"Global Strategic Management: IKEAfavourable opportunity to the company for investment, acquisition, and the opening of newerfranchises in the local market, owing to their immense popularity and demand(Schlegelmilch, 2016, pp. 195). During the 1990s and early years of 2000, the common problem faced by the company,especially in European and US markets are linked to demographic issues. The reason isassociated with the lack of company’ attention towards the local taste and requirement ofcommunity members. In particular, during this time, the customers are preferable towards bigfurniture kits and related household items in a combined manner (Yu, Wang, Zhong andHuang, 2016, pp. 179). Threat of substitutesAccording to the report by Valdivieso et al. (2015), the existence of many global competitorsis reflective of the fact that industry is much ripe at this stage and that there exists minimalscope of future growth. In the present market condition, IKEA has a strong competitor likeWayfair in markets of US and West Europe. Other than this, the markets of Asia, Africa, andOceania do not have any global competitors, which can be considered as one of the potentialstrength of the company. In contrast, there exists a vast pool of local competitors for IKEA that mainly involves brick- and-mortar retail shops. With reference to the technological advancement, online (e- commerce) field do not have potential competitors that can affect the business line. Still, theimportant consideration is that IKEA maintains quality and cheap product line which holds astrong position in every market niche. This advantage of IKEA with reference to the globalcompetition have an advantage over the local competition, that ultimately offers revenueadvantage (Frynas and Mellahi, 2015).6 | P a g e Global Strategic Management: IKEAThreat of potential entrantsIt is also found that IKEA do not have strong global competitors, but there exist various localfirms (retailers, distributors, and shopping units) that give tough competition with referenceto cultural advantage and demographic taste of local. On the other hand, IKEA still survivesby virtue of its quality line and competitive pricing strategy.A tough level of competition is mainly given by local entrants that are well aware of localtaste and requirement of community members in terms of furniture and home accessories.Though these companies can be considered only as small to medium sized firms, they possessstrong competition in terms of attracting customers. In consideration to globalisation,importantly for IKEA, issues like the risk of damage during shipping and transportation costis much higher. IKEA have prepared a robust solution in this regard, where they manufacturethe furniture parts, and correspondingly, the pieces can be assembled at the market location. Competitive rivalryRivalry among the existing firms in the market are mainly offered by firms like Wal-Mart,Argos, Euromarket design, and Galiform plc. The only advantage that IKEA have amongthese rivalry companies is that not all of them have established themselves on globalplatform. The key question in this consideration is that how IKEA manages its competitivesuccess; and the answer to this lies in its promotional strategies.With the prospect of globalisation, the company started expanding their global functionalunits that not only offers IKEA to gain market recognition but also enables them to gain moreof revenue from their targeted market segments. Additionally, in this prospect of expansion,the core responsibility was made with reference to the managers such that the supply andlogistics management can be made accountable at all the locations (Salomon, 2016, pp. 1).On the other hand, IKEA marketing staff had the responsibility to undertake the market7 | P a g e Global Strategic Management: IKEAanalysis, framing newer strategies based on demographic dynamic, and finding measures toincrease customer via attraction. Note that this is also effective for gaining marketcompetitiveness in conjunction with their rivalry companies.Internal analysis of the firmInternal analysis refers to the operational management aspect that mainly aims towards (i)managing organisational behaviour; (ii) implementing cost effective strategy; (iii) use oftechnology; (iv) maximizing the resource utilisation, especially human resource; and (v)increasing the effectiveness of primary activities like logistic management, marketing, sales,and other related services. The analysis of this section for IKEA is mainly managed with twomodels, one is the value chain model and another is four generic strategies approaches. Value chain modelThe support activities are managed with firm infrastructure, HRM, technological input andprocurement process. Firm infrastructure is mainly having intention to increase the costeffectiveness such that profit margin can be increased. For example, in Asian markets, IKEAmanages its range of activities either through the indirect export or licensing provision(Meyer and Benito, 2016, pp. 149). In both of these terms, the associated firm needs to paylicensor fees as well as taxes that allows them to promote their business line and earn profitmargin from associated markets. Similarly, in case of joint ventures (as implemented inEuropean nation and US market), IKEA manages avoiding control of problems that areusually common during the foreign market entry and which also to issues that are probable toarise because of integration to international firms in any foreign environment. IKEA is knownto have involvement in the similar agreement such as with formal joint ventures inBangladesh, shared research in Sweden and Switzerland, and minority equity participation in8 | P a g e Global Strategic Management: IKEAAfrican nations (Dawson and Mukoyama, 2013). The advantage of such value chainprocessing is that:- High-level industrialised countries and their business operations is possible at global level. - Focus on the creation of newer products and technology that offers a superior advantageover the existing product lines. - Created for the short-term duration and have an objective to earn a high-level profit.It is also noteworthy to mention that IKEA focuses its visionary towards the usage oftechnological advancement and bringing robust outcomes (innovativeness) in product lines.The prime rationale behind this fact is that technological innovations are helpful in deliveringoptimal resource utilisation and capabilities for conducting the R&D efforts (Feldman andMargolis, 2014). Moreover, in the location of high competitiveness such as in Germany,Hong Kong, China, technological input is helpful in staying and managing the companyreputation.In terms of procurement, IKEA insist on strategies like direct investment such that it acquires100% ownership. In particular, IKEA makes direct investment – (i) Greenfield investment;and (ii) Acquisition, which offers a differing level of market risk and estimation based ondemographic, cultural, and political dynamics (Steenkamp, 2014, pp. 5). Move over, thestrategy of direct investment is also considered with reference to the existence of rivalrycompanies and level of competitiveness within the market.The next critical segment of value chain is logistic management, operational activities,marketing and services. IKEA’s strategic decision in US market during the 1990s reflect thateven multinational companies fails to survive with their global business managementstrategies if they fail to respond effectively towards the local business realities andrequirements (Burt, Johansson and Dawson, 2016, pp. 715).Note that majority of locations9 | P a g e Global Strategic Management: IKEAof stores of IKEA also have disadvantage owing to the huge cost of establishment, land orrental high prices, and taxes provision made by the government (Salomon, 2016, pp. 35). For logistic management, the company insist on strategy to open new set-up and reduce thecost, as well as to reduce the risk of damage due to shipping. Thus, it is critical for IKEA tosupply optimal volume of products in the market, such that compensation to customerdemand could be possible. With this vision, the company involves in selling of ready-to- assemble furniture, home accessories, and home appliances, such that both inbound andoutbound logistic can be managed. The order management is mainly handled by zonaloffices, and the input of information are managed by local dealers, retailers, and suppliers.In conjunction to marketing and sales, IKEA also manages the potential for economies basedon R&D and production rate and as mentioned in the report of Johansson et al. (2013, pp.137), the smooth experience curves were only reflective in the financial report of IKEAduring 2002, after which the company shows a significant strategic implementation in theirglobal business management. IKEA also frame its strategic planning keeping in view of theproducts which are highly demanded by the customers. For example, the home accessories,combined furniture set that are required in houses, decorative items constitute morehomogenous needs within the market. Moreover, these products are equally accepted basedon the taste and culture of the diverse community (Devinney, Mcgahan and Zollo, 2013, pp.325).Similarly, the transferable marketing cost is also accounted while managing the globalbusiness line, which has an investment of €0.9m for advertisement requirement with the localadoption of respective markets (Jin-Yuan, Miao and Xiao-Ming, 2016). 10 | P a g e "