Bus 499 Assignment 3 Essay

1838 WordsMar 8, 20148 Pages
Assignment 3 BUS 499 1. Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. IKEA is an acronym for “Ingvar Kamprad Elmtaryd Agunnaryd”. This represents the founder of IKEA Ingvar Kamprad’s first and last name and the name of the farm where he was born and the village where he grew up. IKEA started out selling wallets, jewelry, watches, pens and other items that Kamprad could buy at a low price and flip for a profit. Furniture was added to the product line in 1948. IKEA is now a well known furniture retailer. Founded in 1943, Ingvar, at the age of five began selling matches to the local community. Ingvar’s entrepreneurial style brought him to the furniture business. He built the furniture locally, close to his family’s farm and by having the local manufacturers produce his product designs, the price was kept very low. This enabled Ingvar to sell the furniture at a low price while still making a profit. (IKEA.com) This type of strategy is known today as low cost-leadership. Cost leadership strategy involves the firm winning the market by focusing on and appealing to the cost conscious consumers (Hitt, 2013). This type of strategy is achieved simply by having the lowest prices in that target market or by having the lowest price to value ratio in the market. This type of strategy is essential to the success of IKEA. They have tried to make their products affordable for virtually everyone. Many furniture stores around the country sell furniture with exceptionally high mark ups and do very well. One of those competitors is Design Within Reach (DWR). DWR sells the same type of furniture and other offerings as IKEA. Comparing prices for similar sofas, DWR’s price
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