Company Background
Discuss about the competitive strategy used by the company IKEA Thailand.
The purpose of this report is to provide description about the company IKEA Thailand and cooperative strategy used by it to attain success in the market. The report explains the description about the company, meaning, use and importance of cooperative strategy in the business of IKEA Thailand. It also explains the competitive dynamics of the industry that affects the activities of the company in the competitive environment. Further, it should be noted that the company is an organization that is well-renowned worldwide. The company operates its activities in numerous parts of the world. The company has initiated many strategies to expand worldwide and maintain its competitive advantage in the target market. The company mainly makes use of the co-operative strategy to expand its scope of business in Thailand. Co-operative strategy refers to the strategy under which an organization plans to work together with another organization initiating similar diverse activities in the market. Further, more details about the report are discussed below:
The company IKEA Thailand is a value-driven organization that provides furniture services to people worldwide. The company provides easy designed and efficient products to the customers in the market. The organization offer products to the customers that are feasible by all the customers present in the market. IKEA has 389 stores in total 48 countries. The vision and business idea of the company states that they want to create a better world by assisting people with their products and services in the market. The idea of the business is to offer a wide range of well-designed products to the people at lower rates in the market. The major aim of the organization is to offer its products to all types of customers in the target market irrespective of their income level (Grant 2016). The company works hard to enhance the quality of the furniture that they provide in the market. Three growth areas of IKEA Thailand are achievement of quality products at lower rates, maintain sustainability in planet through their activities and lastly, to help people repeatedly in the market. The company IKEA is formerly based in Netherlands, it is a Swedish organization that designs and sells ready to assemble furniture, home accessories and kitchen appliances. IKEA is the world’s largest organization that sells furniture to the customers in the target market. Further, the corporate structure of the company is formed in such a way that it flexible expands its business in the target market and initiates strategies in such a way that competitive advantage is achieved to the company through its strategies (Desyllas, et. al., 2018).
Co-operative Strategy
Further, the organization is known for using the modernist design for the production of different types of products in the organization. The company is known best for providing services to lower income level people as well; apart from it IKEA Thailand also aims to create products that are ecofriendly as well. The company has a complex organizational structure that makes it difficult for other competitors to make use of same strategies to initiate its sales in the target market. The IKEA Company opened its second store in Bangkok, Thailand. In the current environment this store is the largest store present in south East Asia (Huo, et. al., 2014).
Cooperative strategy refers to the strategy under which an organization plans to work with another organization by sharing similar motive in the environment. It is a business level strategy under which two organization works collectively to fulfill one mission. Under the cooperative type of strategy, organizations make use of each other’s resources and capabilities to make sure that both the organizations gain competitive advantage through their products and services served in the target market. It should also be noted that the organization initiating cooperative strategy not only use each other’s resources but they allocate the cost to each other so as to maintain that both the organization maintain competence in the market (Bereznoi 2015).
The word co-operative strategy by its name explains that the organization will share the same motive to work in the diverse environment. This type of strategy makes it easy for both the organization to use diverse resources that they were initially unable to procure. Resulting to which, both the organizations gain competence in their respective target markets (Pimpan 2018). This type of strategy is initiated in the environment by many ways like horizontal integration, joint venture, vertical integration, conglomerate diversification etc. Further, use of these strategies provides various benefits to the organizations in the target market. Suppose if IKEA make use of this type of strategy with other organization then the other organization can effectively make use of the name and goodwill of the company to promote its brand in the external market. Goodwill is the most important aspect helps and co-operates with other business process to grow efficiently in the target market (Panwar, et. al., 2016). Further, below mentioned are the reasons due to which the companies make use of this type of strategy in their business structure to grow:
Use of Co-operative Strategy in IKEA Thailand
Lack of adequate resources; many times the organizations faces difficulty in procuring the right type of resources for their business that can help them to growth repeatedly in the target market.
This type of strategy allows the companies increase its value and image in the eyes of the target customers in the external market.
Increase in the level of revenue and expand their scope of business in diverse environments.
In the country Thailand, the company adequately used the co-operative business strategy to earn reputation the target market. With the help of this strategy, the business implemented the act of value creation in their business resulting to which competitive advantage was earned by the company. In the country Thailand, the organization understood the importance of stakeholders in the system, in response to which they laid emphasis on the stakeholders and aimed to improve their satisfaction level (Zollo, Minoja, and Coda 2018). The company made the stakeholders its fundamental component in achieving cooperative advantage in the target market. Under this case the stakeholders of the company were considered as the potential partners who assisted them in attaining satisfaction in the target market. The stakeholders of the company were considered their partners under the co-operative strategy (Simon, and Wangsirilert 2017).
