Intangible Assets And Intellectual Capital Essay


Discuss about the Intangible Assets and Intellectual Capital.



Strategic management is the formulation and making and devising the plans and thereby implementing such plans and goals by the management and the board of directors. The company does this by analyzing the internal and external environment where the organization operates and competes[1].

This involves analyzing the strength and weakness of the company and formulation and execution of various plans so that the company is able to successfully implement get the desired objectives. This report focuses on the internal organizational resources and capabilities, which is important to achieve the organizational objectives and vital for formulation of strategic management[2].

IKEA is one of the most famous brands, which has smart and affordable home furnishing features. The IKEA has various products, which is affordable, durable and designed in a modern technology. The brand is in all over the Countries and which demonstrates its passion for quality and value. The company’s product shows the value and its quality. The company is very smart at keeping customers’ value high and thereby delivering high quality products. The most important is their strategy, which has helped them to expand internationally and position itself as favorite of the modern generation modern generation. The IKEA dream has three components – its vision, its business idea and its human resource idea[3].

Summarize the processes of developing strategic management of an organization plan

IKEA high and forward-thinking strategy has made it into the top furniture seller in the world. It has moved its model into various places like no other retailer on the planet. The furniture are very impressive and they have expanded in almost 298 stores spreading over 28 countries.

Few crucial aspects to IKEA success

  1. Solving any problem related to the customer
  2. The furniture is very cheap and reasonable
  3. They are able to target the right people or the right demographic
  4. The stores are spread all over the world

Increased of globalization and protectionism which has presented a challenge as well as opportunities to IKEA.The challenges are very competing against the unknown sources ad it will be competing against the unknown forces and sourcing the best quality financially viable products from across the world. IKEA can enter emerging country markets through partnership for exploring into these markets. Company should be vary about the protectionist policies of many host nations since high tariffs may be imposed on goods which are imported for encouraging domestic production

The fluctuations in the commodities as well as raw material prices across the world will result in increased purchasing cost for IKEA. This has impacts on the margins of the organization and can lead to passing over the cost to the consumers through high prices, which adversely affects the competiveness of the organization. The credit crunch has an impact on IKEA in a negative manner as it can decrease the purchasing ability of the consumers`

The technology can be used in the supply chain which can help in inventory savings resulting in lesser costs for the company.

Company Vision and Mission

IKEA has its vision and mission statement as “To create a better everyday life for the many”. It explains their vision statement as the relation between their vision and the business ideas as “Our business idea supports this 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”.

IKEA’s has only one vision and mission statement therefore it is not very specific. Since it is broad, therefore it does not specifically serve the particular purpose of the mission and vision statement[4]. The statement talks in general about the products like customers and other important factors related to the business, competition and financial strength. A mission or vision statement usually helps the company However, the mission is very broad and does not specifically talk of things like products, customers or other important factors related to the business and the organization like its culture, competition and financial strength. Whether a vision or a mission statement, it must be specific enough so that the managers and the directors can form a decision based on the resource allocation. IKEA’s vision fails to be both specific and clear[5].

A mission statement explains what the product sells and its customer segment and position are. When explaining the purpose of the business, a mission must state what the business is doing including the products it sells, its customer segment, market size and position[6]. What IKEA does is to create better homes by creating and selling good quality home furnishing products at affordable prices Mission and vision statements are also useful at marketing of the brand and therefore must give a clear glimpse of the company and its business. These are guiding statement, which guide the organization during decision-making[7].

Company SWOT Analysis

  1. The most important strength s that IKEA has a clear vision thereby it adds value to the customers even in a bad condition. The well-defined strategy helps the company in its pioneering and its simplicity helps in targeting of the competitors and their position[8].
  2. IKEA measures the strength by using the key performance indicator that includes the increased use of renewable material thereby maintaining long-term relationship with the suppliers and economies of scale.
  3. IKEA is operating in various countries throughout the World due to the large size scale of the business and therefore difficult to control standards[9].
  4. It focuses on cost leadership, quality goes up and the cost of inputs and raw materials has gone up. The profitability also increased. It is sometimes difficult for the company to maintain quality with the increase in cost and the need to change the standards across all the location in the World.
  5. The environmental situation about IKEA is that the company faces the challenge and difficult in exchanging the policies of the environment and the policies of the Government and the shareholders or the stakeholders[10].
  6. The company has a good business mode and its huge opportunities in terms of attracting from the customers and to rise in the ethical consumers buying such products and the environment is conscious and s getting such opportunities and is tapped in the company.[11] The opportunity for the company is that it has a cost leadership, it focuses on the cost leadership, and there are expenses. The concerns are all about the quality has raised and the customers mind is getting more money minded and it is significant opportunity[12].
  7. The last opportunity lies on the company’s expansion and on the markets and which have developed throughout the World and which has untapped the customers base that have leveraged the company’s profitability. IKEA has the cost leadership and it was planning for expansion, which yield the benefit for the company[13].
  8. IKEA has low cost model, which have made and initiated and copied by the rivals through and company can innovate itself and therefore can stay ahead of the competition. Thus, IKEA came up new strategies and thereby there can be threat to the customers[14]. Thus in order to survive in the market the company needs to innovate constantly to keep up with the growth.
  9. With the invention in the technology in the market and there is immense competition in the market and there is use of internet and online. DIY is the unique proposition of IKEA they can provide the lower cost so that the cost of having physical presence lowers and there is snapping of heals of IKEA.

