EU Trade Relations With New Zealand, n.d.), (EU Trade Relations With South Africa, n.d.),
(EU Trade Relations With Brazil, n.d.), (Martins et al., 2023),(Sinclair et al., 2023),
(Vigne et al., 2023), (Commisceo Global Consulting Ltd, 2020a),
(Commisceo Global Consulting Ltd, 2020b), (Commisceo Global Consulting Ltd, 2020c),

Brazil New Zealand South Africa

Mostly Portuguese English and Maori South Africa has 11 official languages, English is the language of
White (includes Portuguese, German, Italian, Spanish, Polish) New Zealand European 74.5%, Maori 9.7%, other European 4.6%, administration and is spoken throughout the country
55%, mixed white and black 38%, black 6%, other (includes Pacific Islander 3.8%, Asian and etc. 7.4% Black 75.2%, white 13.6%, Coloured 8.6%, Indian 2.6%
Japanese, Arab, Amerindian) 1%
Anglican 24%, Presbyterian 18%, Roman Catholic 15%, unspecified or Christian 68%, indigenous beliefs and animist 28.5%
65% of Brazilians are Catholic

C
Cultural Values: family, community, hospitality, strong emphasis on none 33% Values: diversity, resilience, community, respect for various cultures,
distance social connections, warmth, and inclusivity Values: fairness, equality, respect for diversity; Strong emphasis on languages and traditions
Norms: relaxed attitude towards time, blend of cultural nature and Maori cultural heritage Norms: mix of tradition and modern, hospitality, communal support,
influences, embracing diversity in music, food, and Norms: laid back attitude (kiwi culture), informal and friendly, respect for elders, family
celebrations. Nature holds great significance (Amazon egalitarian and value individuality, while also emphasizing teamwork
Rainforest)
and community support

Strong colonial history, influenced Brazil deeply Colonial history (British colonization), strong impact complex colonial history (Europeans), troubles with racial segregation
Part of various reginal political associations and diplomatic Independent nation and not part of lager political unions and discrimination until early 1990
relations across the world Currency is the New Zealand Dollar (NZD) Political associations and memberships in various regional and
Currency is the Brazilian Real (BRL) New Zealand follows a common law legal system influenced by international organizations, such as the African Union and BRICS
Administrative Brazil follows a civil legal system influenced by Portuguese British legal traditions Currency is the South African Rand (ZAR)

A
and political law, It has its own legal framework and justical system Political stability (democratic system and low levels of internal Hybrid legal system influenced by Roman-Dutch and English law (equal
distance There have been international political tensions (linked to political hostilities) rights and freedoms for all citizens)
governance, socio-economic disparities and corruption) EU and New Zealand concluded an free trade agreement (FTA) in faced political tensions and challenges related to governance,
The EU is negotiating a free trade agreement with Brazil June 2022 corruption, socio-economic disparities
signed Trade, Development and Cooperation Agreement with the EU in
1999 and the Southern African Economic Partnership Agreement in
2016, regulates trade in goods

certain regions, particularly in the Amazon rainforest, have New Zealand is an isolated island in the South Pacific, long travel not as physically remote as some countries due to its relatively well-
limited access (dense forests, lack of infrastructure) times to reach other countries connected road and transportation networks
Brazil shares borders with many South American countries, well-developed transportation and communication infrastructure, Immediate neighboring countries in Africa include Namibia, Botswana,
Geographic

G
including Colombia some remote areas (South Island) face challenges with connectivity Zimbabwe, and Mozambique
distance major cities and developed areas have adequate and infrastructure due to rugged terrain mix of well-developed and less-developed transportation and
transportation and communication infrastructure, remote or faces earthquakes and flooding communication infrastructure; while major cities and urban areas have
rural areas face challenges with accessibility and good infrastructure, rural regions might face challenges with
infrastructure development accessibility and connectivity
experiences flooding and wildfires faces flooding and wildfires

significant disparity between higher and lower-income groups mix of higher and lower-income groups, but less unequal than in significant wealth gap, Income inequality is pronounced
Brazil possesses abundant natural resources, including other countries South Africa is rich in natural resources, including minerals and a

