ASB4904 Applied Business Projects

Trade Dispute of IKEA and its impact:

IKEA established its retail corporate in China in the year 1998. To meet the local laws, the company went for a joint venture and this particular venture provided the company with a good platform that helped IKEA to test the marketplace, comprehend the needs of customers as well as adapt its strategies accordingly. The company understood that the apartment in China is small and the customers require a functional and modular solution (Ahrens and Guetz 2015). Therefore, they innovated their existing products and made slight modifications so that the local needs can be met. The problems that the company faced in China were similar to the problems that they faced in the United States which was to imitate their present business model and products. But the company had to modify its products that were based according to the resident needs. The customers in America demanded for bigger closets and bigger beds. Therefore, IKEA made a lot of variations in its marketing strategy for the US. But the encounters it faced in China were much superior than that of the US (Compa 2015). Apart from this, as the organization opened more stores in China, its revenue started to grow rapidly and the in the year 2004, IKEA’s revenue in China jumped from 40% from the previous year. Despite of the revenue, the company faced numerous challenges as innovating new products were very costly for the company and it also had to implement different strategies which were different from the other locations in which the company served. Still the company tried and made attempts to overcome them. One of the major issues for the organization of IKEA was to maintain low prices.

The company is known for low price but it was difficult for them to maintain the same in China. The values of furniture that were made by the local stores in the country were much lower as they had access to an inexpensive labour and raw materials and moreover, the designs costs were frequently nil. IKEA constructed a number of workshops in the country of China and put efforts to increase the local sourcing of materials. Due to the presence of local companies and the low prices that they offered to the company, IKEA had to face loss and during the time period they had to even cut off their prices for more than 60% (Guo 2015). The company then decided to reduce the prices in the near future by implementing the strategy of mass production as well as by trimming the supply chain costs. With the help of several strategies, IKEA has made a stable presence in the market of China and having a successful business.

Effect of COVID-19 pandemic on IKEA:

The COVID- 19 pandemic slowed down the business of Swedish furniture retailer company, IKEA’s expansion plan in India. The pandemic has slowed the world down and has also affected the business of IKEA. The company had plans to expand into the markets of India and set more stores in the other cities of the country but as the pandemic hit the world, it has now become very tough for the organization to think at this point of time and expand into the markets of the country (Business Standard 2020). This situation shows that the company had a negative effect on the business due to the pandemic.

IKEA UK faced a lot of issues during the first year of pandemic in the year 2020 as they were forced to provide help to around hundreds of its external suppliers in order to stop them from going bankrupt. In addition to this, the company even had to pay their workers as there was strict lockdown restrictions in Europe due to which the production hampered. The company had to ask their suppliers to work extra shift so that they can pent- up the demand from the first lockdown. The world’s largest furniture retailer did not face a huge loss but as they had to keep the operations close, it was difficult to pay the prices to its stakeholders (Dempster et al. 2020). During the pandemic, the company even provides their suppliers with loans, prepayments for the goods and even funded their working capital. IKEA faced a tsunami of sales after they opened their store and, they made a huge profit. Therefore, it can be said that due to COVID- 19 the company faced issue but afterwards it had a positive impact on the company.

References:

Ahrens, I. and Guetz, T., 2015. Transnational Strategy Shift: The Importance of Cultural Awareness:-Case Study: IKEA.

Business Standard, 2020. Covid-19 impact: IKEA to adopt omni-channel approach for expansion in India. [online] Business-standard.com. Available at: https://www.business-standard.com/article/companies/covid-19-impact-ikea-to-adopt-omni-channel-approach-for-expansion-in-india-120092700323_1.html  [Accessed 22 May 2021].

Compa, L.A., 2015. Corporate hypocrisy: violations of trade union rights by European multinational companies in the United States.

Dempster, H., Ginn, T., Graham, J., Ble, M.G., Jayasinghe, D. and Shorey, B., 2020. Locked down and left behind: the impact of COVID-19 on refugees’ economic inclusion. Center for Global Development, Refugees International, and International Rescue Committee. https://www. refugeesinternational. org/reports/2020/7/6/locked-down-and-left-behind-the-impact-of-covid-19-on-refugees-economic-inclusion. Published July, 8.

Guo, Y., 2015. How Would the Domain Name Dispute—Ikea “Cybersquatting” Case Be Decided Under American Law?. In Research on Selected China's Legal Issues of E-Business (pp. 155-164). Springer, Berlin, Heidelberg.

Have you reached your limit trying to find dependable assignment help in London, Glasgow, Nottingham, Bristol, and Cardiff? Now, unlock top-quality dissertation help in the UK only on Myassignmenthelp.co.uk.

For over a decade, we have been resolving assignment problems for millions of students wondering, “Who can provide me with quality homework help?” Our priority is to maintain top-notch standards in every assignment we deliver.

As a result, when you look for law assignment help on our website, you can hire professional lawyers for a consultation. So, don't let your academic worries fester. Instead, hire our professional paper writers and increase your chances of securing an A+.