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External Factors that have Impacted the Marketing Mix of IKEA
External Factors that have Impacted the Marketing Mix of IKEA
Introduction to the Business and Purpose
IKEA’s business objective is to simplify people’s daily lives in the hope that this would draw in more consumers. IKEA is a firm that provides a wide range of well-designed, functional home furnishings at prices that are maintained as low as possible to make them affordable to the largest number of consumers (Isaksson & Suljanovic, 2006). IKEA’s mission includes advancing society via positive leadership in addition to providing home goods.
The operations division and the franchising division are the two main divisions that make up the IKEA corporate structure as shown in figure 1 below. The majority of IKEA’s commercial operations are managed by INGKA Holding, a privately held, for-profit Dutch corporation (Dudovskiy, 2017). This covers the management of the vast majority of IKEA’s retail locations, the creation and production of its furniture, as well as services related to purchasing and supply. IKEA follows the corporate structure of a large corporation. The organizational matrix used by the IKEA Group focuses on the need for information flows in all three directions (forward, backward, and lateral).
Figure 1: The legal Structure of IKEA (Sourced from Dudovskiy, 2017)
Stakeholders are those who have an interest in a business. Investors, devoted customers, and employees are a few examples of stakeholders. IKEA’s stakeholders provide operational and monetary support. They raise the amount of community members who are interested in the organization’s success. The relationship between IKEA and its several stakeholders could be at its most positive and helpful. This connection is based on opposing wants and interests when things are at their worst, which makes decision-making difficult and time-consuming (Edvardsson and Enquist, 2002). The decision-making process, the organization’s goals and objectives, operational issues, sales, costs, and profits are just a few examples of areas in a corporation that are vulnerable to influence by stakeholders. The owners of a business have the most sway since it is their duty to decide how the business will run and to provide the funding required for its beginning and growth.
External Factors
Businesses often recognize unexpected events that have serious consequences. These factors have the potential to change an organization’s values, organizational structure, and strategic trajectory. These elements often relate to the surrounding environment of a business. Social, political, environmental, legal, technical, and economic considerations are a few of these. IKEA has expressed its opinion on a number of political topics. For instance, entry hurdles for Western businesses have recently been lowered in China and India, improving the brand’s visibility in these regions. IKEA operates in over 50 countries; thus it is crucial that local laws be observed in each of them (Grondelaers & van Hout, 2021). The primary factor influencing the earnings and sales that companies will generate in international marketplaces is the state of the global economy. Since they could have a significant effect on sales, cultural and societal trends should also be taken into account. IKEA is compelled to concentrate on a particular fashion trend when it emerges in order to compete in the market. Instead of building more physical shops, IKEA can reach customers and provide a better shopping experience at a lesser cost by embracing digital technologies. In addition, the business is using augmented reality to increase customer happiness. This is strongly related to the idea that greater customer service results from better customer experience (Grondelaers & van Hout, 2021). Since they are the outside variables that are now connected to sustainability, environmental concerns should be a company’s first priority. Given how often laws and regulations change, IKEA is continually in risk of running afoul of the law, which would impact its operations.
Strengths
The most valuable aspect of IKEA is its clearly stated goal, which is to provide customers value independent of market circumstances.
The company’s clearly defined idea, which translates into a wide range of products that consumers can assemble themselves, results in enormous cost savings that are passed on to the customers as another key benefit. Weaknesses
It is challenging to maintain consistent standards across all of IKEA’s sites since the company is a large, worldwide enterprise with operations in several nations (Alrubah, et al., 2020).
IKEA fails to explain its environmental policies to its stakeholders and its activities have a negative impact on the environment.
Opportunities
The firm has a good chance of drawing customers who like buying such goods because to its “green” business methods (Alrubah, et al., 2020).
The company’s biggest potential is probably its cost leadership, which requires a singular concentration on cost at the detriment of all else.
The company’s entry into developing markets and new markets, where it has an untapped client base that can be used to increase profitability, is the second potential. Threats
IKEA’s competitors have often copied its low-cost business strategy, so the firm has to keep innovating if it wants to maintain its competitiveness.
IKEA’s distinctive selling concept, that DIY is a major factor in strategic success, has changed as a result of the rise of the internet and online purchasing.
