Strategy in Industrial Networks: Experiences from IKEA SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Strategy in Industrial Networks: Experiences from IKEA
This article examines how IKEA handles a complex network of business relationships with its suppliers and partners. This industrial network is fundamental to IKEA's strategy in terms of efficiency and development goals. From the analysis of IKEA's experiences in dealing with its industrial network, the article discusses a set of structural components and dynamic interactions of a network strategy. The three structural components are: defining the content of relationships; forming the network structure; and evaluating goal matching with the network. The two dynamic interactions are: interacting via inter-organizational routines for efficiency goals; and interacting via joint projects for development goals. Network strategies cannot be used as shortcuts to compensate for severe weaknesses, but instead can only be pursued by firms that possess adequate competences, external organizational interfaces, and network-oriented cultures.
Swot Analysis of "Strategy in Industrial Networks: Experiences from IKEA" written by Enrico Baraldi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Network Ikea's facing as an external strategic factors. Some of the topics covered in Strategy in Industrial Networks: Experiences from IKEA case study are - Strategic Management Strategies, Organizational culture, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Strategy in Industrial Networks: Experiences from IKEA casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, technology disruption, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, etc
Introduction to SWOT Analysis of Strategy in Industrial Networks: Experiences from IKEA
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Strategy in Industrial Networks: Experiences from IKEA case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Network Ikea's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Network Ikea's 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 Strategy in Industrial Networks: Experiences from IKEA can be done for the following purposes –
1. Strategic planning using facts provided in Strategy in Industrial Networks: Experiences from IKEA case study
2. Improving business portfolio management of Network Ikea's
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 Network Ikea's
Strengths Strategy in Industrial Networks: Experiences from IKEA | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Network Ikea's in Strategy in Industrial Networks: Experiences from IKEA Harvard Business Review case study are -
Learning organization
- Network Ikea's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Network Ikea's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Strategy in Industrial Networks: Experiences from IKEA Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Network Ikea's is one of the most innovative firm in sector. Manager in Strategy in Industrial Networks: Experiences from IKEA Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Network Ikea's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Network Ikea's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Network Ikea's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Network Ikea's 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.
High switching costs
– The high switching costs that Network Ikea's 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.
Analytics focus
– Network Ikea's 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 Enrico Baraldi 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.
Low bargaining power of suppliers
– Suppliers of Network Ikea's in the sector have low bargaining power. Strategy in Industrial Networks: Experiences from IKEA has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Network Ikea's to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Network Ikea's is present in almost all the verticals within the industry. This has provided firm in Strategy in Industrial Networks: Experiences from IKEA case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Network Ikea's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– Strategy in Industrial Networks: Experiences from IKEA firm has clearly differentiated products in the market place. This has enabled Network Ikea's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Network Ikea's to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Network Ikea's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Strategy in Industrial Networks: Experiences from IKEA HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Leadership & Managing People field
– Network Ikea's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Network Ikea's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Strategy in Industrial Networks: Experiences from IKEA | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Strategy in Industrial Networks: Experiences from IKEA are -
High bargaining power of channel partners
– Because of the regulatory requirements, Enrico Baraldi suggests that, Network Ikea's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Network Ikea's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Network Ikea's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Strategy in Industrial Networks: Experiences from IKEA can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Network Ikea's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Network Ikea's is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Network Ikea's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Network Ikea's to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Strategy in Industrial Networks: Experiences from IKEA, it seems that the employees of Network Ikea's 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.
Skills based hiring
– The stress on hiring functional specialists at Network Ikea's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, Network Ikea's 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. Network Ikea's 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Network Ikea's supply chain. Even after few cautionary changes mentioned in the HBR case study - Strategy in Industrial Networks: Experiences from IKEA, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Network Ikea's vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Network Ikea's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Strategy in Industrial Networks: Experiences from IKEA should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Network Ikea's products
– To increase the profitability and margins on the products, Network Ikea's needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Strategy in Industrial Networks: Experiences from IKEA | 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 Strategy in Industrial Networks: Experiences from IKEA are -
Loyalty marketing
– Network Ikea's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Developing new processes and practices
– Network Ikea's can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Network Ikea's has opened avenues for new revenue streams for the organization in the industry. This can help Network Ikea's to build a more holistic ecosystem as suggested in the Strategy in Industrial Networks: Experiences from IKEA case study. Network Ikea's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Network Ikea's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Network Ikea's is facing challenges because of the dominance of functional experts in the organization. Strategy in Industrial Networks: Experiences from IKEA 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Network Ikea's 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 Network Ikea's to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Network Ikea's 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.
Better consumer reach
– The expansion of the 5G network will help Network Ikea's to increase its market reach. Network Ikea's 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Network Ikea's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Network Ikea's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Network Ikea's 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, Strategy in Industrial Networks: Experiences from IKEA, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Network Ikea's 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 Strategy in Industrial Networks: Experiences from IKEA - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Network Ikea's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Network Ikea's in the consumer business. Now Network Ikea's can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Strategy in Industrial Networks: Experiences from IKEA External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Strategy in Industrial Networks: Experiences from IKEA are -
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 Network Ikea's business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Network Ikea's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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 Network Ikea's in the Leadership & Managing People sector and impact the bottomline of the organization.
Consumer confidence and its impact on Network Ikea's 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.
Stagnating economy with rate increase
– Network Ikea's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Network Ikea's 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.
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.
Regulatory challenges
– Network Ikea's 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.
Increasing wage structure of Network Ikea's
– 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 Network Ikea's.
Environmental challenges
– Network Ikea's 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. Network Ikea's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Strategy in Industrial Networks: Experiences from IKEA, Network Ikea's 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Network Ikea's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Network Ikea's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Strategy in Industrial Networks: Experiences from IKEA 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 Strategy in Industrial Networks: Experiences from IKEA 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 Strategy in Industrial Networks: Experiences from IKEA 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 Strategy in Industrial Networks: Experiences from IKEA 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 Strategy in Industrial Networks: Experiences from IKEA 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 Network Ikea's needs to make to build a sustainable competitive advantage.
