Strategic Management in Dynamic Environments Essay
Strategic Management in Dynamic Environments
After some good discussions and ideas regarding the expansion plans of the furniture company, the realization comes about that the main factor to consider is the competition that will be encountered in the expansion country of choice. As a result, there needs to be further research done regarding the top competition for the furniture company in China. After researching furniture companies in China, the two companies that have been chosen are IKEA and Markor International Furniture Company. IKEA is a company that started out small by a five year old boy with an entrepreneurial spirit selling pencils and match sticks to neighbors. Because of his drive and determination to help out his family, the IKEA brand started in 1943 and is a global giant that has stores in forty-one countries, with twelve stores in various neighborhoods of China. The vision of IKEA is to create a better daily life for the many, and their business plan is to offer a wide range of well designed, functional home furnishings at prices that are low enough so as many people as possible can afford their furniture (IKEA, 2013).
Markor International Furniture Company was founded in 1995 and has lumber resources that are imported, produces various styles of high-end furniture with different cultural elements, and exports to Australia, Canada, Europe, Japan, the U.S, as well as other countries. Markor ranks as one of the top furniture stores in the industry and in the areas of equipment level, production scale, industrial and technical production, as well as marketing, product development, and management. In 2002, Markor created its own brand of furnishings; Markor Home Furnishings and began working with Ethan Allen, one of the largest furniture retailers in the U.S, and opened around thirty stores across China (Markor, 2013). As we look at IKEA and Markor, it is evident that both these companies have strengths and weaknesses. Because of those strengths and weaknesses, it is important to do a SWOT analysis since it will not only analyze the strengths and weaknesses, but also the opportunities and threats.
The strengths of IKEA include brand recognition and image, internationally known, unique business model, and a long-term joint venture with their supplier, which equals quality products. The weaknesses are privately owned, a reliance on European markets, lower level of customer service, and real estate (large land masses). The opportunities are further international expansion, smaller store locations, moving towards being global and more high-end furniture. The threats are competitors (direct and indirect), shipping prices and rising commodity, copycat companies, and a threat to the performance of the company in specifically the American and UK markets. IKEA is a direct competitor to us because of their established global presence and brand recognition, and furniture styles that look high-end, but are inexpensive. They also have several locations throughout China. In some ways IKEA has an advantage over us because of their inexpensive products, but are of quality.
However, our advantage over them is that our customer base wants furniture that is of quality and furniture that is already assembled (IKEA, 2013). The strengths of Markor is their collaboration between Ethan Allen and their own brand Markor Home Furnishings and a strong operating performance, known internationally, free shipping, marketing strategy, and economies of scale. The weaknesses are an over dependence on domestic regions, high employee turnover, expensive products. The opportunities are recovering economy, strategic acquisitions, and additional global expansion. The threats are falling housing investments in the U.S, labor and wage issues in China, aging population on main shopper sector, and competition (direct and indirect). Markor is a direct competitor for us because they are a well established company in China with a working relationship with Ethan Allen and export to countries like Australia, Canada, Europe, Japan, and the U.S. They also have a wide range of high-end furniture with influences from the countries they export to and a direct competition to our product line.
The advantage they have over us is that they are an established company with various locations throughout China (Markor, 2013). When discussing a cooperative strategy with our competitors, this is something that is highly possible with Markor. Since this company has already established a working relationship with Ethan Allen, why not add more partnerships to the mix. This form of relationship will have benefits for involved by adding value to each company. As far as IKEA, not so sure that a cooperative strategy is possible, IKEA is a company that has its own way of doing things and their own ideology. If it were possible, our company would have to do things IKEA’s way. Another strategy that the furniture company should perform is building a competitive market profile.
This process helps companies to identify and communicate with the forecast that offers the best opportunity for success. This type of profile is a concise description of the type of prospects the company wants to sell to. In order to do this there are certain steps to follow: identify the target market for our products as accurately as achievable; profile business customers by a set of different attributes consisting of size, location, and industry, as well as decision makers; research the preferences and interest of that target market; build a profile that is more detailed of the target audience on our website regarding their specific requirements; identify the benefits of the products that represent the best value for our customers; and create a positioning statement that I distinct for each sector of customers. Although this will vary depending on the area of expansion, but these steps will help the company go into the market as a strong competitor (Marketing, 2013).
IKEA. (2013). The IKEA Way. Retrieved from http://www.ikea.com/ms/en_CN/about_ikea/index.html MarketingMo. (2013). How to Articles: Competitive Positioning: Start with a Market Profile. Retrieved from http://www.marketingmo.com/how-to-articles/competitive-positioning/competitive-positioning-start-with-a-market-profile/ Markor International Furniture Co. Ltd. (2013). About Markor. Retrieved from http://www.markorfurniture.com/en/0230.html