E
Economic agriculture, minerals, and a diverse ecosystem rich natural resources, including agriculture, forestry, and scenic diverse landscape
distance faces challenges in ensuring equal access to education and landscapes, invest in education and possess a skilled workforce places importance on education but faces challenges in ensuring equal
information across its population good access to education and information, contributing to a well- access and quality of education across its population, particularly in
informed workforce underprivileged areas
08. CAGE Framework - Evaluation
Cultural Administrative and political Geographic Economic
language barrier is the differently than the three countries New Zealand has the best New Zealand has the least
highest in Brazil Sweden did not have a colonial history, it transportation and unequal income-groups and
no reliegous affects on maintained independent and did not communication infrastructure is therefore very similar to
IKEA engage in overseas colonization (different out of the three countries Sweden; this is the best
New Zealands norms and background) but New Zealand is isolated requirement for making B2C-
values are the most Sweden has the Swedish Krona (SEK), and harder to reach than business
similar to the ones from there is no preference for any country in South Africa and Brazil all countries are rich in
Sweden (equality, that field Just as Sweden all three natural ressources but due to
sustainability) Sweden has experienced political stability, countries have some remote the facvt that IKEA would
there are less tensions a strong democratic system and relatively regions which might import the furniture this is
between cultures in New low levels of internal political hostilities experience limitations in not relevant
Zealand (more which is most similar to New Zealand infrastructure due to rugged New Zealand is the most
homogenous) Brazil and South Africa have both terrain similar to Sweden when it
problems with corruption which speaks all three countries are facing comes to access to education
against those countries natural disasters such as and information and
The free trade agreement between earthquakes, floods, and contributing to a well-
Sweden and New Zealand suits best for wildfires but New Zealand the informed and skilled
IKEA least workforce

When summarizing the evaluation of the CAGE Framework there is a clear preferation for New Zealand in all four distances.
New Zealand is most similar to Sweden in cultural and economic aspects and has the best conditions in terms of administrative,
political and geographic aspects. Therefore IKEA is most likely to be successful in New Zealand.

(Commisceo Global Consulting Ltd, 2020d), (Helmfrid et al., 2023)

 09. Recommendations
Given New Zealand’s size and location, it is crucial to realize operational efficiencies. The
Optimize Supply country’s cutting-edge technology could streamline and improve the company’s inventory
Chain management and distribution. Succesfully implementing the flat-packed method is a must.

The company should develop a targeted market strategy directly towards the Kiwi market
Strategic Marketing emphasizing their unique value proposition and highlighting their differentiatiors such as the
and Differentiation flat-pack. The rivalry could be avoided by showing how it meets the market needs while
maintaining the IKEA Concept.

IKEA could leverage local partnerships to enter the market. Through strategic partners, IKEA
Strategic could avoid potential challenges coming as an “outsider” company, overcoming cultural shocks
Partnership and regulations.

Investing in local talent, and training the local workforce could leverage IKEA’s entry within the
Local Talent community, positioning it as a better competitor in the marketplace. Similarly, the IKEA concept
already spotlights local jobs, hence making it easy for the company to achieve this.

Lastly, having mentioned the community’s importance, having strong links with the community,
Community and involving it in the decision-making process would further differentiate IKEA and improve its
Engagement & positioning. Furthermore, addressing Kiwi's concerns regarding the environment with IKEA’s
Sustainability
sustainability efforts and job opportunities could place IKEA as a potential market leader.
 10. Executive Summary
IKEA's strategic analysis reveals a financially healthy company that prioritizes customer benefits and navigates
geopolitical challenges. After evaluating multiple countries, New Zealand emerges as the most favorable market for
expansion due to its cultural and economic similarities to Sweden, low competition, political stability, and a growing
economy.

Stakeholder analysis highlights the importance of considering various stakeholders, from shareholders seeking
profitability to local communities concerned about job opportunities and environmental impact. IKEA's commitment to
sustainability aligns with its corporate values, fostering a strong brand identity.

In the external environment analysis, New Zealand stands out with favorable outcomes in the five forces analysis.
Despite high rivalry, the expanding demand and IKEA's unique "flat-packing" approach position the company for success.
The low threat of new entrants further enhances the market potential.

Assessing resources and capabilities using the VRIO framework, IKEA, especially in New Zealand, demonstrates valuable,
rare, and inimitable capabilities, providing a sustainable competitive advantage. The company's non-profit ownership,
adaptable fiscal strategy, and franchise system contribute to effective control, risk reduction, and maintenance of the
IKEA Concept.

In summary, expanding to New Zealand aligns with IKEA's strategic goals, leveraging its strengths and mitigating risks.
The country's economic stability, low corruption, and technological advancements present a prime opportunity for
IKEA's sustainable growth and success.
 3SG395 INTERNATIONAL BUSINESS STRATEGY
2023/2024

Thank You
Do you have questions?

GROUP 6
DE CASTRO ALFERES PALMA GOMES CAROLINA (DECC01)
GRANILLO IBANEZ RODRIGO (GRAR04)
IERARDI NICHOLAS ROYAL (IERN00)
O'KEEFFE GAVIN DAVID (OKEG00)
RASCONA CHIARA PIERINA (RASC00)
TIN CHUNG SHING (TINC01)
STEPHAN FRANCA STELLA (STEF07)