Ltd. is a furniture operations company that offers “quick assembly” furniture with 15% lower price than its competitors. IKEA’s success brought imitators, such as Sears. In order to analyze IKEA’s competitive position in the Canadian Furniture Industry as well as Sears competitive threat, a model of competitive rivalry was used. IKEA and Sears both compete against each other in multiple markets across Canada, they both have market commonality and resource similarity.
The Sears catalogue has almost the same format of an IKEA catalogue, and they both offer knock-down, self-assembled line products which allows the customers to create particular designs.
In addition, the price for Elements’ products in Sears seemed almost identical to IKEA prices. They both go closely to the supplier in marketing, research, design and development, production standards and production planning. Some of the suppliers of the Elements line for Sears were from Sweden, which is the same as IKEA, but it didn’t show that they had any suppliers in common.
It’s evidently that both of the market commonality and resource similarity are very high between those two companies. The market commonality and resource similarity can influence the drivers of competitive behaviour. The awareness of IKEA to recognize the degree of imitation by Sears is very high. High awareness enables IKEA to understand the consequences of Sears’ actions and responses. IKEA has a high motivation to respond Sears’s imitation. In order to protect IKEA’s position in the furniture market, IKEA has a philosophy to dealing with the copyright.
IKEA would like to make a new model to replace the stole one rather than bring a lawsuit. Furthermore, IKEA has the ability to attack or respond to Sears’ actions. Since they both hold the similar resources, the ability to attack and respond is similar. IKEA should consider all important issues before taking action or respond to Sears. First-mover incentives, organizational size, and quality are the three factors that IKEA may take action to its competitors.
As a first mover, IKEA’s business approach was fundamentally different from the traditional Canadian retailers. IKEA focus on “quick assembly” furniture and allow the customers assembled at home. Due to this reason, its price is 15% below the lowest prices for traditional furniture. The size of IKEA Canada is relatively small than Sears. The smaller size enables IKEA to launch competitive actions to defend their market position. The quality of IKEA’s product can be guaranteed.
As one of the competitive strategy, IKEA had nearly 100 production engineers to assist suppliers in every way to low costs, introduce new technology, and design. The company has a philosophy to “create a better everyday life for the majority of people. ” In order to defend its market position, IKEA may response Sears’ imitation in the following ways. IKEA may implement some strategic action, such as new innovation, to replace the stolen model from Sears.
IKEA may lower its price, always by 10 to 15 percent on a particular item, than Sears. If IKEA can’t do it, IKEA may just drop the item and select some other one, to compete against Sears. Sears is one of Canada’s largest merchandising operations, and offering a wide range of medium price and quality goods. IKEA can predict that Sears with relatively lower market dependence are less likely to respond strongly to attacks threatening their market position.