VRIO Analysis of IKEA in Saudi Arabia A

The IKEA in Saudi Arabia A is exposed to, as well as has ownership of different resources. The IKEA in Saudi Arabia A uses these resources for meeting its goals, as well as for developing and expanding different growth opportunities. The VRIO analysis is used by the IKEA in Saudi Arabia A for assessing and evaluating these resources to help leadership and management to identify different strengths and weaknesses, and work towards using the same to enhance the business standing and proposition (Knott, 2015).

VRIO importance

More importantly, the VRIO analysis is used by the IKEA in Saudi Arabia A to evaluate and identify the different competitive advantages that different resources can offer. In doing so, the IKEA in Saudi Arabia A is able to identify resources that offer a long-term sustainable competitive advantage, and work towards building the same for increased opportunities (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018). IKEA in Saudi Arabia A VRIO analysis is a strategic tool that allows the IKEA in Saudi Arabia A to identify resources that offer a temporary competitive advantage – allowing the company to strategize tactics to then turn these into factors of long-term competitiveness.

The VRIO analysis largely assesses resources as being Valuable, rare, inimitable, and organized.

Valuable

Resources are valuable if they allow the IKEA in Saudi Arabia A to enhance its efficiency and effectiveness through facilitating strategy implementation and realization. Moreover, resources are also valuable if they allow the IKEA in Saudi Arabia A to successfully manage the threats it is exposed to, and capitalize on different opportunities through helping build internal strengths, and manage weaknesses appropriately (Lasserre, 2017). Some examples of valuable resources for IKEA in Saudi Arabia A include the following:

Strong global presence

The IKEA in Saudi Arabia A has a presence across various international locations and countries. The IKEA in Saudi Arabia A has expanded its manufacturing operations across different countries in Asia and Europe. The IKEA in Saudi Arabia A uses these manufacturing sites as central supply locations and hubs for different regions as well (Abratt & Bendixen, 2018).

Branch network

The IKEA in Saudi Arabia A has a strong branch and store network across different regions in various international locations – including the UK, USA, China, and Australia, and across Europe. The IKEA in Saudi Arabia A has developed its store network in locations that offer the company high visibility, and promise a high customer footfall (Baines, Fill, & Rosengren, 2017).

Supply chain management

Owing to the global presence, and international operations, the IKEA in Saudi Arabia A also has an internally managed supply chain network. The supply chain network ensures consistently high quality, and timely manufacture and delivery of the products offered by the IKEA in Saudi Arabia A to retailers, distributors, as well as end consumers (Chernev, 2018).

Risk management

The IKEA in Saudi Arabia A has developed an internal means and system for identifying, managing, and mitigating environmental risks and threats. These risks include fluctuation in prices of raw materials, as well as political instability in regions where it operates. The internal risk management system for IKEA in Saudi Arabia A comprises of continuous observation of the environment, and development of proactive strategies, as well as training of its personnel for responding to the same (Deepak & Jeyakumar, 2019).

Technological advancement

The IKEA in Saudi Arabia A makes use of technological advancement for achieving economies of scale. The presence across various global locations has allowed the IKEA in Saudi Arabia A to develop a seamless technological infrastructure for knowledge sharing. IKEA in Saudi Arabia A is also able to implement processes of improvement internally (Iacobucci, 2021).

Use of AI

The IKEA in Saudi Arabia A also makes use of AI for improving internal efficiencies and processes as well as for improving the consumer experience. The use of AI internally has allowed the IKEA in Saudi Arabia A to reduce the error rates, and improve logistic management, for example.

User experience

The IKEA in Saudi Arabia A focuses on enhancing the user experience for maintaining loyalty. The use of AI especially has allowed the company to improve the user experience through providing 24/7 customer support, as well as developing relevant purchase prompts for consumers based on their browsing histories (Sahaf, 2019).

Customer service

The customer service offered by IKEA in Saudi Arabia A is an important and valuable resource that helps the company differentiate its offerings from that of the competition. The IKEA in Saudi Arabia A offers 24/7 online support to consumers, and has a team of trained personnel for providing customer services on physical locations (Gillespie & Swan, 2021).

Research and development

The IKEA in Saudi Arabia A makes a substantial investment in research and development. The research and development allows the IKEA in Saudi Arabia A to stay updated with the market and consumer trends – thereby allowing the IKEA in Saudi Arabia A to tailor its offerings and marketing efforts accordingly. The research and development also allows the IKEA in Saudi Arabia A to improve its production processes, and improve efficiency levels continuously (Grewal & Levy, 2021).

