Competitive advantage of IKEA Essay

INTRODUCTION In this modern hypercompetitive marketplace, a company must be a powerful competitor to survive. A company must possess a powerful strategy in order to become a powerful competitor. But what makes a good strategy for the company? A good business strategy would be that to attain a competitive advantage over other competitors. So what is a competitive advantage? And how company can be able to have a competitive advantage over other competitors? This essay would now discuss what a competitive advantage is and how a company can build a competitive advantage over other competitors in the same industry by using two furnishing stores, Ikea and Courts as examples. COMPETITIVE ADVANTAGE Definition A company is said have competitive advantage over its competitors when the company earns profits that are above the normal average in the industry where it competes. Types of competitive advantages According to Michael Porter, there are two basic types of competitive advantage, namely: Cost Advantage- A cost advantage is the ability of the firm to deliver the same product or services at lower cost than competitors. This can be achieved through using economies of scale, production efficiencies, low labor cost or better access to raw material and etc. Differentiation advantage- A differentiation advantage is the ability of the firm to deliver products or services that are different from the product mix of competitors. Due to the added costs in achieving differentiation for the  product or services, differentiated products or services are often marketed at premium prices. Model of Competitive Advantage Source: www.quickmba.com Competitive advantage derives out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that reduce the price sensitivity of the buyer. Value can be achieved though utilizing the firm resources and capabilities that would then become core competencies of the particular firm. The core competencies created will allow the firm to position either as a cost leader or differentiation leader in the industry and this will in turn create value for the buyers which will become the firm competitive advantage in the industry. Resources and capabilities A firm needs to possess resources and capabilities that are better than its competitors in order to develop a competitive advantage over them. Any competitive advantage will disappear if the competitors can easily imitate what the firm was doing. Resources are assets of the company that its competitors cannot easily acquire. Some examples of a firm resource include the firm’s reputation, loyal customer base, patent and trademarks and strong branding. Capabilities refer to the ability of the firm to make the most of its resources. One good example of the capabilities of a firm is the ability to carry out a successful marketing campaign. The combination of both capabilities and resource will become the distinctive competencies of the firm. The competencies will allow the firm to achieve  innovation, efficiency, quality and customer responsiveness. The core competencies created will allowed the firm to position either as a cost leader or differentiation leader in the industry Cost advantage and differentiation advantage A firm will position itself as a cost leader or differentiation leader in the industry based on the distinctive competencies formed using its resources and capabilities which become the firm competitive advantage against other competitors. Value creation Value is created by firm through performing a series of value creating activities that Porter identified as the value chain. The value chain comprises 4 supporting activities (procurement, technology development, human resource and firm infrastructure) and 5 primary activities (inbound logistics, operation, outbound logistics, marketing as well as sales and service). On top of the firm own value creating activities, the firm operates in a value system of vertical activities including those of upstream suppliers and downstream channel members. In order to achieve competitive advantage, a firm must perform one or more value-creating activity that is more superior compared to other competitors. Superior value is created through lower costs or superior benefits to the buyers. IKEA Profile Ikea, the Swedish furniture giant was founded in 1943. It is the world’s largest furniture retailer that sells stylish but inexpensive Scandinavian designed furniture. It has outlets in 35 countries, including Singapore. The company is, perhaps, one of the World’s most successful multinational retailing firms operating as a global organization based on its unique concept that the furniture is sold in knock down form that are to be  assembled by the customer at home. Ikea mission statement Ikea’s mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that as many people as possible can afford to buy them (www.ikea.com) Ikea competitive advantage Ikea’s success in the retail furniture industry can be attributed to its vast experience in the retail market and its ability