Marketing
IKEA lays a stronger focus on the price component of the marketing mix than on any of the other parts due to its cost-effective business approach. This is shown by IKEA’s marketing strategy. The 4Ps marketing strategy (Product, Pricing, Place, and Promotion) incorporates a number of marketing methods into its marketing mix, including the product innovation, preferred pricing strategy, and the promotion planning applied to a market. IKEA sells a vast variety of products, all of which are part of the company’s marketing mix (Ye, 2021). IKEA distributes its items in three major categories: baby and children’s products, traditional home and workplace furniture, and outdoor furniture. IKEA’s aim, business philosophy, and vision all revolve around providing things at reasonable costs. IKEA is well-known for producing low-cost furniture that can be used in both household and business settings. It stresses expenditure containment as well as efficient operational components. IKEA has a terrific distribution and placement strategy as part of their marketing mix (Wichmann, et al., 2022). IKEA’s distribution network is one of the largest in the world, reaching every nation on the planet. Massive quantities of flat products are produced in the manufacturing process. IKEA’s items are transported directly from the suppliers to the retail outlets where they are sold. As a result, the expenses of handling, shipping, and carbon impact are all reduced. Regarding IKEA’s promotion and advertising strategy, the company’s marketing mix comprises a variety of promotion tactics such as billboards, social media, print, television, and internet promotions.
A product portfolio is a straightforward compilation of all the goods and services offered by a company. IKEA is able to reduce its exposure to risk by maintaining a diverse assortment of goods, since if demand for one of these products declines, another may rapidly fill the void. Product portfolio analysis is used to aid in planning product development and strategy by reviewing an existing portfolio to identify which goods should get more or less investment. This is done to enhance the productivity of product development and strategic planning. Before selecting whether to eliminate some items or suppliers from its lineup or to add new products to those it already offers, IKEA evaluates its whole product selection. IKEA utilizes a product range that plays to the company’s strengths and allows it to capitalize on the most alluring economic prospects (Ye, 2021). The business portfolio indicates the range of distinct companies and strategic business units that comprise the organization, as opposed to just the goods and services it offers. In studies of IKEA’s product line, several perspectives on stock types, the company’s development prospects, profit margin drivers, income contributors, market leadership, and operational risk are offered. This is vital for investors doing equities research and analysts assisting internal corporate financial planning.
The impact of external factors on the marketing mix
Marketing is a social and management activity that assists people and organizations in achieving their objectives by developing new products and trading them for items of equivalent or greater value. The marketing mix is a vital component of IKEA’s overall marketing strategy since it serves as a conduit between the firm and its target market. As a result, it evolves with the market and all connected parties. Three key worldwide dynamics have had a significant impact on IKEA’s ability to successfully promote its goods during the last decade. Changes in the natural environment, economic and geopolitical power shifts, and technology breakthroughs are examples of these external factors (Alrubah et al., 2020). Significant continuous and rapid changes in IKEA’s stakeholders, market, and marketing mix have resulted from external factors. These changes are the result of external factors. It is difficult to sell a brand successfully to a new market owing to a lack of brand exposure, unanticipated market circumstances, diverse economic and environmental constraints, and other difficulties. IKEA shares the stories of its customers and offers advice on how they might enhance their lives via content marketing. IKEA employees visit customers in their homes to learn about their actual experiences and gather vital data that helps the company to make more informed choices on its proactive marketing efforts. Considering the future, it is possible to infer that IKEA’s marketing mix has reached a crossroads with competing future possibilities along each of the outer dimensions. First, Wichmann, et al. (2022) highlight that the disparity between increasing complexity and enhanced simplicity will influence consumer purchasing decisions, and second, the furniture industry will be differentiated by more inter-firm cooperation rather than increased marketing mix protectionism. Thirdly, the ongoing use of automation vs a greater appreciation for the importance of the human touch is a dilemma impacting the whole furniture sector. As a final consideration, IKEA’s future expansion requires striking a balance between local adaptability and worldwide consistency in its marketing mix.
Reference List
Alrubah, S.A., Alsubaie, L.K., Quttainah, M.A., Pal, M., Pandey, R., Kee, D.M.H., Ling, L.K., Nadirah, N.A. and Aishan, N., (2020). Factors Affecting Environmental Performance: A Study of IKEA. International journal of Tourism and hospitality in Asia Pasific (IJTHAP), 3(3), pp.79-89.
Dudovskiy, J. (2017). IKEA Organizational Structure: Expecting Benefits from a Major Restructuring – Research-Methodology. [online] Research-Methodology. Available at: https://research-methodology.net/ikea-organizational-structure-expecting-benefits-major-restructuring/.
