"Global Strategic Management: IKEAGlobal Strategic Management: IKEAUniversity NameAssignment Code 1 | P a g e Global Strategic Management: IKEAContentsExecutive summary ................................................................................................................................. 3Introduction ............................................................................................................................................. 3Scope of present report ....................................................................................................................... 3IKEA business in brief ........................................................................................................................ 4Business strategies .................................................................................................................................. 4External analysis of the industry ......................................................................................................... 4Bargaining power of suppliers ........................................................................................................ 4Bargaining power of buyers ............................................................................................................ 5Threat of substitutes ........................................................................................................................ 6Threat of potential entrants ............................................................................................................. 7Competitive rivalry ......................................................................................................................... 7Internal analysis of the firm ................................................................................................................ 8Value chain model .......................................................................................................................... 8Generic strategies .......................................................................................................................... 11Ethical assessment of strategy .............................................................................................................. 11Evaluation of strategy ........................................................................................................................... 13Conclusion and recommendations ........................................................................................................ 15References: ............................................................................................................................................ 16 2 | P a g e Global Strategic Management: IKEAExecutive summaryThe present report aims to focus on IKEA strategic management and practices at global level.With the brief introduction of company, the strategic analysis is presented with external andinternal analytical framework. All the facts presented in the report were supported withevidence that highlights how the effective strategic management helps the company tosuccess at global level. Other than this, the report also includes ethical consideration and setof recommendations which are helpful for further business expansion and gaining more ofprofit margin.IntroductionIn the present competitive environment, companies are mandatory to frame effectivestrategies that should have the potential to achieve their objectives in an efficient manner.The rationale behind these practices is primarily important because companies need to retaintheir brand image in international markets as well as to achieve competitive success.Importantly, the global prospect is also beneficial for industries as it tends to fetch a largermarket that in turn help in obtaining more of profit margin (Johansson and Olsson, 2016). Inorder to achieve an efficient global strategy, the key role is mainly performed by managers,where an essential understanding of nature of global business and dynamics of globalcompetition is critical to understanding. Scope of present reportThe above section discusses the importance of global strategic management with reference tosuccess and maintenance of business line for any firm. The extent of the present report, insimilar consideration, will discuss in-depth essentiality of business management with the useof global strategy. In particular, the discussion is made with reference to one of the3 | P a g e Global Strategic Management: IKEAtraditionalcompany – IKEA, which have an excellent brand image at international level andhave a high-level penetration into major markets of Europe, U.S., Africa, and Asia.IKEA business in briefIKEA is a multinational group with its head-branch located in Netherlands. The company wasoriginally founded by a 17-year old, Ingvar Kamprad, which is in the current state is anowner of more than 60-billion-dollar fortune. The company is functional in more than 392locations across the globe, with the overall purpose of global business management to securecontinuous improvement, development, expansion, and superior quality line of their products(Johansson, 2013, pp. 137). Business strategiesExternal analysis of the industryAccording to Tiwari et al. (2015), the foreign market entry strategies differ with reference tothe risk degree such as political, cultural, demographic, and social point of view. Likewise,the commitment in terms of resource and financial investment and the return on investment isalso critical in making decisions. Bargaining power of suppliersThe raw materials that are relevant for the company include furniture materials, labour cost,and transportation cost. However, there do not possess substantial bargaining power ofsuppliers because there are numerous factories across the globe with capabilities andresources. The important questions in this consideration include:- How IKEA increases it success in various multinational market by using resourcesefficiently?- Are they making any collaboration with local firms to reduce the price of labour?4 | P a g e Global Strategic Management: IKEA- What strategies are effective in framing long-term relationship with suppliers. It is worth mentioning that compared to other companies, IKEA has a huge volume of theirfurniture and related home accessories products. As a result of this, there is a high-end costassociated with transportation and is at high risk of damaging during the shipping process(Thomas and Alluru, 2016, pp. 8). In order to frame collaboration with local firms such as to reduce the price of labour and alsoto lower the risk of investment, IKEA uses franchising and joint venture strategies.Franchising companies (or groups) will be directly involved in the development and controlof the marketing programme (Mukoyama and Dawson, 2013, pp. 55). For IKEA, jointventures are mainly reflective in Japan, Australia, Hong Kong, and Singapore, which is nowconsidered as a third firm that was created in collaboration with host and home countries.According to a report by Gong et al. (2013, pp. 3), the joint agreement is critical because ittends to give a better control in a foreign location for the companies and thereby offers theopportunity to access the local markets. Bargaining power of buyersBuying power of buyers is mainly attributed to the factors like wide choice availability ofoptions in market as well as competition due to local furniture. Hence, it would beappropriate to state that bargaining power of buyers is strong for IKEA. The central theme ofIKEA for the maintenance of their business line is that they are engaged in manufacturing ofvarieties of products, well-designed and furnished furniture, home furnishing products atreasonable lower prices, such that majority of customers could afford easily. As a result ofsuch measures, it becomes easier for the company to gain market reputation and that by theth year 2002, IKEA becomes 44 position holder among top brands of the international market.In addition to this, the service responsiveness of international market also offers the5 | P a g e "