to integrate both product differentiation and cost leadership strategies successfully. As pointed out in Ikea’s mission statement, the company is in business to produce high quality products at a low cost. This would support a cost leadership strategy. However, the company is also applying differentiation strategy due to its unique way of incorporating the customer in the value chain and unique marketing strategies Cost advantage Ikea cost leadership strategy allowed it to have a competitive edge over other competitors in term of pricing. Ikea achieved this through tight cost control and production efficiencies. Under Ikea’s global strategy, suppliers are usually located in low-cost nations, with close proximity to raw material and reliable access to distribution channels. These suppliers produce highly standardized products intended for the global market, including Ikea. This allows Ikea to take advantage of economies of scale. Ikea also practice tight cost control in order to keeps its product price low and affordable. Some key cost control measures undertaken by Ikea includes: * Locating their outlet outside the city area on places where the lease or the cost of the land is cheaper * Flat packaging of its product allows Ikea to transport its goods from suppliers to its outlet at low cost as it efficiently maximizes the space during transportation. Flat packaging also means lower warehousing costs for them. * â€Å"No waste† policy when Ikea develops product. For example, the remnants of fabrics that are left over the heart shaped FAMNIG cushion, one of Ikea product, are used to make smaller FAMNIG cushion. Door manufacturer are used by Ikea to make their table-top with the leftover raw material thus reducing production cost. In addition to tight cost control and production efficiencies, Ikea also incorporate customer into the value chain approach as a mean of reducing costs. Customers are to use the information on the product price tag to collect from the racks in the store self-service area, transport the items themselves back home and to assemble by themselves. The costs saved are passed back to the consumer in term of charging lower price for their product rather then including the labor costs and delivery costs into the selling price, a usual practice of other furniture stores. Differentiation advantage Ikea had also successfully integrated its cost leadership strategy with differentiation strategy that allowed it to further distinguish itself from other furniture stores and develop a strong branding for the firm. Ikea differentiate itself from other competitors by performing the following: * As mentioned earlier in page 6, Ikea incorporate customer into the value chain approach to reduce cost. Customers are to use the information on the product price tag to collect from the racks in the store self-service area, transport the items themselves back home and to do assembling of the  furniture. Ikea is the only furniture store that adopts this practice in Singapore and it is accepted by all Ikea customers as they understood it as a cost saving method through education by Ikea to the customer on their catalogues. * Ikea adopted different marketing communication strategy from the rest of its competitors. Instead of choosing to advertise every weekend in the newspaper to reach out to consumer, which is the norm of most of the popular furniture stores in Singapore, Ikea main communication strategy lies in the complimentary catalogue mail to every household in Singapore annually. This allowed customer to read the catalogue at the comfort of their home. Furthermore, the dimensions of the furnitures are indicates in the catalogue that allowed the customer to measure up their place for the furniture and come up with a systematic shopping list. Thus, the catalogue is the best way to prepare the customer for a visit to Ikea compare to newspaper advertisement used by other competitors. * Ikea provides child care services and supervised play area in their outlets to ensure parents can focus on their shopping in Ikea store without having any worries for their children. * In-store restaurant (Rare among furniture stores), Burger King as in the case of Singapore, offer a chance for shoppers to take meal breaks without the hassle of leaving the store. Summary The cost leadership strategy adopted by Ikea allows it to set attractive price for their product compare to other competitors in the same industry. By setting attractive price, it also reduces the price sensitivity of the consumer. The cost advantage is achieved by Ikea through tight cost control and production efficiencies. The differentiation strategy approach such as the Ikea catalogue, in-store restaurant, the incorporation of customer in the value chain and providing of child care services undertaken by Ikea helps to create a highly differentiated picture of Ikea in the target  market’s mind. Ikea through successfully integrating cost leadership and differentiation strategy had become one of the most successful international furniture retailers.