Product offering

The IKEA in Saudi Arabia A focuses on maintaining consistent quality for its product offerings. Moreover, the IKEA in Saudi Arabia A also ensures that the product offerings meet the consumer needs and demands. For this purpose, it engages in the localization of its product offerings across different regions and locations (Abratt & Bendixen, 2018).

Financial resources

The financial resources and capability at the IKEA in Saudi Arabia A allows minimum dependence on debt. The IKEA in Saudi Arabia A has a higher dependence on equity for expansion and development purposes. This ensures lower vulnerability of the company, and gives the IKEA in Saudi Arabia A increased freedom and independence for pursuing business objectives and goals (Groucutt & Hopkins, 2015).

Marketing activities

The IKEA in Saudi Arabia A engages in marketing activities for appealing to its target audience across different countries and regions. The marketing communication is tailored to take into account different cultural considerations across these locations and regions. Moreover, the IKEA in Saudi Arabia A ensures to appeal to the functional as well as emotional fronts of the consumers - using insights from its research and development activities (Kotler & Keller, 2021).

Rare

Rare resources for the IKEA in Saudi Arabia A are those which are not easily and readily available for the competing players. These resources are rare for the IKEA in Saudi Arabia A because of the firm’s unique position and access to the resources – which is otherwise difficult and challenging to acquire. This makes rare resources cost-intensive for other organizations (Phillips & Moutinho, 2018).

Manufacturing and distribution licenses

IKEA in Saudi Arabia A has gained special licensing permissions for manufacturing and distribution in various regions ad countries – some of which are more remote and stringent towards international firms. The IKEA in Saudi Arabia A has been able to do so based on its strong team of lawyers and policy interpreters, as well as because of the goodwill it has developed over the years (Kotler & Keller, 2021).

Access to raw materials

IKEA in Saudi Arabia A has access to different raw materials that support its quality maintenance of product offerings. The access to raw materials for the IKEA in Saudi Arabia A is largely based on the company’s unique position and its investments in research and development. Both of these have allowed the IKEA in Saudi Arabia A to substantially develop its capabilities (Buchanan & Huczynski, 2019).

Equipment

The IKEA in Saudi Arabia A has access to world-class equipment. This equipment and technology is not readily and easily available to its competing players. The IKEA in Saudi Arabia A has access to this equipment for increasing efficiency, and improving economies of scale based on its vast operations, and partnerships with various regional governments (McShane & Glinow, 2017).

Intellectual property

The IKEA in Saudi Arabia A has multiple policies regarding intellectual property, and thoroughly implements policies and regulations regarding the same internally. In addition, the company also follows external regulations for intellectual property protection. This allows the IKEA in Saudi Arabia A to sustain its creativity and successfully continue to experiment with new product ideas (Chernev, 2018).

Patents

The IKEA in Saudi Arabia A has different patents registered under its name. This is done by the IKEA in Saudi Arabia A to safeguard its innovative capacities, and maintain regulated intellectual property rights. This helps the IKEA in Saudi Arabia A stay ahead of the competition, and secure new technology and ideas to maintain the first mover, and unique competitive advantage over other players (Wunder, 2019).

Sustainable manufacturing

Based on its unique environment for development and innovation, as well as because of its engagement with advanced technology and equipment, the IKEA in Saudi Arabia A has developed processes for successful sustainable manufacturing. This resource allows the company to appeal to green consumers, and at the same time, maintain higher internal efficiencies and profitability (Tonelli & Cristoni, 2018).

Eco-packaging

The IKEA in Saudi Arabia A is also successfully engaging with, and producing eco-based packaging. This resource is important for the IKEA in Saudi Arabia A, and allows it to improve its processes as well as brand perception. Competing players do not have access to the needed intellectual property, ideas, or machines to successfully, and efficiently apply this to their internal business processes and offerings (Tonelli & Cristoni, 2018).

Inimitable

Inimitable resources for the IKEA in Saudi Arabia A are those which are hard and costly to copy and imitate by other players, and competitive rivals in the industry. Inimitable resources offer a long-term competitive advantage to IKEA in Saudi Arabia A. IKEA in Saudi Arabia A has different resources that are hard to imitate, or are perfectly inimitable largely because of factors of historical context; and unique historical conditions; causal ambiguity, and/or social complexity (Stead & Stead, 2014).

