The impact of the low-cost strategy has its own significance in the retailer’s industries. The brief analyzing of the whole topic portrays an effective picture of the strategies that have been implemented by the management of the company IKEA. The market has become very much competitive nowadays and thus the companies have to focus on implementing few strategies while achieving competitive advantages and strengthening their position in the market. A low-cost strategy is one of the best strategies that have been used by the retailer’s companies in a very extensive manner.
It was evident that the consumers mostly focus upon the best products and the variations of products with all the good features and that too on very affordable prices. So the company is differentiating their market strategies with other companies and using this method while selling their products to the consumers at a very low rate. But at times company fails to achieve the perfect quality of the products as per the customers’ expectations. Consumers mostly complain that though they are getting the required products at an affordable price but the products are not satisfying neither the variations are found. So sometimes it gets hard for the company to retain their customers for future prospects. And even the researcher did not get any assurance of the genuine results obtained from the primary data analysis process as the customers sometimes get biased and their answers are sometimes being neutral. So these are some of the obstacles that are been shown in this research topic.
The research was very much challenging to discuss. But through this research, the level of my analytical skill gets higher and thus will be very much helpful for future experiences. It gave me the strength to face the shortcomings and to achieve success by dealing with them accordingly. So here I want to thank my mentors, professors and companions who always helped me to gather more information and to acquire ideas about the concept related to this topic. With the help of some academic guidance books, I have gained much knowledge which will help me in future as well.
I would like to thank the authority of IKEA who has given me permission to interact with their customers and conducting the survey by distributing questionnaires through Facebook. The interviews of the managers also helped me to get the knowledge about different business strategies and moreover the strategies to perform well in this competitive world.
There are some different aspects of the business which are been integrated by some business strategies. These strategies are mainly applied in the different prospects of the companies. The strategies are the combined effort of the market and consumers. These hold a very strong position in the market and help to achieve the use of the services and the offerings by the company. As LaTourrette (2010) opined, in order to deal with the competitive market position the companies integrate so many business strategies and take the advantage of positioning. Thus the customers can be able to get the proper endeavour and they can be available in future business dealings as well. In every industry, the different strategies are been availed and these strategies are used for the progress of the company, discuss the management or product issues and arguments (Gramatikova, 2013). But there are so many drawbacks in this process that need to be dealt with in a convenient manner. All the probable implementing business strategies of a particular company thus been implemented in order to retain the sustainability of the customers. So the companies can achieve a proper position in the market.
1.1 Background of the research
The research is mainly based on the proper identification of the company IKEA, UK and signifies the business strategies adopted by them in their furniture business orientation. The previous research which has been implemented by the researcher shown that there are some of the issues the customers of the company faced while dealing with this particular. But there are some of the quality parameters which the company failed to maintain in a proper manner. Thus, De Kluyver and Pearce (2009) argued that the business strategies adopted by the company IKEA are not sometimes meet the customers’ expectations. To some extent, the company’s low-cost business strategies failed to retain some of the customers. The rate of the furniture company has been increased so the industry people have to adopt some strategic optimization in order to face the competitive world of business and retain their position on the market. However, Fisch (2012) opines that this research will help to present a detailed report of implemented business strategies and thus can be used for the future integration of the strategies.
1.2 Rationale of the research
In today’s world competition makes a person stronger in this competitive world. This strategy holds good for the business organisations as well. Every company or the industry has to be very much competitive in this race of progressing in this world of market positioning. And it leads them to adopt some of the business strategies which will help them to retain their position and achieve a proper place on the market. According to Bielski (2014), there can be so many reasons why a particular company sometimes fails to maintain these strategical issues. It was confirmed that the company IKEA mainly focuses on offering the customers’ furniture of good quality at a very low cost. So the customers get attracted by these several offers. As Tanwar (2013) stated that each year the company lows down the cost of the products in a very relentless manner. Despite the business low-cost strategy that has been implemented by the company IKEA, the company fails to maintain the TQM (Total Quality Management) technique. As the company reducing the prices of the products in order to get more customers’ interests, the quality of the materials to manufacture a particular product reduce accordingly (Weidong, 2007). So it does not create an effective impact on customers’ satisfaction level.
So the company has to look after the quality of the product and they actually spend time on finding the different way to manufacture the products at a low price. So it has been signified that it is very obvious that the company will not be able to manufacture the high-quality products at a low rate cause it includes the prices of the raw material used in the manufacturing process, the labour costs and the suppliers’ expenses. Fernando et al (2012) explained that the company has to face so many challenges in order to maintain this low-cost strategy while processing the business extensively among the customers. The customers may get attracted by the offered prices. But to some extent, the product quality even fails to feed their satisfactory level. In this case, the material producing techniques should be much more effective and customer satisfying.
The services that the customers would like to get are not sometimes as per their expectations. The cost of the suppliers are also very high, so it was found that when the company try to sell their products in a very low rate in order to gain more customers’ priority, they have to pay such amount to the suppliers which sometimes hampers the financial areas. According to LaTourette (2010), while reducing the costs to manufacture any product the company has to appoint some cheap labors and even the raw materials used in the manufacturing process are also come at a very low rate. It hampers productivity and even the operational process also creates a lot of troubles during the manufacturing of a product. Thus the company at times does not create any much effect on customers’ expectations level.
1.3 Research aim
This research mainly focuses upon the low-cost business strategy implemented by the company IKEA in order to sustain in the competitive market of the UK furniture industry.
1.4 Research objectives
- To understand the various elements relating to low-cost strategy
- To critically analyze the low-cost strategies of IKEA and its impact on profitability
- To identify whether such strategy of IKEA is effective enough to achieve competitive advantage
- To point out the gaps in its low-cost strategies of IKEA and put forward suitable recommendations
1.5 Research Questions
- What is the need and importance of maintaining low cost in the furniture industry?
- What is the key marketing technique followed by IKEA to achieve low-cost leadership?
- How far has the company been able to maintain the product quality despite following low cost?
- How far has the low-cost strategy of IKEA proved appropriate to gain a competitive advantage?
The literature review mainly focuses on the strategies that have been implemented by the company in order to progress in this competitive world of marketing. The review gives a perfect demonstration of the implemented strategies that can help one to understand in a better manner. It gives a properly constructed framework based on theories that are very much significant for the research.
2.1 Conceptual Framework
2.2 Low-cost strategy
There are some of the strategies that a company mainly adopts in order to progress in this world of competition. One of the most significant adaptations or the strategy that has been implemented by the companies is the low costs strategy. As per Tanwar (2013), there are so many theories that can be taken to imply in the business opportunities and thus the chosen one can be implemented in the business management area and it helps in gaining the proper attention in the furniture industry. Porter’s generic theory thus helps to hold the implied business context. The strategy is very much helpful for the companies to strengthen their position in that particular agency.
Weidong (2007) pointed out that there are some of the determinants that can also be found, such as the organizational behavior, the quality parameter is not being maintained properly, and sometimes the management people have to strive in this process or the application. The research is kind of a very complex one. The main theory in this porter’s generic strategy is to differentiate the products in a particular line and selling them at a low rate in order to gain the attention of the interested consumers. However, Höglund-Isaksson et al (2012) imply that most of the company adopt their strategic management skill based on two main features, one is the cost advantages and the other one is the differentiation. The firm basically strengthens and based on this the company puts their business strategy which helps them to recognize the business intention………………
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