Strategy development tools
In every organization, there are certain goals and objectives that need to be fulfilled so every organization creates strategy for the same. The development of strategy is a very critical task and it should be effectively implemented. There are different strategy development tools that help in creation of strategy as well as implementation of the same. With the help of a proper analysis, these tools can be used in effective way and can contribute in the growth of the organization. These tools ensure the fulfillment of short term goals and long term goals. It also helps in defining the market position if an organization.
Ikea is a Swedish international leader in furniture business that deals in stylish cheap furniture products. It has expanded its business in many countries like Europe, USA, Canada, Asia and Australia. Recently it has launched in India and started a very efficient business.
Political- There is some different political factors that help in explaining the government intervention in the launching of IKEA in India like tax policy, constitutional system and trade freedom. When this retailer made a decision of investing crores in Indian market then it sent a signal to those investors who were hesitating in doing Foreign Direct Investment. It is a positive point of India because India needs some modern technology. After the decision of Ikea related to entering in the Indian market, government has relaxed all he tax rules on foreign retailers. Ikea have to source minimum of 30 percent from Indian market. The agricultural states like Punjab were positive in the aspect of FDI as they knew that modern storage facilities helps the farmers to get better prices (Tools for Justifying the Parameters of Strategic Regional Development Based on Adaptive Simulation, 2017).
Economic- Ikea sells its products on very cheap prices and it leads in a tough competition among different retailers. Everyone was planning to set low prices of the products and it targets customers who are willing to spend less. It is a strategy of IKEA, to provide cheapest furniture in the market. There is an increase in the process of raw material and commodity market that results in a rise of high purchasing cost for IKEA (Campling, 2008). It creates an impact on the margins also and at last consumers has to pay a high. Rise in fuel cost has also impacted the strategy of IKEA. Ikea has suffered low sales due to the economic condition of India.
PESTEL Analysis
Social- Social factors can also create an impact on Ikea’s business. Asian societies in the country are usually willing to spend less in the situation of economic certainty. It might be possible that Asian consumers do not want to spend in buying products from IKEA.
Technological- Technological factors refer to R&D activities, technology and automation. They can be considered as barriers in entering into a market, the efficiency of production level and all the outsourcing decisions. Radio frequency identification device can help IKEA in understand the supply chain. It can help in decreasing the cost of the company as they need not to carry high more inventories. IKEA used technologically advanced systems although like it has a system that leads to shorter queues, proper tracking and scheduling patterns (David and David, 2016).
Environmental- Environmental factor refers to all the ecological, weather related aspects and climate change that creates a direct impact on industries like agriculture, tourism and finance. Government has start taking different initiatives to save the environment from industries pollution. There are several NGOs who are working upon that in collaboration with the government. India ranks second in the list of most populated countries but it’s easy to do nosiness in India because of general economic environment that considered as a favorable point for IKEA. Indian rupee is very constable from past few years and there is a growth in GDP also. There is a legal aspect related to environment safety that needs to be followed by all the organizations (Sherif and Khalil, 2008).
Legal- There is a very strict legal compliance for IKEA with all the relevant laws and their applicability related to environment, social and working conditions. There are several laws in India like Consumer law, Employment law and Discrimination law that need to be followed in these aspects-
- Safe working conditions for employees.
- Payment of minimum wages (Hitt, 2011)
- No use of child labor
- Reduce waste and follow proper waste management system
Strength- IKEA’s has a very good brand value and a good position in the world. The products of IKEA are very cost effective and easily affordable (Huff and Jenkins, 2002). They provide high quality products in low price. They always work upon innovation that helps in bringing the price down for the customers. IKEA has a very strong marketing strategy that helps in the brand promotion.
Weakness- Like any other organization, IKEA has also faced some local troubles that have created a negative image of the organization in some parts of the country. IKEA is famous for its cheaper prices with high quality so every time it is not possible. There is an increase in the cost of raw material so it is difficult to maintain the same standard as well as quality of the products. Brand image of IKEA was hampered once due to environmental issues (Harding, 2017).
SWOT analysis
Opportunities- IKEA cans tart adopting environment- free techniques of production as it is in trend and people also like it. It can expand its operations in the developing countries like India. From there, they can generate higher revenues (O’Meara, 2003).
Threats- Many companies has copied the products of IKEA and trying to implement the same production strategies too. It can be a big competition for IKEA so it has to be innovative every time. There are some changes in the legal policies that create a negative impact on the prices of IKEA. There is a growth in disposable income of the people so sometimes they prefer to opt for costly products due to the perception that they can be good in quality (Jalonen, Schildt and Vaara, 2018).
Zara is a Spanish Organization involve in Fashion business. It is a global fashion retailer deals in clothes, shoes and accessories of different age group and gender. It has more than 4500 stores in the world (Ansoff, 2014).
Threat of New entrants- There are less entry barriers for fashion industry as it does not require high capital and lavish stores. There are many competitors in the market that can be strong competitors for Zara.
Threat of Substitutes- Threat of substitute is very high because there are big fashion houses and retailers that are offering designer products on low prices (Gheibi et al., 2018).
Power of buyers- Purchasing power of buyers is high because they have so many options in front of them and they have to choose the cheaper best quality products. There are many stores providing convenience to the customers by offering all the stuffs at one place. There is no cost in switching the brad for customers.
Power of suppliers- Power of suppliers is low because most of the fashion retailers are involved in outsourcing their production activities from developing countries. The switching cost for them is low.
Threat of Rivalry- As there are low barriers in the industry, there is always a threat of rivalry. There are so many major competitors.
Apple is a multinational company that involves in the business of phones, I pads and laptops. It is known for the advanced technology and quality products. Ansoff Matrix is a strategic development tool that helps in creating strategies. There are four parts in Ansoff Matrix for Apple-
Product development- Apple has created new products for all its customers like Apple watch and I pod. I pod was an amazing entertainment tool designed by Apple for their customers.
Product Penetration- Apple focuses on the advertisement that attracts them to buy Apple products for their family.
Market Development-Apple always tries to introduce new product different from the product line like Apple watch. Apple has entered into watch market by launching Apple watch.
Diversification- Apple has introduced its first I phone in 2007. It entered into mobile phone market and then entered into different sectors that were totally new for it.
Conclusion
These strategic development tools are very important for every organization for the accomplishment of goals and objectives. Implementation of them should be in a proper way to get success. There were above few examples that clearly show the successful implementation of this strategic development plan.
References
Ansoff, H. (2014). Strategic management. [Place of publication not identified]: Palgrave Macmillan.
Campling, J. (2008). Management. Milton, Qld.: John Wiley & Sons Australia.
David, F. and David, F. (2016). Strategic Management. Pearson Education UK.
Gheibi, M., Karrabi, M., Mohammadi, A. and Dadvar, A. (2018). Controlling air pollution in a city: A perspective from SOAR-PESTLE analysis. Integrated Environmental Assessment and Management, 14(4), pp.480-488.
Harding, S. (2017). MBA Management Models. London: Taylor and Francis.
Hitt, M. (2011). Relevance of strategic management theory and research for supply chain management. Strategic Direction, 27(7).
Huff, A. and Jenkins, M. (2002). Mapping strategic knowledge. London: SAGE.
Jalonen, K., Schildt, H. and Vaara, E. (2018). Strategic concepts as micro-level tools in strategic sensemaking. Strategic Management Journal.
O’Meara, P. (2003). The Decembrist Pavel Pestel. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
Sherif, M. and Khalil, T. (2008). Management of technology innovation and value creation. New Jersey: World Scientific.
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