In a fast changing world it’s important for a company to develop strong foundations that will maximize profit, and create a powerful market position. In order to do so it has to create a competitive advantage in its field. Being the first entrant into the market with well developed business plan can create a great competitive advantage for a company. As for that I choose to write on IKEA which back in 1951 offer a completely new concept, well designed product in low prices. ‘We will achieve the IKEA vision by offering a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.’ Anders Dahlvig, President, IKEA. IKEA was the first company to do so, and by doing so it create a new shopping experience. IKEA use it strength to expand the business around the globe, and it did so in very impressive way.
Financial Highlights
Fiscal Year End: August
Revenue (2007): 27017.10 M
Revenue Growth (1 yr): 21.70%
Employees (2007): 118,000
Employee Growth (1 yr): 13.50%
*Taken from Yahoo Finance.
Financial Highlights
Fiscal Year End: August
Revenue (2007): 27017.10 M
Revenue Growth (1 yr): 21.70%
Employees (2007): 118,000
Employee Growth (1 yr): 13.50%
*Taken from Yahoo Finance.
Companies can create a competitive advantage by having large market share. A strong market position can give a company the ability to control who to work with in order to get the lowest price, and/ or the best products. Moreover it can provide its customers with variety of products and services. A good example for that will be Wal-Mart with their slogan:
I decided to let the numbers talk, and show the meaning of major market share company. In an article taken from Business Week magazine about Wal-Mart I found these fascinating facts that emphasis how big it market share. With $245 billion in revenues in 2002, Wal-Mart is the world's largest company.” In home products such as toothpaste, shampoo, and paper towels, the company commands about 30% of the U.S. market and analysts predict that its share of many such goods could hit 50% before decade's end. Wal-Mart also is Hollywood's biggest outlet, accounting for 15% to 20% of all sales of CDs, videos, and DVDs. The mega-retailer did not add magazines to its mix until the mid-1990s, but it now makes 15% of all single-copy sales in the U.S. this numbers are only the tip of the iceberg in this megastore company that shows every day the power of market position.
5 comments:
Good examples. IKEA and Walmart are 2 of the most recognized companies that are leaders in their industry. I tend to agree with your analysis why they are keeping their leadership. It interests me to know what started them out. How Walmart became so big and what made IKEAs' founder to start mass producing and selling cheap furniture. I'll probably read up more about these companies.
Its funny, I have chosen IKEA and Wal-Mart as examples as well, but I used both of the companies as cost leaders. I have actually noticed this in many of the other blogs as well. I don’t know if it’s a coincident or a cause and effect, but when a company has one type of a competitive advantage, other advantages also emerge. Now going back to your assessment of IKEA and Wal-Mart. I would have to agree with both of your ideas. Ikea really was first of its kind of stores as Wal-Mart does have a leading market share. Perhaps when one company does well in its industry, it starts to rise as leaders in other forms as well.
I agree with Yoni Ellert that Ikea and Walmart illustrate a very good examples of competitive advantages.The first example,Ikea is a famous for selling affordable furniture and other home items, as you said, it gave people a shopping experience.In the second example,you were right that nobody could beat Walmart's prices.
Wal-mart's ability to sustain its competitive advantage as the company with the largest market share is very high. Wal-mart is a price leader in the industry, it has a dominating relationship with its suppliers where it dictates the terms, has great locations for its stores, and uses technology effectively to have the best inventory in stock. These factors combined will make it very hard for Wal-Mart to lose its market dominance.
Eliran,
IKEA is a worldwide phenomenon that with great prices for its average quality furniture. What I think differentiates IKEA is that they have transformed furniture shopping into an enjoyable experience that incorporates the whole family. This shopping experience together with the affordable prices make IKEA what it is today.
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