2. Sharing information about Diamond strategy framework concerning IKEA
The origin of strategy was in the military and the need for people to defeat their enemies. The term strategy the
aforementioned is derived from the antique Greek word στρατηγός, indicating the general in the army. Strategic
management was introduce as business strategic management by management gurus like Peter Drucker, Philip
Selznick, Alfred Chandler, Igor Ansoff, and Bruce Henderson later in 1960’s. Management guru introduce various
strategic tools like Ansoff matrix, SWOT analysis, the Five Forces model, and Growth-Share matrix. Through these
mantras managers became better able to understand their businesses and the atmosphere and make conclusions on
future steps to take.
Later on year by year, so many strategic tools developed, and the word strategy itself has become a comprehensive
term used by both researchers and specialists. Chandler once demarcated strategy as ‘the willpower of the basic long-
term goals of an business, and the implementation of courses of action and the distribution of necessary resources for
carrying out these targets‘.
Although business environment became more complex, competition less predictable, technological advancements
disruptive and formulating for the future hard, people appeared to disagree about the true sense of strategy.
3. Strategy Linked to Operational Effectiveness
Michael Porter, one of the fathers of tactic, made a clear distinction between policy and operational
effectiveness (OE). Porter defines operational excellence as performing similar activities better than rivals
perform them. OE mean that a company manufactures products faster, cheaper or with smaller amount of
defects due to a more competent production line.
Even though constant improvement in OE is necessary to remain competitive, it is not sufficient. It is because
competitors can easily emulate these operational activities and attain the same results. According to Porter, a
business only outperform competitors if it found a difference that it can domain. It is where strategy comes in.
Strategic positioning is about performance diverse actions from rivals and
joining them in such a way that they carry a unique preposition of values.
4. Strategy Business Diamond
D. Ham brick and J. Fredrickson formulate the Strategy Diamond as a method to indicate what the right
odds and ends of a strategy are and how they fit together. The policy tied in with relaxing on crucial choices,
and the real umph of a Strategy Diamond is that it organizes essential results into a more outstanding
picture, rather than as a disconnected approach.
Strategy diamond gives administrative and authorities a compact,
coherent approach, organize, abridge, and report item, corporate, and
corporate level SOP. The model spreads strategy proposal - that is,
Strategy helps response inquiries concerning what the strategy is and
what future will be?.
5. The Five Key Factors of Strategy
The five key element of a strategy are :-
arenas, vehicles, differentiation, staging, and economic value.
Answering specific questions in each part, we draw conclusion of our plan with clear picture.
1. ARENAS
It include choices made about where to resist: the extreme state, i.e., item or running
markets, localize markets. Fields additionally differentiate honor chain movements or
esteem formation organizes that are sourced. I.e., a medical firm may import new
medication development to smaller pharma companies.
2. DIFFERENTIATORS
These are factors that are accepted to allow the firm to "win" in its attentive on meadows,
particularly outside fields. Differentiators can include the portrait, value, reliability,
and other statistics information.
6. 3. VEHICLES
It distinguish how much the plan depends on internal advancement activities in respect to
collaborating with external sources.
4. STAGING & PACING
This factor is mention to the grouping and speed of critical moves. These are
internal or external expansions. I.e., a medicine company develop its global
impression by first growing its item fields to stabilize in global market.
5. ECONOMIC LOGIC
The economic logic factor reflects how each of the pieces tangles in a
way that accomplishes the outcomes of partners. Economic foundation
for benefit arranged companies can appear as growing economy, best
valuing or some blend of these. And for non-benefit links, fiscal basis
reproduces how well the connotation is achieving its main goal and
vision.
7. IKEA Business Strategy Diamond
2. VEHICLES
3. DIFFERENTIATORS4. STAGING
How will we win?
The main focus points were
Good design, Quality &
Affordable prices. Stores opened
were unique & not taken over
from other competitors.
How will we get there?
They expand into countries with
similar cultures as their home
country with wholly-owned
stores.
What will be our speed and sequence of
moves
Expand into one country at a
time & seek to establish early
footholds. Each entry support by
massive advertising & marketing.
Where will we be active (and with how much emphasis)?
Sells Contemporary, Scandinavian style
furnishings to young professionals,
primarily white-collar customers around
the world. They design & retail the
furniture but outsourced the
manufacturing to bring down costs
5. ECONOMIC
LOGIC
How will returns be obtained?
Scale efficiencies & efficiencies
of replication. Easy to
manufacture product designs.
Diamond Framework strategy uses to develop the plan in multi-business enterprises at all organizational
levels & across markets or products.
In the case of IKEA, the five strategic elements were as follows:
1. ARENAS
9. In summary
IKEA, the strategy is all about making deliberate choices on what to do and more
importantly what to NOT do. A company can only create a real and sustainable
competitive advantage once all elements of its strategy are aligned and reinforce each
other in the way IKEA has done it. Competitors would only be able to imitate IKEA’s
success if they would copy every aspect of IKEA’s strategy. It is practically impossible
due to previously made decisions and the fact that IKEA’s economies of scale are just
too large to copy from scratch. Only large multinational companies or Private Equity
firms with significant capital investment opportunities could be able to recreate a
similar business model in a short amount of time (e.g., through aggressive acquisitions).
One major problem would still exist though: overcoming IKEA’s unique brand value and
the millions of customers worldwide that are loyal to a company as IKEA. Entering the
worldwide furniture industry is therefore extremely unattractive for companies. All
proves the relevance of an internally aligned strategy. Ham brick and Fredrickson’s
Strategy Diamond is, as a result of an excellent framework to establish that.