And so, below will be a brief intro to what Strategic management is about. Strategic Management is a dynamic process that requires a long-term perspective and flexibility. Top executives are usually responsible for strategic management. It also includes analysis of the internal and external environment of the firm, definition of the company's mission, formulation and implementation of strategies to create or continue a competitive advantage. Gomez-Mejia ; Balkan, 2011)
The Strategic Management process involves 5 steps: Analyze internal and external environments Define strategic intent and mission Formulate strategies Implement strategies Assess strategic outcomes (Gomez-Mejia ; Balkan, 2011) Introduction of KEA KEA was started by Angina Kampala in SMS?land in southern Sweden. He single exploration of furniture design, self assembly, advertising, the use of a catalogue and a showroom to reach his potential customers.
KEA originally sells pens, wallets, picture frames, table runners, watches, Jewelry and nylon stockings, meeting the increased needs with products at cheaper prices and still earning a sizeable profit. It has since expanded into 40 countries/territories around the world, including Singapore in 1978 which I will be focusing mainly on wrought this case study. Mission To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Vision To create a better everyday life for the many people.
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Values Humbleness ; Willpower
- Respect whoever we meet be it customers or fellow workers and by using willpower, it means getting things done Leadership by example
- All the leaders in KEA try and set a good example and fellow co workers are expected to do the same Daring to be different
- We eliminate old solutions if we eave better idea Togetherness ; enthusiasm
- Together, we have the ability to solve seemingly unsolvable problem Cost consciousness
- We achieve good results with small resources Constant desire for renewal
- Adapting to customer demands with innovative solutions saves money and contributes to a better everyday life at home Accept and delegate responsibility
- We promote staffs with potential and drive them to surpass their expectation and being encouraged to learn from mistakes (KEA, N. D)
The SWOT analysis (Strengths, Weaknesses, Opportunities ; Threats) is a commonly used strategic tool. The SWOT analysis allows the firm to analyze the internal and external factors that can influence the organization's success. (Gomez- Mejia & Balkan, 2011) .
In this case, by owning their own restaurant and market hall, IKEA already has an edge over its competitors as foods and snacks hailing all the way from Sweden can be found. By living up to their value of cost consciousness, IKEA are able to attract customers through the affordable prices by ordering through bulk at a cheaper rate & saving handling fees by delivering products directly from suppliers to IKEA stores worldwide. IKEA has always been an ambassador for CEO friendly products through its increased and smarter use of renewable or reclaimed waste materials. In order to pep improving and also be CEO friendly, feedbacks from customers are taken seriously and workers from various departments contribute ideas to one another so more unique and innovative ideas can be generated within IKEA itself.
Firstly, as they are using cost conscious approach to produce their products. There's as durable as of those of other furniture company. The designs of Kike's home furniture are quite very modern and therefore, won't be as appealing to the older generation as it is to the younger ones.
The future looks bright for IKEA due to the fact they are able to increase the variety of Rene products and it only helps because of the environment's current condition while also meeting the demand of greener products. As IKEA are producing more green products, the production cost will be cheaper as recycled and waste materials are used instead.
Thus, sales price won't be as expensive, meeting the demand of lower priced products. The cost of production of furniture are pretty low at the moment and so, new competitor will surface and it don't take as much money as it did in the past to set up a furniture company. Economy recession is another factor that will threaten KEA tutus as lesser people will be spending their money to replace their existing furniture.
There will be 2 parts to external analysis; it will be done based on general environment and competitive environment. External analysis is basically analyzing the factors that are not within the control of an organization for the general environment part. As for the competitive environment part, the strength of an organization's current competitive position, and the strength of a position it is considering moving into will be identified to help prepare itself for every possible appending in the near future.
External analysis of general environment will be done using PESTLE which refers to how the political, economic, social, technological, environmental and legal environment affects an organization. Below will be a diagram of PESTLE, followed by a brief explanation of each factor and their examples. Monsoons, Gerry, Schools, Whittling, 2006) [pick] Political Factors - basically to what extent the government intervenes in the economy.
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