For IKEA in Saudi Arabia A, a number of resources are inimitable because of their uniqueness to the company itself. These include:

Organizational culture

The organizational culture is unique to the IKEA in Saudi Arabia A – developed through the IKEA in Saudi Arabia A’s core values and beliefs, as well as its structure and managing style. The culture of the IKEA in Saudi Arabia A leads to improved employee performance, and facilitates organizational success (Abbas, 2017).

HRM policies and activities

The IKEA in Saudi Arabia A has also built a strong HRM department internally which supports the business, and its strategies. This support is extended through various HRM functions such as hiring, and training activities and opportunities. These activities are aligned with the business goals and strategic direction for ensuring high organizational performance, and the right talent match for the IKEA in Saudi Arabia A (Mariappanadar, 2019).

Compensation Framework

The IKEA in Saudi Arabia A also has a unique compensation system to support internal activities and functions. The compensation system is rooted in employee motivation and needs. The IKEA in Saudi Arabia A invests in understanding the needs of the employees, and then designs rewards accordingly- linking them with the job responsibilities and tasks (Mariappanadar, 2019; DuBrin, 2013).

Brand equity

The IKEA in Saudi Arabia A has developed strong brand equity over time. The IKEA in Saudi Arabia A has successfully, and continually delivered on its brand promise by providing high quality offerings. This has allowed the buildup of consumer trust as well as positive brand perception leading to higher brand equity for IKEA in Saudi Arabia A (Kotler & Keller, 2021).

Brand loyalty

The IKEA in Saudi Arabia A has a high brand loyalty. Based on its offerings, quick customer service, and after-sales service, the IKEA in Saudi Arabia A has developed a high brand loyalty amongst customers. These customers conduct repeat purchases of the IKEA in Saudi Arabia A’s offerings and products because of higher satisfaction levels (Baines, Fill, & Rosengren, 2017).

Brand awareness

The marketing activities of the IKEA in Saudi Arabia A are carefully tailored and targeted, and based on the emotional appeal that the company provides in its offerings to the customers. This in turn leads to a positive buzz. The viral buzz, as well as positive marketing efforts, have led to high brand awareness for the IKEA in Saudi Arabia A amongst not only its own target customers, but also amongst secondary groups (Sahaf, 2019).

Goodwill

IKEA in Saudi Arabia A has continually delivered on its promise, and has thus developed a positive brand perception. As a result of this, the IKEA in Saudi Arabia A has built positive goodwill over the years. This goodwill allows the IKEA in Saudi Arabia A to confidently launch new products in the market that consumers readily accept and consume (Grewal & Levy, 2021).

Innovation

The IKEA in Saudi Arabia A continually engages in innovation and creativity as well. The company has a team for business development that engages in the process of new product design and development. The IKEA in Saudi Arabia A also invests in the creative development of its employees for facilitating and encouraging new idea generation, and emphasizes on employee empowerment for the same purpose (McShane & Glinow, 2017).

Organizational leadership

The IKEA in Saudi Arabia A has a supportive leadership. The leadership style at IKEA in Saudi Arabia A is participative which encourages discussion, and creates trust and a positive work environment. In addition, the leadership at IKEA in Saudi Arabia A is transparent and accessible, and works closely to improve and build the organizational culture through promoting core beliefs and values (Schein, 2010).

Employee commitment

The employees at the IKEA in Saudi Arabia A display high levels of job satisfaction. This is because the IKEA in Saudi Arabia A continually engages the employees with challenging tasks, trainings for personal and professional development, as well as motivational work responsibilities and teamwork. This results in increased levels of job satisfaction amongst employees of IKEA in Saudi Arabia A, leading in turn to high levels of employee commitment (Mariappanadar, 2019).

Branding activities

The IKEA in Saudi Arabia A invests in branding activities for building its brand as well as a positive consumer perception. These branding activities for the IKEA in Saudi Arabia A involve not only the marketing communications, but also the development of a suitable marketing mix for the company. The branding activities help the IKEA in Saudi Arabia A increase brand awareness, as well as increase its reach and penetration amongst the target audience (Iacobucci, 2021).

