The Competitive Advantage of IKEA

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The Competitive Advantage of IKEA

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Strategic ways of competing

• The competitive advantage of any company is
  expressed in terms of the company's performance
  and the differentiation that the company has
  effected at the cost of its product. The position
  of the firm in the market is usually determined
  by the profitability of that firm in the industry.

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The matrix of competitive advantage

• Cost leadership
• For any firm to be considered as the cost leader
  in an industry, it must be the pace setter as far
  as price of products is concerned. This means
  that the company must be the low cost producer in
  the industry.

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The matrix of competitive advantage

• Differentiation
• In differentiation, a particular company seeks
  to be unique in the market by taking some
  dimensions different from what the market is
  taking. In this the focus is the buyer and effort
  is made to design products that meet the
  requirements of most buyers if of the product.

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The matrix of competitive advantage

• Focus
• This is the direction that a particular company
  takes in an attempt to narrow the competitive
  scope within the industry. Under the focus
  strategy, the company selects a group of segments
  or a segment in the industry and then tailors
  strategies to serve that market.

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Cost leadership strategy

• The cost leadership strategy emphasizes on
  efficiency. Cost leadership is obtained when a
  company engages in producing high volumes of
  standardized goods.

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Cost leadership strategy

• When firms designs their products, produces and
  markets these products better that then
  competitor, these firms are said to have an added
  advantage or a cost leadership firm.

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Cost leadership strategy

• New entrants in the industry may not be able to
  outdo the firms that usually engage in low cost
  production as even though they engage in mass
  productions.

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Cost leadership strategy

• Firms that emphasizes on cost leadership usually
  engage in mass production in order to take
  advantages of the high customer base.

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Cost Control for Product Design

• Product design is the aspect of a companys
  ability to modify the design of the products.
  This being the case, there needs to be some cost
  control as failure to control costs on designs
  would lead to higher costs of design thus leading
  to higher prices for the product.
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