How to Promote Tourism in Malaysia Essay

In comparison to other sectors of Industry, the tourism industry is well developed at Malaysia. This industry effects in a positive manner in giving a boost to the Malaysian economy with a rapid increase in the earnings, of foreign exchange along with good employment opportunities. In the year 2005, it was declared by the World Tourism Organization that Malaysia stands 14th in the overall ranking based on the international tourism arrivals. Among the 53 different common wealth countries Malaysia ranks 3rd next to Britain and Canada. A wide increase in the foreign revenue generation was noticed in the year 2006 and the tourism sector generated about US$18. 1 billion through export revenue, which is almost 10% of the total foreign revenue earned by the country. Different efforts were taken by the government of Malaysia, to make the country more developed and a prime place of attraction for tourist from all parts of Asia and world. You can notice a huge infrastructure and physical development was given due priority by the government of Malaysia along with the established projects of tourism with good attraction of tourism for the prospect of the country (Jamil. J, 2007). After the independence of Malaysia, the Malaysian people put their concern on the western influences on the tourism development (Din, 1982). The tourism development continued its journey with a vision for the national development, the civilization of Islam, with a great progress in the parallel with the teachings of Islam (Islam,H, 2005). Out of the world’s 57 Muslim countries, only four countries manage to earn 17. 5 million tourists in 2004. The countries are Malaysia, Morocco, Egypt, and Turkey (Islamic countries Seek Bigger Piece of Tourism Pie, 2005). The tourism policy and its implementation in Malaysia As per as the overall development of Malaysia is concerned, NEP directly influenced it from 1971 to 1990. In later part NEP was replaced with the introduction of New Development Policy from the period 1991 to 2000. Several objectives of NEP were included in New Development Policy. Like various other industries and sectors of the economy of Malaysia, focus was also given towards the development of tourism industry by NEP. Depending on that, a federal form of constitution was adopted by Malaysia. Under this constitution come all the thirteen states and all the federal territory. The central government of Malaysia designed the policies keeping in mind a linear path with regard to their implementation on the state level. But in real terms it seemed like quite difficult to centralize the flow of the process, particularly due to the involvement of each state with own legislative style. Many of the state participated in the argument to oppose some of the policies of tourism as they feel that goes against the local norms of the state. Institutionalization of the industry of tourism in Malaysia The year 1995, marked the beginning of tourism as a new force of the economic sector of Malaysia with the setting up of the Department of Tourism under the Ministry of Trade of Malaysia. It clearly justifies that the industry of tourism is a late arriver in comparison to any other sector of industries in Malaysia (Tan, W. H 1991). The involvement of Malaysian government was in a slow pace towards the tourism industry, while most of the developing countries concentrate on the tourism industry to follow the path of growth in the economic front. A sudden fall in the commodity prices inspired Malaysian government to give new life to the industry of tourism, in order to sustain the growth of economy principle objectives of tourism, was included in the tourism master plan of Malaysia, which was the country’s 2nd Malaysia Plan 1971-75, marked the new beginning of the tourism sector as the contributing force for the economic development of Malaysia. In the year 1972, a dedicated agency was established known as the Tourist Development Corporation by the parliament of Malaysia. It is established with the mission to promote tourism of Malaysia. A new phase is marked with the involvement of the government in this sector. An international bench mark was achieved by the tourism industry in the year 1972 when Malaysia hosted the Pacific Area Travel Association (PATA) 21st conference, which resulted in the gradual increase in the number and percentage of the international tourist into Malaysia. A rapid increase is noticed also in the number of inbound tourist with the availability of the facility of regional airports and that too of an international standard. In the year 1986, the PATA 35th conference was held at Malaysia, which enhances the tourist attraction of the place in the subsequent years with the highlighting of the facilities and services offered to the delegates (Tan,W. H, 1991). A grand event was organized in the year 1990 on tourism . The event was named the Visit Malaysia Year 1990. In that very year a record visit of almost seven million international tourists was marked, which is a growth of almost 53. 6% from the previous year. The grand success of this event gave a targeted increase of almost 10% for each coming year. The Ministry of Culture, Arts and Tourism was introduced in the year 1992 to coordinate and plan the tourism activities of the country with close monitoring of the activities too. The inceptions of the Malaysia Tourism Promotion Board (MTPB), in the same year establish Malaysian tourism as one of the major force of the economic sectors of Malaysia. Malaysia Tourism Promotion Board took the initiative to promote Malaysia as the world tourism destination in order to enhance the socio economic well being of the country of Malaysia. On the other hand the Ministry of Culture, Arts and Tourism were entrusted with the responsibility to formulate the policies for tourism industry of the country. MTPB get the advantage to promote Malaysia on the international level with about 29 offices on worldwide basis. The domestic destinations were marked and then it was matched with various selected international markets. Keeping this concept of promotion eight destinations were marked with another four additional sites in each subsequent year. The destinations of Sabah, Langkawi, and Sarawak were promoted in high level especially to the European market, especially due to the appeal of the nature along with the sand and beaches. The development authority of the Langkawi targets the tourist from the Western Europe, area as the tourist from there do possess the capacity to avail and enjoy the facilities of the four to five star hotels located on the Langkawi Island. The above discussion on the Institutionalization of the industry of tourism in Malaysia clearly depicts how the development of the tourism industry take place in different stages to establish the country as one of the attractive destination for the tourist specially on the international level.