Organized

The IKEA in Saudi Arabia A is able to capitalize on different opportunities based on the various resources available to it through being organized. This factor of the strategic framework evaluates and assesses how organized and structured the IKEA in Saudi Arabia A is. The factor also reviews how the IKEA in Saudi Arabia A is able to benefit from the various resources that are available to it towards building sustainable competitive advantage (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018; Stead & Stead, 2014). This part of the strategic framework for the IKEA in Saudi Arabia A allows it to identify and examine different resources it has closely to be able to optimally benefit from them.

Physical infrastructure

One of the best ways through which the IKEA in Saudi Arabia A is able to capitalize on the various internal and external opportunities is through the development of its physical infrastructure. The infrastructure of the IKEA in Saudi Arabia A allows it to develop economies of scale as well as enhance its various manufacturing and operational processes (Buchanan & Huczynski, 2019).

Technological infrastructure

The technological infrastructure of the IKEA in Saudi Arabia A allows it to benefit from the latest technological trends such as the inclusion of artificial intelligence and automation in its operational processes and schedules. The technological infrastructure has facilitated the IKEA in Saudi Arabia A to improve its production and efficiency rates as well as reduce its errors. The technological infrastructure also led the IKEA in Saudi Arabia A to benefit from potential advancements such as social media marketing and e-commerce (DuBrin, 2013).

Network support

The IKEA in Saudi Arabia A is able to further benefit from consuming of various resources available through the presence of a strong internal network. This network includes not only the physical and technological infrastructure but also the organizational network and alignment of operations locally and globally. This coordination and network allows the IKEA in Saudi Arabia A to realize its strategic goals (Phillips & Moutinho, 2018).

Training and development

As the IKEA in Saudi Arabia A is exposed to new resources and builds on old resources, it is important to update the skills of the employees. The IKEA in Saudi Arabia A continually invests in the training and development of its labor force. This ensures that the IKEA in Saudi Arabia A stays ahead of the competition.

The IKEA in Saudi Arabia A maintains frequent internal training and development opportunities to help the growth of employees and improve their performance (Mariappanadar, 2019; Stead & Stead, 2014).

International Exposure

The growth and expansion of the IKEA in Saudi Arabia A and its business along international fronts have given it considerable exposure to understand different cultural requirements and operational details. This exposure is important for the IKEA in Saudi Arabia A to allocate resources accordingly towards different regions and production sites; and manage them in the most efficient and effective manner possible (Kotler & Keller, 2021).

International learning

The international exposure that the IKEA in Saudi Arabia A also enables increased sharing of knowledge across borders. This knowledge sharing and knowledge development allows continuous learning internally for the IKEA in Saudi Arabia A. This learning then helps the IKEA in Saudi Arabia A to work towards to the development of strategic structures within the organization as well as design more sophisticated management styles and tools to improve the management of resources (Daneshmandnia, 2019).

Organizational hierarchy

Optimization of the resources available to the IKEA in Saudi Arabia A is because the organization has a flatter hierarchy which leads to easier access to the leadership and quicker decision-making processes. This enables higher employee empowerment and participation as well as leads to increased organizational commitment and responsibility (Deepak & Jeyakumar, 2019).

Supportive leadership

The leadership of the IKEA in Saudi Arabia A is largely supportive and ensures the development of the management team and the employees. The support of the leadership within the IKEA in Saudi Arabia A allows space for quicker decisions as well as makes room for capitalizing on the opportunities and mitigating risks accordingly. This in turn allows for improved Resource management and optimization (Schein, 2010).

Effective change management processes

The IKEA in Saudi Arabia A engages all employees in the change management process and ensures that there is transparent communication regarding the need as well as the implementation of the same. This allows the IKEA in Saudi Arabia A to manage resources more effectively as well as build on other resources to help the company achieve its strategic and business objectives and goals (Pollack & Pollack, 2015).

Conclusion

The VRIO assessment is an important strategic tool that allows the IKEA in Saudi Arabia A to identify various resources which can lead to different forms of competitive advantages. The VRIO assessment and model allows the IKEA in Saudi Arabia A to identify resources that can be used for developing sustainable competitive advantage over the long term as well as allows the IKEA in Saudi Arabia A to invest in, and build other resources for the same purpose.

In addition, the strategic tool allows managers of the company to identify resources which can lead to competitive disadvantage. As such the VRIO assessment is an important source of resource evaluation as well as identification of the same.

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