Corruption in Russia: IKEA's Expansion to the East (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Corruption in Russia: IKEA's Expansion to the East (B)
Supplement to case ES1691. This four-part case series can be used to discuss business ethics, compliance/governance, integrity management, reacting to and preparing against corruption in the context of internationalization and allows to also briefly touching upon the issue of Corporate Social Responsibility (CSR). Case (A) describes a challenge IKEA was facing, while trying to enter Russia in 2000. The company was preparing to open its first flagship store on the outskirts of Moscow, only the first of several planned projects. After substantial investments in infrastructure and logistics, IKEA focused on marketing, but quickly faced a sudden complication. Its major ad campaign in the Moscow Metro with the slogan "[e]very 10th European was made in one of our beds" was labeled "tasteless". IKEA had to stop the campaign because it "couldn't prove" the claim. Soon Lennart Dahlgren, the first general manager of IKEA in Russia must have realized that the unsuccessful ad campaign was going to be the least of his problems: A few weeks before the planned opening, the local utility company decided not to provide their services for the store if IKEA did not pay a bribe. What should IKEA and Lennart Dahlgren do? Was there any alternative to playing the game the Russian way, and paying? The subsequent cases (B), (C), and (D) describe IKEA's creative response to the challenges described in case (A), and then report about new challenges with alleged corruption within IKEA and in the legal environment, and finally raise the question whether IKEA can be considered to have a social responsibility to fight corruption on a societal level in order to build the platform for its own operation in Russia.
Swot Analysis of "Corruption in Russia: IKEA's Expansion to the East (B)" written by Urs Mueller includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ikea Corruption facing as an external strategic factors. Some of the topics covered in Corruption in Russia: IKEA's Expansion to the East (B) case study are - Strategic Management Strategies, Corporate governance, Cross-cultural management, Ethics, Social responsibility and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Corruption in Russia: IKEA's Expansion to the East (B) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, wage bills are increasing, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Corruption in Russia: IKEA's Expansion to the East (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Corruption in Russia: IKEA's Expansion to the East (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ikea Corruption, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ikea Corruption operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Corruption in Russia: IKEA's Expansion to the East (B) can be done for the following purposes –
1. Strategic planning using facts provided in Corruption in Russia: IKEA's Expansion to the East (B) case study
2. Improving business portfolio management of Ikea Corruption
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ikea Corruption
Strengths Corruption in Russia: IKEA's Expansion to the East (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ikea Corruption in Corruption in Russia: IKEA's Expansion to the East (B) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ikea Corruption has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Corruption in Russia: IKEA's Expansion to the East (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Ikea Corruption has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Ikea Corruption in the sector have low bargaining power. Corruption in Russia: IKEA's Expansion to the East (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ikea Corruption to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Ikea Corruption has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Corruption in Russia: IKEA's Expansion to the East (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Ikea Corruption is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Ikea Corruption is one of the leading recruiters in the industry. Managers in the Corruption in Russia: IKEA's Expansion to the East (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Ikea Corruption is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Urs Mueller can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Leadership & Managing People industry
– Corruption in Russia: IKEA's Expansion to the East (B) firm has clearly differentiated products in the market place. This has enabled Ikea Corruption to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Ikea Corruption to invest into research and development (R&D) and innovation.
Organizational Resilience of Ikea Corruption
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ikea Corruption does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Corruption in Russia: IKEA's Expansion to the East (B) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Ikea Corruption is one of the most innovative firm in sector. Manager in Corruption in Russia: IKEA's Expansion to the East (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Ikea Corruption digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ikea Corruption has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Corruption in Russia: IKEA's Expansion to the East (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Corruption in Russia: IKEA's Expansion to the East (B) are -
Aligning sales with marketing
– It come across in the case study Corruption in Russia: IKEA's Expansion to the East (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Corruption in Russia: IKEA's Expansion to the East (B) can leverage the sales team experience to cultivate customer relationships as Ikea Corruption is planning to shift buying processes online.
Lack of clear differentiation of Ikea Corruption products
– To increase the profitability and margins on the products, Ikea Corruption needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Corruption in Russia: IKEA's Expansion to the East (B), it seems that the employees of Ikea Corruption don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of Ikea Corruption, firm in the HBR case study Corruption in Russia: IKEA's Expansion to the East (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Corruption in Russia: IKEA's Expansion to the East (B) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Ikea Corruption has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Ikea Corruption has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ikea Corruption even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Ikea Corruption needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Ikea Corruption has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Ikea Corruption has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Ikea Corruption is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Ikea Corruption needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ikea Corruption to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Corruption in Russia: IKEA's Expansion to the East (B), it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Corruption in Russia: IKEA's Expansion to the East (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Corruption in Russia: IKEA's Expansion to the East (B) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Ikea Corruption can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ikea Corruption can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ikea Corruption can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ikea Corruption to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ikea Corruption can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ikea Corruption can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Corruption in Russia: IKEA's Expansion to the East (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Ikea Corruption can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Ikea Corruption has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Corruption in Russia: IKEA's Expansion to the East (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ikea Corruption to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Ikea Corruption can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Corruption in Russia: IKEA's Expansion to the East (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Ikea Corruption has opened avenues for new revenue streams for the organization in the industry. This can help Ikea Corruption to build a more holistic ecosystem as suggested in the Corruption in Russia: IKEA's Expansion to the East (B) case study. Ikea Corruption can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ikea Corruption in the consumer business. Now Ikea Corruption can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ikea Corruption to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ikea Corruption to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Ikea Corruption to increase its market reach. Ikea Corruption will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ikea Corruption is facing challenges because of the dominance of functional experts in the organization. Corruption in Russia: IKEA's Expansion to the East (B) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Corruption in Russia: IKEA's Expansion to the East (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Corruption in Russia: IKEA's Expansion to the East (B) are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ikea Corruption in the Leadership & Managing People sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Ikea Corruption business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ikea Corruption in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Ikea Corruption is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Ikea Corruption needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ikea Corruption can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ikea Corruption can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Ikea Corruption needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ikea Corruption.
Increasing wage structure of Ikea Corruption
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ikea Corruption.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ikea Corruption can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Corruption in Russia: IKEA's Expansion to the East (B) .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Corruption in Russia: IKEA's Expansion to the East (B), Ikea Corruption may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Consumer confidence and its impact on Ikea Corruption demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Corruption in Russia: IKEA's Expansion to the East (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Corruption in Russia: IKEA's Expansion to the East (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Corruption in Russia: IKEA's Expansion to the East (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Corruption in Russia: IKEA's Expansion to the East (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Corruption in Russia: IKEA's Expansion to the East (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ikea Corruption needs to make to build a sustainable competitive advantage.
