231 stores in 24 countries, 522 million visitors during one year and nearly
20 billion euros in sales make IKEA the most successful furniture retailer
in the world (IKEA, 2007; Sloan, 2007). In addition this is achieved
without taking advantage of people or the environment, as one of IKEA’s
policies is to have an overall positive impact on both (Barner, 2007).
But why is the Sweden-based company so successful? And how did it
become that way? Which strategic issues did IKEA face? What are the
values, resources and competences the company bases its operations on?
In order to answer these questions this work uses two strategic
frameworks. For the historic development of the company the ‘dynamic
competence and capability framework’ is used. Furthermore the competitive
edge IKEA has in comparison to its concurrence is explained with
the ‘static competences and capabilities framework’, which is based on a
company’s special set of resources. Within this latter framework there is
an emphasis on knowledge as a fundamental resource and on knowledge
integration, which is separately discussed.
The remainder of this work is therefore structured as follows. In the
second section the frameworks of static and dynamic strategic competences
and capabilities are explained. Afterwards, in the third part, the
dynamic model is adopted to IKEA by applying it to some of the most
important strategic decisions that led to the success of the company.
Furthermore this paper is seeking to evaluate IKEA’s current resources,
competences and capabilities within the static competence and capability
framework. Eventually the integration of knowledge at IKEA is examined.
The analysis finishes with a conclusion revising the main points.
Table of Contents
1. Introduction
2. Strategic competences and capabilities
3. IKEA
3.1. IKEA’s dynamic competences and capabilities
3.2. IKEA’s resources, competencies, capabilities
3.3. Integration of knowledge
4. Conclusion and outlook
5. References
Research Objectives and Topics
This paper examines the sustained success of the furniture retailer IKEA by analyzing the company's strategic development through the lenses of static and dynamic competence and capability frameworks, with a specific focus on the role of knowledge integration.
- Historical development of IKEA using the dynamic competence framework.
- Evaluation of IKEA's core resources, competencies, and strategic capabilities.
- Analysis of knowledge management and lateral knowledge transfer practices.
- Assessment of organizational adaptability in response to market changes.
- Investigation of the relationship between corporate culture and operational success.
Excerpt from the Book
3.1. IKEA’s dynamic competences and capabilities
According to Barthelémy, it was rather coincidental that Kamprad included furniture in his catalogue, realising much later that this is far more promising, as all his former products taken together. Following the model of Teece (1997) the decision for selling furniture can be seen as the first dynamic competence created by the young entrepreneur. Basing on limited resources such as the existing catalogue and a rather small channel of distribution, the path of possible developments was relatively broad. However, already at this early stage his choice was limited. Both the lack of capital and the indirect as well as impersonal distribution channel excluded a wide range of products (e.g. cars or motorbikes) and services. The core capability at this time might be described as ‘selling whatever to make the most money’.
A few years later, in 1953, one of Kamprad’s first employees, Gillis Londgren, had the idea for a ready-to-assemble kit by taking the legs from a table and putting them under the table top (Barthélemy, 1996). This was mainly supposed to reduce delivery damages which were a major problem at this time. A side effect was large reductions in shipping costs. Applying Teece’s (1997) model one could argue that by varying the combination of organizational resources and processes a new competency, the cost saving transport of furniture, emerged. That is the design of the table as well as the package was changed by using a new idea that developed within the company. However, the decision to do so could only be made, because the changes were still within the boundaries of the path determined by IKEA’s position. The position at this time can be described as the composite of the mail-order-system depending on shipping, a rather small product range of furniture and home-based selling.
Summary of Chapters
1. Introduction: This chapter outlines the scope of the study, presenting the research questions regarding IKEA’s success and introducing the static and dynamic frameworks used for analysis.
2. Strategic competences and capabilities: The author defines the theoretical foundation, explaining the concepts of static resources and dynamic capabilities as described by scholars such as Chandler, Grant, and Teece.
3. IKEA: This section serves as the empirical core, applying the theoretical models to IKEA’s history and current business practices.
3.1. IKEA’s dynamic competences and capabilities: This chapter analyzes how IKEA developed its specific market position through historical strategic decisions and the adaptation of processes.
3.2. IKEA’s resources, competencies, capabilities: This chapter breaks down IKEA’s current business model into its fundamental resources and the specific competencies that sustain its low-cost strategy.
3.3. Integration of knowledge: This chapter examines the internal structures and cultural mechanisms IKEA employs to share knowledge effectively across different organizational levels.
4. Conclusion and outlook: This final chapter synthesizes the main findings, summarizing how knowledge integration and adaptability have driven IKEA's success and providing a brief outlook on future challenges.
5. References: A list of all academic and industry sources cited throughout the paper.
Keywords
IKEA, dynamic capabilities, static competencies, knowledge integration, strategic management, organizational resources, furniture retail, supply policy, competitive advantage, lateral knowledge transfer, business growth, corporate culture, strategic decision making.
Frequently Asked Questions
What is the primary focus of this paper?
The paper explores the reasons behind IKEA's long-term global success by analyzing its business operations through strategic management theories concerning resources and dynamic capabilities.
What frameworks are used to analyze IKEA?
The work utilizes the 'static competences and capabilities framework' (based on resources) and the 'dynamic competence and capability framework' (focusing on historical development and adaptability).
What is the central research question?
It seeks to understand which strategic issues IKEA faced, what values and resources the company uses, and how it manages to remain successful in changing markets.
Which scientific methodology is applied?
The study uses a theoretical-deductive approach, applying established strategic management models from authors like Grant, Teece, and Chandler to the empirical case study of IKEA.
What does the main body cover?
The main body covers the theoretical background, the historical evolution of IKEA's capabilities, its current operational competencies like global sourcing, and its knowledge sharing mechanisms.
Which keywords define this work?
Key terms include IKEA, dynamic capabilities, knowledge integration, strategic management, organizational resources, and competitive advantage.
How does IKEA handle knowledge integration specifically?
IKEA uses formal measures like the intranet and 'range-weeks,' as well as informal meetings and 'reverse knowledge transfer' to ensure that insights from floor workers reach the headquarters.
What role did the Swedish retailer boycott play in IKEA's history?
The boycott forced IKEA to innovate its supply policy by sourcing from Poland, which ultimately contributed to the development of new core competencies related to volume purchasing and economies of scale.
Why is the 'ready-to-assemble' concept considered a strategic competence?
It allowed for significant reductions in shipping costs and delivery damages, fundamentally changing how furniture is transported and sold while enabling a low-price strategy.
What future risks does the author identify for IKEA?
The author notes that deviating from the established successful path, such as moving towards in-town stores or online retail, could potentially threaten the company's traditional competitive edge.
- Arbeit zitieren
- David Wagener (Autor:in), 2008, IKEA. Strategic competences and capabilities, München, GRIN Verlag, https://www.grin.com/document/113429
