Swedish Furniture Giant IKEA Case Study The points of the Porter’s Diamond are described as four broad attributes. And these attributes promote or impede the creation of competitive advantage. These attributes are: •Factor conditions –a nation’s position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. •Demand conditions –the nature of home demand for the industry’s product or service. •Relating and supporting industries –the presence or absence in a nation of supplier industries and related industries those are internationally competitive. Firm strategy, structure, and rivalry –the conditions in the nation governing how companies are created, organized, and managed and the nature of domestic rivalry. National Competitive Advantage of IKEA IKEA Group, a Swedish company founded in 1943 with its headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and furniture. It is the world’s largest furniture retailer, which specializes, in stylish but inexpensive Scandinavian designed furniture. At the end of 2002 (1 September 2001 – 31 August 2002), the IKEA Group of Companies had a total of 175 stores in 31 countries. In addition, there were 19 IKEA stores owned and run by franchisees, outside the IKEA Group, in 12 countries. During the IKEA financial year 2001-2002, 323 million people visited our IKEA stores around the world. Factor Conditions of IKEA’s National Competitive Advantage IKEA’s Heritage —- the Swedish Root It’s no accident that the IKEA logo is blue and yellow. These are the colours of the Swedish flag. In Sweden, nature and the home both play a big part in people’s lives. In fact, one of the best ways to describe the Swedish home furnishing style is to describe nature — full of light and fresh air, yet restrained and unpretentious. In the late 1800s, the artists Carl and Karin Larsson combined classical influences with warmer Swedish folk styles. They created a model of Swedish home furnishing design that today enjoys world-wide renown. In the 1950s the styles of modernism and functionalism developed at the same time as Sweden established a society founded on social equality. The IKEA product range — modern but not trendy, functional yet attractive, human-centred and child-friendly — carries on these various Swedish home furnishing traditions. Many people associate Sweden with a fresh, healthy way of life. This Swedish lifestyle is reflected in the IKEA product range. The freshness of the open air is reflected in the colours and materials used and the sense of space they create: blond woods, natural textiles and untreated surfaces. In a climate that is cold and dark for much of the year, these light, bright living spaces create the sensation of summer sunshine indoors all year round. The IKEA Concept, like its founder, was born in Smaland. This is a part of southern Sweden where the soil is thin and poor. The people are famous for working hard, living on small means and using their heads to make the best possible use of the limited resources they have.
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