Methods of Research

Price Scientist conducts research on a daily basis. The purpose of this research is exploration, description, explanation, and application. In the area of criminal Justice things are getting researched all of the time. Take murder for example, the police have to explore to find out what actually happened. They have to describe the events leading up the the murder. They have to explain the facts to try and come up with a suspect. Finally, they have to use the process of application to put it all together so they can make an arrest.When using the different purposes of research it Is important to examine each purpose by Itself because each purpose has Its own different aspect when It comes to research design. The exploration stage Is the first stage that researchers begin with when using research methods. â€Å"This stage is typically done for three purposes: to satisfy the researcher does curiosity and desires for better understand, to test the feasibility of undertaking a more extens ive study, and to develop the methods to be employed in any subsequent studies. (Grossman, 2014) A researcher will use the exploration take of research when they want to find out about something that there is little known about. Take drugs for example; let's say a researcher wants to find out how bad the drug problem is in the United States. There are a couple categories that a researcher may want to explore. Such as; â€Å"how many were arrested for drug sales or possession each year and how many hours per day do drug dealers work and how much do they make? † (Misfield & Babble, 2009) The next purpose of research is description. The researcher explores and then describes what they explored.For example; the U. S. Census, â€Å"the goal of the census Is to describe accurately and precisely several characteristics of the U. S. Population, including race/ethnicity, age, sex, household size, and income. † (Grossman, 2014) The description stage is widely used in the crimina l Justice field. For example; it is used to describe a certain crime problem that a certain city or state may be having. It can be used to measure how much burglary is committed in the city of Joplin, Missouri. The descriptive stage is used to answer the questions what, when, where, and how something happened.The third stage of research is the explanation stage. The explanation stage attempts to describe why something happened. The description and the explanation stages work together. The descriptive stage explains what happened the explanation stage explains why It happened. Take the burglary rate In Joplin the descriptive stage tells you how much burglary Is committed and the explanation stage will tell you why burglary is committed in Joplin. Application research: evaluation and policy and problem analysis. An example would be â€Å"determining whether a program designed to reduce burglary actually had the intended effect. (Maxwell & Babble, 2009) Criminal Justice organizations gather all their research from exploration, description, and explanation in the application process to come up with a conclusion for all their research. There are four different stages of research that the criminal Justice organizations use to find answers to things that are unknown and also to find out the what, where, when how, and why things happen. Most researches that are done contain all four stages of research. For example take auto theft. A researcher would use the exploration stage to learn about the case.