Edvardsson, B. and Enquist, B., 2002. ‘The IKEA saga’: How service culture drives service strategy. Service Industries Journal, 22(4), pp.153-186.
Grondelaers, S., & van Hout, R. (2021). From Big Brother to IKEA. Applications of Cognitive Linguistics, pp. 371.
Isaksson, R., & Suljanovic, M. (2006). The IKEA experience: A case study on how different factors in the retail environment affect customer experience. Available at: http://www.diva-portal.org/smash/get/diva2:1032639/FULLTEXT01.pdfWichmann, J.R., Uppal, A., Sharma, A. and Dekimpe, M.G., (2022). A global perspective on the marketing mix across time and space. International Journal of Research in Marketing, 39(2), pp.502-521.
Ye, C. (2021). IKEA’s Global Sourcing Challenge. Academic Journal of Business & Management, 3(7).
Ethics. The Ford or Firestone Debacle
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Ethics: The Ford/Firestone Debacle
Case summary
It presents a manufacturing company Ford explorer that manufacturer’s car. The explorer was designed to use the same frame that was used in older vehicles in the assembly line. Tests done before the launch of the car showed that it performed dismally in terms of safety, but the management went ahead to implement and force its launch even after being presented with a variety of options and steps to take to rectify the problem ( ABC, 297 ) . Continuous challenges and complaints led to investigations being launched by the relevant authorities and findings in most of the studies revealed that the problem resulted from a compromised quality in the tires used. Several regions and areas that Ford had sold their products experienced similar challenges relating to safety and the quality of the products that the company offered. It reached a point where they stopped using the explorer tires as most of the studies conducted from both within and without the institution revealed that the problem resulted from the quality of tires from firestone.
Problem analysis
problems that range from the action taken by the leadership of the companies involved, communication challenges as well as ethical and moral challenges. The leadership of the firm is the problem in this case because of the poor decisions that do not conform to business ethics and standards besides raising more questions and concerns relating to social morals ethical values
Data collection and interpretation
Sufficient data is available from the players involved such as Ford, Bridgestone, and partners involved in the trade from many parts of the region including the middle east as well as data from the various studies conducted in the case revealing the percentages and numbers of people affected from the case by actions taken by the leadership and those responsible from the case. The amount of money spends in recalls and compensation makes the business unsustainable.
Critical ethical issues
Despite the leadership getting informed about the challenges, they failed to take adequate steps and actions necessary to prevent the concerns raised on safety. The organization ethical concerns are also questioned regarding the value that they give their clients relating to safety. Bridgestone tried to introduce the ethical and moral concerns that they have through their experience in Ford explorer, but it resulted in vain. The society presented in the case through consumer federation has taken measures and steps to protect and guarantee their members which are the public in most cases.
Ethical frameworks
Utilitarianism principle that allows the highest number of beneficiaries over a service or product made was not considered by the Ford explorer. The leadership had a duty to act and take necessary steps and actions that would address the situation (Brusseau, 1). The employees that went on strike had the right to demand for better working conditions and they had the duty to provide services of high quality to their employers.
Relate the case to the concepts and topics in the books
The case fits into the context from the text book by presenting various ethical decisions that are made that impact on the overall performance of the business
Generating solutions
. Ethical principles should be looked upon to provide guideline for generating a better solution relating to the case that benefits all parties involved.
Possible legal solutions
The consumers and all beneficiary from the products offered by Ford and the related parties such firestone who have resulted into losses of any kind relating to safety and security should take legal actions to be compensated.
The employees who were on strike and should be compensated for the period that they were out of work demanding for better services and terms
possible legal but unethical solution
Divert the Legal costs faced by Ford to firestone and Bridgestone who made the tires for them
Sue the body that authorizes and standardizes products made and sold to the market in the US.
No payment for workers who were on strike and no reengaging back to the company.
Possible ethical solutions
Compensate all people who have incurred losses relating to safety and security concerns that result from the poor quality of products that Ford offers. The owners of the firm must change the leadership and restructure it to suit to business ethics to remain relevant and competitive.
Selecting best solutions
The best solution caters for all parties involved that result into a fair decision that cuts across many parties. The Ford Company should take responsibility and pay all its clients and associates who incurred direct or indirect losses that resulted from the compromised quality of their products. The firm should look for a long term solution that steers it back to success in the industry.
Works cited
ABC News. The Ford/Firestone Debacle. Business and its External Exchanges: Ecology and Consumers. The Ethics of consumer Production and marketing.
