Key / Critical Success factors in 2010-11

Customers:
The most critical factor behind the success of Ikea is the least cost to the customer by mitigating the
as much extra costs incurred by the company as possible. Ikea has always focussed on to eliminate
as many unnecessary costs as possible. During the year 2010-11, Ikea focused on renewable energy
so as to attain the cheaper energy sources for the longer term and to reduce the costs. They were
the believers of working more with less at that period of time and providing better solutions to the
customers. Here, the company’s focus is on the maximum value delivered to the customer and thus
brought a sense of belongingness among the same.

Workers:
Second factor behind the success of Ikea was its people. Ikea believed that its success can be
determined by the kind of people it is going to recruit and the way it is going to train them. Thus,
Ikea chose to train its people in such a way that they work with as much simplicity as possible. One
of its best examples is the “Backpacker” program. Under this program every new worker of the
company was allowed to work in two different countries for 1 year and come up with new skills and
learnings. This shows how much the company was focused on its employees and also how the
employees were working for the company. In 2011, they had 131,000 people from 48 different
Nationalities working on different projects. This brought a huge diversity not only in terms of
geography but also in terms the way people think and work.

Sustainable growth with renewable energy:

Ikea focussed on attaining as much energy as possible from renewable resources only. It installed
Photovoltaic energy production systems on the roofs of its stores and purchased wind parks in
several countries around the world. Apart from that they used recycling rates, charging stations for
electric vehicles, LED lights. At that time, they were able to attain 50 percent of their energy through
renewable resources only.

Two of their most important raw materials were cotton and wood at that time. They were focussing
on getting the most of that using sustainable routes only. This will indirectly make them less
dependent on the other sources in the coming future if they can ensure the sustainability of these
most commonly used resources.

Key / Critical Success factors in 2016-17

Accessibility and Digitalisation:

As the customer became more and more busy with his/her own work, he cannot afford to visit far
away places for shopping. Ikea realised it and started making itself as accessible as possible to its
customers. It went for digitalisation in this period as the economies are shifting towards the same.
For example, Task rabbit is their one of the recent acquisitions. It is an online services marketplace
that makes specialists available for the kinds of tasks customers were finding hard to do.

Sustainable growth:
Ikea believes in earning before spending. They focussed on arranging their own funds through their
operations to invest in the new projects rather than getting it funded through external sources. It led
them save a huge cost and attain the organic growth.

Investments in the future:

Ikea started shifting its focus towards new investments through collaborations and acquisitions. It
tries to attain a new business model so as to create and maintain a competitive edge. Being cash
rich, it is capable of investing in the new opportunities so as to support its core businesses. They
have launched a financial asset management strategy that evolves around five portfolios of varying
size and direction.

Reasons for the shift in the factors:

Though most of the critical factors of Ikea’s success did not change much, but some took a swift
turn. For example, they started focussing more on the future investments by using their unused
liquidity. Also, they shifted towards the digital technology as compared to 2011 to ensure the
greater reach to its customers. These steps are taken due to the following reasons:
 Firstly, the industries are shifting more towards the digital era. Companies want to ensure
the maximum reach to its customer and making the customer more aware using technology.
Thus, this is a shift which has become a mandate for every futuristic firm in the industry.
Also, with the customer getting busier with time, it has become imperative for the firms to
be accessible to the customer and fulfil their needs at their own space.
 Secondly, as Ikea is a cash rich company with profits being made year on year, they need to
invest that fund in the development of the firm so that to create a competitive edge. This
will also help them reduce the costs by relying less on the outside sources and getting the
work done as per their own requirements.

Competitive profile matrix of Ikea:

IKEA WALMART BLU DOT

Critical success factors Weight Rating Score Weight Rating Score Weight Rating Score
Brand reputation .08 4 .32 .08 3 .24 .08 2 .16
Market share .22 3 .66 .22 2 .44 .22 1 .22
Low cost structure .3 4 1.2 .3 3 .9 .3 2 .6
Promotions .1 4 .4 .1 3 .3 .1 2 .2
Product quality .3 3 .9 .3 2 .6 .3 1 .3
Total 1 3.48 1 2.48 1 1.48

To survive in the changing environment, the firm needs to maintain its low-cost strategy by
mitigating as much costs as possible. It also needs to shift its focus completely on digitalisation which
it is currently working on. Moreover, they need to maintain the relationship and the same working
environment with its workers as human resource is the one which cannot be imitated by the
competitors easily. It builds up its own legacy throughout the years and thus can create a web which
cannot be untangled by the other players and thus will give a competitive edge over the others.

https://www.bartleby.com/essay/The-Key-Success-Factors-of-Ikea-FKQT5YS57KGEY
https://www.entrepreneur.com/article/319047
https://www.studymode.com/subjects/ikea-cpm-matrix-page1.html

Comments: Ikea is a company which has not focussed on just earnings but has kept in mind the
interests of its customers throughout the period. It learns about the pain points of its customers and
then comes up with the solutions as per the needs.
Then it is flexible with the changes in the environment and always tries to be update with the
economy. Digitalisation is one of the best examples of the same.
It has not focussed on the show off of the growth of the company by increasing the share prices
overnight rather it tries to reinvest the money and get the maximum out of it.