Diet Program Research Paper Example | Topics and Well Written Essays - 500 words

Diet Program - Research Paper Example The body burns both fats and carbohydrates, therefore, if carbohydrates are reduced or eliminated the body will start burning fat. On this diet, the amount of food consumed is limitless. The restriction is on the type of food: no refined sugar; milk; white rice; pasta/white flour; and white potato. All the foods rich in fats are allowed to be eaten: meat; eggs; cheese/spread; red meat, fish (including shellfish); fowl; one may cook with butter; use mayo; and olive oil. This is diet of almost pure protein and fats. This diet is divided into four stages; phase one, two, there, and four. The first phase, phase one, lasts two weeks, the dieter eats only proteins and fats. three cups of loosely packed salad, or two cups of salad with two-thirds cup of certain cooked vegetables per day. For phases two, three, and four, carbohydrates, fruits, and vegetables are added gradually, and limitedly. The objective of this is more fats and protein. Dieters must keep checking their weight and decrease their carbohydrate intake if they begin to gain weight. This is a diet that also requires the dieter to take vitamins supplements (WebMD). Obviously this is not a practical diet. A diet with an intake of more protein than carbohydrates ; and is going to last a lifetime, can never be healthy. Exerciser seems to be the only good thing that this diet promotes. The diet is a life sentence; and the dieter can never touch the restricted food again; who wants to be held hostage to a diet for life? Robert H. Nickel, MD, director of the general clinical research center at the University of Colorado Health Sciences Center in Denver, tells WebMD: "Our worries over the Atkins diet go way past the question of whether it is effective for losing weight or even for keeping weight off. We worry that the diet promotes heart disease ... We have concerns over whether this is a healthy diet for preventing heart disease,

What are the roots of the present crisis of the euro Essay

What are the roots of the present crisis of the euro - Essay Example There are good promises about integrating the euro zone into one currency policy. One of the reasons why there are many countries engaged themselves into this one-currency policy is to substantially address the need of their economy to rise up above any other. However, behind all of these promises are some limitations that need to be taken into consideration (Provopoulos, 2010). One of the limitations is the substantial loss of the ability of a participating nation to set its individual domestic monetary policy. Another is losing its ability to change the nominal exchange rate of its currency. It is therefore clear that with the optimum currency area policy; there could be no significant contribution of uniting the euro especially with the presence of weaker economies because the euro’s market strength would eventually be dragged down (McGuinness, 2010). Another main reason why the euro crisis comes into a significant issue in the euro zone is the failure of Stability and Grow th Pact to ensure fiscal discipline (Provolous, 2010). This is clear in the case of Greece in which its debt to GDP ratio had risen to 12.6 per cent which is extremely above the required maximum of only 3 per cent. This resulted to the bail-outs of Greece and Irish Republic which has become the major topic in the recent euro crisis (BBC News, 2011). The Greek government is promising a good opportunity for everyone. This entices investors to invest in its economy and in return the government substantially does its best in the process. However, this led to increase in government spending which made it highly covered with debt. Tax is an important financial source of the government. However, it would be impractical to increase tax rate because this would only encourage investors to go to countries with low taxation rate. The worst case scenario is that this would just only encourage investors to falsify financial information just to save them from paying high tax rate. This is the reas on why the Government especially in the case of Greece to result to borrowing just to meet its obligation. In reality, it is hard to redistribute wealth by increasing tax. This would only result to other complex problems that would help aggravate the situation. However, in reality it is not only Greece doing this same strategy but it includes Portugal, Italy, Greece, and Spain. These countries are also known for overspending and borrowing for many decades just like Greece. Considering that these countries would be unable to pay their debt, and then the present crisis of the euro will be persistent and could hardly challenge the US dollar as the leading currency in the world. Government expenditure therefore is the leading driving force allowing the rise in the share of government spending. This is evident in the case of some European countries in which government spending increased from 43 percent to 50 percent (Provolous, 2010). It is therefore important that investments in high-va lue added sectors should be maintained and this can only be realised by the reduction of bureaucracy and rigidities in the labour, product and service markets (Provolous, 2010). Another root cause can be traced to the problems underlying a one-size-fits-all monetary policy. One significant problem is the issue of political and cultural differences among participating European countries (Hughes, 2010; Provolous). Unlike with the United States, there is no central fiscal authority in the euro area. This central fiscal authority is viewed to significantly contribute to redistribute fiscal resources. Furthermore, unlike in the United States, cultural differences particularly in the language make labour a less mobile in euro area. Labour is particularly important in the euro area. However, this is continuously challenged by the cheap labour in China. This significantly increases the chance of investors to gain more in China. Thus, this leaves behind the euro area. Specifically, it was ve ry clear that it reduced its employment