Brusseau, James. Business Ethics Workshop, Edition 1. FlatWorldKnowledge2014. Internet Sources http://2012books.lardbucket.org/books/business-ethics/index.html
How Might Media Systems Impact Our Ability to Think Critically
How Might Media Systems Impact Our Ability to Think Critically?
People’s information consumption habits have shifted away from print and toward images. By inventing new methods to accomplish things, the present generation has created a new way of communication. A digital gap exists across generations as well as between socioeconomic classes. The new manner of communication is immediate, networked, interactive, media-rich, and people-rich. In addition, both conventional and social media are engaging in a dialogue with members of society to find out how to aid people following a disaster. Because social media and conventional media, both of which serve as information filters, are now collaborating, the old way of thinking about mass communication has given way to a new one. Finally, media systems shape tales and influence how people think in society. This prevents individuals from having their own thinking and produces a community of individuals who think and reason in the same manner.
One reason people’s capacity to think critically is deteriorating is because the brain develops dependent on what each individual need. Children’s critical thinking skills will deteriorate as long as public schools continue to emphasize facts over reasoning, and as role models and adult relationships deteriorate. If youngsters can gain rapid gratification from reading brief messages while adults must properly process a massive quantity of information, this condition will deteriorate and harm society. Everyone in the contemporary world has instant access to information and images. They are virtually everywhere. There may be too many pictures and words in a self-organizing system if there are no instructors or leaders, making it difficult for most individuals to determine which of the numerous disputes or images about the same issue is real and truthful. This is due to a lack of instructors and leaders in the system, which results in an excess of images and words. People are afraid and insecure because they can’t locate a single instructor who can tell them what to believe and what not to believe about many topics. In her piece “Great to Watch,” Maggie Nelson discusses the same visual and verbal overload and talks about how this “overflow occurs without anybody being aware of it” (302). People might get addicted to specific TV series and, without even realizing it, begin to admire it when others behave aggressively or cruelly. Nelson quotes Susan Sontag that “an age of extremity, characterized by the continual threat of two equally fearful, but seemingly opposed destinies unremitting banality and inconceivable terror” (Nelson 306). People who watch violent TV programs and listen to mean-spirited statements contribute to the culture becoming even more nasty and savage. People and society are getting increasingly confused, bewildered, and chaotic as a result of the issue of too many pictures and voices. This is one of the most unexpected outcomes of violence on television.
People are more connected than ever before to technology, yet they are also less close to one another, and this has significantly affected how they reason in terms of relationships and inter-personal connectedness. Even while technology seems to offer an endless list of advantages, many people fail to consider the things that have been lost as a result of it. Nelson isn’t hesitant to express her feelings on technology and how it makes people less attentive to their surroundings noting that “many people value the Internet because it is a public forum in which anybody may contribute their ideas, views, and abilities” (304). In her opinion, Nelson notes “But there are also perils. And one is that in cultural moment defined (by some, for some) by image flow, the question of what one should look at, along with attendant inquiries into nature and effect of images blowing by, has creepy way of overtaking almost all other questions” (304). It does not restrict what someone may see or do, which, depending on the circumstances, might be either beneficial or negative. When discussing how media systems influence how people think critically, it’s difficult to overlook the relevance of false news. The phrase “fake news” is becoming increasingly popular over time. It is often used to describe tales that are false or exaggerated and are propagated online or on television by organizations with ambiguous aims. Politicians and others, on the other hand, utilize it to discredit critical coverage and divert attention away from true news. For a long time, false information has circulated. Tabloids have been disseminating misleading information since the dawn of mankind. Newspapers and television news outlets are partly to blame since they clearly state that they have an editorial bent. The 24-hour news cycle has made too much information accessible to the public, and this trend is continuing. This makes it difficult to distinguish what is true and what isn’t, which is an issue since an increasing number of people obtain their news from social media.
