Read the case below and answer the questions.

IKEA, the global Swedish home furnishing company, has been on a growth spurt. Revenue

grew over 20% from 2013 to 2017, resulting in total revenue of 36.3 billion

Euros ($41.3 billion) in 2017. IKEA operates a total of 355 stores in 29

countries. It has 149,000 employees and sells 9,500 products.¹¹⁰

The company's vision is "To start a better everyday life for the many

people." The mission is "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." To accomplish this vision, the

company strives to "achieve quality at affordable prices . . . through

optimizing our entire value chain, by building long-term supplier

relationships, investing in highly automated production and producing large

volumes."¹¹¹

The company's growth strategy is based on the goal of achieving 50 billion in

sales by 2020. This requires successfully opening stores in emerging markets

like China and India. The good news is that IKEA has a proven track record of

global expansion. One expert noted that IKEA is "ferocious about not

expanding too rapidly." Mikael Palmquist, IKEA's regional manager for

retail in Asia Pacific, said, "The more global, the more complex it

gets." He also believes that IKEA is very careful in how it plans such

expansions. To make his point, Palmquist told a reporter fromFortunethat

it took about six years to plan and open IKEA's inaugural store in Gwangmyeong,

South Korea. This 624,000-square-foot store is the company's largest and is on

track to be a top performer.¹¹²

Strategic Management Insight, an online resource that focuses on strategic management,

conducted a SWOT analysis of IKEA. Results uncovered the following conclusions:

Strengths:customer

and market knowledge; low cost provider, and an integrated supply chain

Weaknesses:public

criticism of its treatment of employees, questionable advertising, and

decreases in quality associated with continually trying to lower costs

Opportunities:global

expansion, online sales, and expansion into selling groceries

Threats:growing

competition from companies like Walmart and Tesco and increasing average

consumer income¹¹³

IKEA's product development process is based on extensive market research. For example, the company did a study of over 8,000 people to investigate their morning

routines. The idea was to understand how people's routines could be enhanced by

designing products that met their needs. This led to creating the Knapper, a

freestanding mirror that contains a rack on the back side for hanging clothes.

Additional research revealed that more people are moving into cities, creating

the need for multifunctional products. IKEA thus developed lamps and bedside

tables that contained built-in wireless charging for mobile devices.¹¹⁴

IKEA's strategic mantra is volume at low costs. This requires a continuous focus on

cost containment and efficiency. The company does things like "skip an

extra coating of lacquer on the underside of a table" because people don't

see it. They also reduce labor costs by pushing assembly tasks to the consumer.

The use of flat-packed furniture also saves costs. It reduces the expense of

stocking and delivery.

Allan Dickner, deputy manager of packaging, has a goal of reducing "air

space" in the packaging.Fortunenoted that "The magic of flat packing allows goods to be jammed into shipping containers without wasting any space." Space is money, according to Dickner. He said, "I hate air." To find creative ideas to reduce the

spacing in packaging, the company implemented an "air hunt

competition." The winner received a two-week vacation in Thailand.

To ensure that flat packing does not put too much burden on the assembly of its

products, IKEA uses an instruction-manual team. The team writes about 1,400

sets of assembly instructions every year. The goal of these instructions is to

reduce the time it takes for people who are not "handy" to assemble

products.¹¹⁵

A reporter for theBusiness Insiderconcluded that there are four key strategic issues that continue to guide IKEA's success. They are:

Solving the worst part of buying.IKEA has designed products that many shoppers desire. They are attractive, yet not overly durable. They are designed to be used until they

wear out, or until the buyer wants to purchase higher-quality furnishings.

Hitting the right demographic.The company has targeted younger shoppers, particularly Millennials. Products are designed to meet their tastes and values.

Not expensive, but not cheap.The price point is in the sweet spot between deep discounters like Aldi and higher-end outlets like Bed Bath& Beyond.

Stores are a destination.People still like to visit IKEA stores due to their showrooms and cafeterias.¹¹⁶

Q1: Use Porter's five force model to describe the strategy and growth opportunities of Ikea.

Q2:Using the Ikea's SWOT analysis as an example, choose another

company and explain that organization's strengths, weaknesses, opportunities

and threats.