Strategic Management Essay Example | Topics and Well Written Essays - 1000 words - 14

Strategic Management - Essay Example The company’s mission statement claims, â€Å"To bring inspiration and innovation to every athlete in the world.† In a statement, Bill Bowerman, who is among the founders of the company, states, "if you have a body, you are an athlete† (Nike 2014). Nike integrates Bowerman’s statement as part of the company’s mission statement. Among the key values of the company is its aspiration â€Å"to deliver growth in the right way† through the development of sustainable strategies that are capital-efficient, profitable, and enhance the company’s brands(Nike 2014). These are among the company’s core values of developing brand-enhancing initiatives. Despite Nike’s stand on brand-enhancing initiatives, its production and growth strategies were harming the company’s image. The labor crisis in Indonesia almost destroyed Nike’s corporate image (Braddock 2011) The company’s use of contracted sweatshops was among the issues that contributed towards the development of a negative image towards the company. Nike took measures aimed at enhancing the company’s brands and its market sustainability including aiding the creation of the Fair Labor Association (Nike 2008). Consequently, the emergence of issues concerning practices in its affiliates factories led to comprehensive audits of its factories across the world. Though various issues emerged after the audit, Nike has since taken measures to prevent the recurrence of such issues in the future. Rindova & Kotha (2001) contend that firms co-evolve their organizational form and function to maintain a competitive edge in a dynamic environment.Nike’s competitive strategy is the unique differentiation of its products and focuses on sustaining the brand to grow its operations across the world markets. The organization’s growth depends on strategies that focus on enhancing the core competencies in

Psychological Route to War Essay Example | Topics and Well Written Essays - 3000 words

Psychological Route to War - Essay Example The act of war is a decision with the ultimate consequence. With such magnitude that comes with the declaration of war, it becomes imperative to understand the political and historical context that comes with such a decision. "The constitution makes the President Commander in chief of the armed forces but requires that Congress appropriate all money for the military. The president appoints ambassadors, but the Senate must confirm them. The president can sign treaties, but they have no meaning unless the Senate, by a two-thirds vote, ratifies them. Congress must 'declare' war, but the United States has often gone to war without any formal declaration. The reason is simple: America backs its fighting forces, and when they are put in harm's way, Congress pays their bills," (Wilson p.348). With such insurmountable risks at hand, the psychological reasoning behind resorting to a declaration of war to resolve conflict is an imperative idea to assess and analyze. To have one person be given the Godly role of placing people in a perilous situation, the psychology of what leads them there is tantalizing to contemplate. Humans by nature find themselves at one point in their lives being in the position of having to make a decision that has ramifications of monumental proportion. Psychology Today writes that, "War is probably the second most popular activity with the human race," says psychologist Lawrence LeShan, Ph.D., author of the recently published book, The Psychology of War (Helios Press, 2002). "Making love," he concedes, "is the first." In his book, LeShan argues that war's popularity stems from its unique ability to resolve two major psychological needs. It fulfills our sense of independence by assigning it a purpose, and it fulfills our need for community by establishing boundaries between 'us' and 'them,'" Adding that, "We say we love peace, but it doesn't actually excite us," says LeShan. "Even pacifists talk more about the horrors of war than the glories of peace." Battle generates perceptions so attractive that they can shift people from a rational perspective to one of "war mode," the idealized perception of crusading against evil. But as LeShan notes, After it's all over, you might have solved one problem, but you won't have solved all of the m," (Allen p.1). Humans, as a sign of their nature, can find themselves letting their subconscious desires filter into the decision making capabilities of their logical mindset on the outside. It is those unspoken desires which can lead the person into the most dangerous situations, with the direst of conclusions, or lead them into the most amazing of successes. In the end, as it comes down to it, the chips ultimately fall wherever they may and it is up to whomever is at the helm to make the important decisions with only their natural resolve, as well as the conviction of their psyches, to guide them as best as they see fit at the present time. To assess the psychological reasoning behind the act of declaring war, one must