While technology has made life easier, the advancement of contemporary technologies does not assist individuals in evading real-life situations that demand an active ability to think critically. In truth, the advancement of contemporary technology makes meeting these needs simpler. Modern technology may be used in a variety of ways, and how it is applied can sometimes cause more issues than it solves. People are becoming more reliant on various forms of technology to accomplish tasks, which has resulted in an overall enhancement in their capacities. Yet, according to Nelson, “the world presents a composition in which a multitude of meanings and realities are available, and we swim in that sea of multiplicity” (Nelson 311). We sometimes employ the flow of pictures made available by technology to help individuals communicate with one another. Furthermore, technology continuously bombards our thoughts with information about what is going on in other areas of the globe. Maggie Nelson investigates how people’s ignorance has led them to disregard the consequences of violence, and how violence has grown so regular that it is seen as normal (Nelson 300). Nelson expands on this issue by developing the concept of “image flow,” which he describes as the relentless barrage of images or ideas that destroy the primary attention (Nelson 304). She draws on how Americans have been “chained to their image-displacement machines like lab animals to dispensers of morphine” (Nelson 308).
Concerning the mainstream and social media, it emerges that technologies seem to limit the ability of people to think critically and instead fosters a culture of unilateral thought where a difference in opinion is frowned upon. The largest internet corporations aim to present themselves as a “means of giving people greater freedom” (Foer 61). Everyone can realize their full intellectual and democratic potential and completely express themselves via social media. Unlike TV, which used to be a passive medium that forced people to sit still, Facebook is a powerful and participatory media. People may read many materials, think for themselves, and reach their own opinions. Facebook isn’t a bustling public square. Instead, it is a top-down regulated system. It sounds like a variety of various types of discourse, but that’s just one of its characteristics. In actuality, Facebook is a “sophisticated maze of rules and methods” for sorting information (Foer 67). These regulations were established by the firm in order for them to be effective. Facebook is always monitoring its users, auditing them, and studying how they behave (Foer 71). Facebook gives its users the impression that they have options, but in fact, it treats them like toddlers and pushes them in the direction it believes is best for them, which is to become completely reliant on the site.
Both the growth of social media and the increasing reliance on different internet platforms are having a huge impact on how people not only interact with one another and the rest of the world but also reason critically. We are conscious that our virtual network is often just as important to us as our physical network, and we are also aware that the information we get from the internet has a big impact on the decisions we make. Both traditional and social media have an “ongoing impact on our ability to think critically and rationally” (Foer 60). When we speak about critical thinking, we mean the ability to examine information, grasp it, make conclusions from it, and use it to solve problems. The great majority of the time, these talents present themselves in the following order: recognizing a problem, gathering relevant information, assessing what the facts imply, and then deciding what to do or how to solve the issue. With one significant exception, wealthy internet entrepreneurs like Mark Zuckerberg often have left-leaning political views. This distinction pertains to how they feel about laws and regulations. This shouldn’t come as much of a shock to anybody. Regardless of the sector in which they operate, most executives of businesses are not huge lovers of the regulations imposed by the government. The argument that is made by Franklin Foer is that technology corporations such as Facebook have “devalued information and placed at danger the type of critical thinking” that is fundamental to a democracy since there is not enough government control (Foer 61). In the case of Facebook, the most valuable item is the personal information of the user, which the firm utilizes without regard to the user’s right to privacy in order to sell advertisements and conduct experiments. The previous model of publishing, which relied on gatekeepers, was more democratic than the current one, which allows anybody to publish their work but nearly no one can earn a livelihood from it. Ultimately, even with the proliferation of the internet and various social platforms, critical thinking is becoming more limited as people converge towards unilateral thinking.
In summary, people who want to learn how to think critically must be willing to put in the time and mental effort required. It’s possible that using social media makes us less concentrated on any one work or pursuit. This is because when people use social media often, they have a propensity to try to do two or more things at once. As a consequence, people’s ability to focus on a single issue suffers, which may have a detrimental influence on their critical thinking abilities. Aside from the disadvantages of multitasking, emotional reasoning is more likely to be used on social media than rational reasoning. This achievement should be attributed to the algorithms that power a person’s favourite platform on social and other forms of media. These algorithms will offer information that is relevant to an individual’s interests and preferences, and they will do it in an easy-to-understand way. Because one is more likely to notice materials that support or agree with their existing beliefs, people are likely to lose out on the chance to gather all of the data, conduct proper analysis, and reach a more well-informed decision. In the end, social and mainstream media only reinforce what one already believes in and this reduces our abilities to think critically, to question, and to avoid conforming to society-set standards and expectations.
Works Cited
Foer, Franklin. “Mark Zuckerberg’s War on Free Will.” World without mind: The existential threat of big tech. Penguin, 2017, pp. 56-77.
Nelson, Maggie. “Great to Watch.” 2011. The New Humanities Reader, 5th edition, edited by Richard E Miller and Kurt Spellmeyer, Cengage, 2015, pp. 299-314.