Coming up the implementation of this strategy, the company dealt with the issues with maturity, they focused on the issues that they were facing in the external market and they aligned them according to their priorities. For the issues faced by them, IKEA Thailand made use of the strategic approach that helped them in sustaining their image in the target market. Further, with the help of above mentioned strategic management, the company easily resolved most of their issues in the market of Thailand. Afterwards, the organization made use of the slow store expansion strategy to slowly expand its sales in the target market (Rothaermel 2015). It should be noted that Thailand was the second place where the company setup their outlets, so it is important for the organization to attain success in this market so that they can maintain their goodwill as well (Vos, et. al., 2016). After opening a retail store, the company also developed their online website with the help of which people initiated sales for the company.
Further the Scandinavian cooperation adequately helped the organization to increase its sales in the external market with the use of cooperation strategy. IKEA Thailand gained competitive advantage in the market by sustaining its activities with the use of cooperation strategies. The company produced goods and services used the stakeholders to supply the products in the market of Thailand extensively. In this way people got to know about the activities of the company IKEA in the market of Thailand (Kongarchapatara, and Shannon 2014). The biggest challenge faced by IKEA in the market of Thailand was the problem of child labour. The company implemented a humanistic approach by stating that they are in the best interest of children present in the society. This issue was adequately fulfilled by the company using their stakeholders. Further, it should be noted that the company IKEA Thailand gained competitive advantage in the market by mainly depending upon their stakeholders in the market. With the help of suppliers present with the company they used the co-operative strategy to earn reputation in the market. Apart from that, the company used strategic alliance to expand their business in the market. Wholly owned subsidiary is the best co-operative strategic that was used by the business organize its activities in Thailand and earn good returns (Mukherjee, Cuthbertson, and Howard 2014).
IKEA is a privately owned organization that always makes use of wholly owned subsidiary process to enter in a target market and expand its market share as well. With the help of this type of global strategy, the organization effectively placed their headquarter in Bangkok, Thailand. It this way the company managed to control all its functions in Thailand and place the organization at the right place in the market. Thus, in this way, the organization used the feature of co-operative strategy to adequately place them in the external market of Thailand (Wangsirilert, and Simon 2017).
IKEA is the biggest retailer present in the international market of furnishing. Competitive dynamics refers to the understanding of competition attained by the company. Companies in the current business environment should compete differently in order to attain competitive advantage in the market. The process of strategic management is dynamic, not static as it gives rise of competition present in the international as well as domestic environment. Summarizing the above statements, it should be noted that competitive dynamics refers to the total set of actions and responses of all the organizations competing in the international market. These actions taken by the organizations to compete and attain competitive advantage are a part of competitive dynamics (Nandamuri, Rao, and Mishra 2018).
The above mentioned is the competitive dynamics model used by the company IKEA in the external environment. The retail industry faces different types of issues in implementing the actions of their business that hampers the overall growth of the company. Due to which it becomes difficult for them organize their activities and gain competence as well. IKEA Thailand constantly suffers from the threat of disposition in the external environment as many organizations are trying to attain the position of the company through their services (Larsson 2016). However, the company adequately makes use of available resources and target large segment of the audience due to which they gain success in the market. The retail industry mainly faces three types of rivalry that are, rivalry of potential customers, competitions, increasing sales competition. The company IKEA Thailand aims to reduce this type of competition by using its goodwill and providing affordable products to the customer in the market (Dowling 2016).
Conclusion
Thus, in the limelight of above mentioned events, it should be noted that the above mentioned report adequately discusses about the strategies used by the company IKEA to organize its activities in the market of Thailand. The report explains the co-operation strategy used by IKEA to increase the customer base and revenue in the target market. This type of strategy helped the company in attaining satisfaction of the customers in the market by effectively using the available resources. The company partnered with its stakeholders to succeed in the target market. By using adequate knowledge of the competitive dynamics, the organization initiates competitive advantage in the business in such a way that an identified position is recognized by the customers in the market
References
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Simon, L. and Wangsirilert, C., 2017. How large-scale companies and social enterprises improve the sustainability of their partnership?: The case study of IKEA and Doi Tung social enterprise in Thailand.
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