Defining the company Resources, tangible, intangible resources and organizational capabilities

Organizational resources:

  1. The firm or organization is having reporting structure
  2. The formal planning, and
  3. Coordinating with system

Organizational Resources

Resources are those, which help in the creation of the firm’s value. Resources are the products for the companies and for the company like IKEA the furniture they sale are the most cost efficient retailer throughout the world. One of the resource that support the company is that the stores combining the shop and the warehouse[16].

IKEA design and the capabilities to contribute in the market and the efficiency the company .The overall performance of the company is dependent on the activities of value chain and this help to prioritize the resources and the capabilities and this require high performance[17]. The resources being tangible as well as intangible contribute to the customers contribute to the product or services. IKEA tangible resources are the wood, cotton, waste, food which is important to have the finished goods. Whereas the intangible resources of IKEA is the human resources which helps in the running of the company and which helps the company to do day to day operation.

Competitive Advantage of the company

There are diverse and varied strategies that IKEA has implemented so that to meet the order to make it in the furniture and home appliances industry. These strategies are very diversified and it depends on the goals and they include both internal and external. The following are the competitive advantages that IKEA has implemented:

Human resources management: IKEA has implemented many strategies and it has also implemented and lauded for its extraordinary recruitment process. Talented employees are sourced from diversified backgrounds in order to create the highly multicultural workplace in that company. Additionally, IKEA also uses huge amounts of resources in training the staffs. The company believes in creating the right set of skills in their employees and this is why it invests in the training and development of its staff. The company takes reviews and evaluation seriously and employees have to go through performance appraisals and there are rewards for those the employees who perform outstandingly.

Client retention: Over time IKEA has been able to improve its services and the quality of products and this has made it retain the huge clientele it has captured. Initially the products were not good since their focus was on cost cutting. Today there are number of product and service users. They are now constantly updating its products

Ubiquity of the company’s service. Much furniture is already used by all the people. The furniture and appliances are used by all the people all around with the standardized furniture and home appliances. This is a competitive advantage that IKEA has exploited against over the years. The fact that not every company has furniture and this popular makes IKEA stand out.

An organizational capability for the company is to properly allocate and effectively gain over the competitors. The company’s organizational capabilities are mainly to meet the business capabilities and they must focus on the customers’ ability and demand. The focus of the company is to meet the customers and meet organizational capabilities, which is unique to the organization. Organizational capabilities are anything that differentiates the business in the market. Thus by developing and cultivating organizational capabilities the company and the business owners gain an advantage and which the company can focus and then they can excel and have growth[18].

Successful implementation requires the company to build the organizational strategy. This is important for business success. The best solution includes the full review of organizational design and in understanding the key cross-functional effectiveness and thereby ensuring the effectiveness in order to have the staff members understand the strategy and get motivated by excelling in the role of the company.

The core organizational capabilities are as follows:

In order to maintain the low cost product and the packaging made by the company this is less costly and simple. The company maintains the design and the model to maintain the design of the customers and so that the company and increase and improve its brand image[19]. Thus, it helps in creating the brand image of the customers, which increases the loyal brand image.

IKEA is so renounced that the policy of the company is such that it is simple, it is flexible, and so that the target is to start the business and that the part of the company is without the complex formalities and thereby, it increases its cash flows with the company[20].

Comparative advantage is the ability of the company to gain from attribution of the resources and from a way that there is proper allocation of resources and to perform the same so that the resources are properly utilized and that they can perform in the same industry and market. A firm has a comparative advantage there is proper allocation of resources, which is creating value and implemented by a current or potential player. The company properly implements the strategies and this will lift a firm higher. The competitive advantage to outperform the potential players in undertaking the work and these resources can competitive advantage and to have a edge over and to overcome the outcome and superiority in in production resources reflects the competitive advantage.

It can determine the resources and the sources of sustainable competitive advantage. In order to be sustainable competitive resources must have the following advantage:

1.Valuable – The resources shall be of greater source or of greater value and in terms of relative cost and benefits with respect to the resources in a competing firm.

2.Rare – Rare means that the resources must be in that sense that the demand for that particular product is high but the demand for that particular product is less relative to the demand or for the demand for its uses.

3.Inimitable -- it is difficult to imitate the same product

Non-substitutable – the products are non-substitutable and therefore any type of resources cannot be functional resources[23].

Exploitable – The firm can exploit the resources and capabilities that they own or control

The criteria for the VRINE Framework clearly rule the best practices for competitive advantage.


It is important to examine the internal environment that includes the resources and the organizational capabilities of the company to have competitive advantage and this is a continuous process of strategic management. The resources can be identified and can be used effectively then the strategic plans put together, and it will have competitive capability over its rivals.

IKEA mission is to help the organization throughout the world to do more and achieve more by creating quality for supplying home appliances. It thus deliver new and varied opportunities with greater convenience, and will enhance value to people’s lives.


Collins, P. (2002) The cost of war. Journal of Politics, vol. 1, no. 1, June, pp. 20-40.

Collins, P. (2002) The cost of war. The Straits Times. Vol. June, pp. 20-40.

Frynas, Jedrzej George, and Kamel Mellahi. Global strategic management. Oxford University Press, USA, 2015.

Grant, Robert M. Contemporary Strategy Analysis Text Only. John Wiley & Sons, 2016.

Gunnarsson, Adam, and Gustaf Ljungwaldh. "Business Model Innovation Towards Sustainability: The Mobile Phone Industry." (2015).

Ivanov, Gennady, and Elena Mayorova. "Intangible assets and competitive advantage in retail: case study from Russia." Asian Social Science 11.12 (2015): 38.

Kotler, Philip, Roland Berger, and Nils Bickhoff. "Strategy and Strategic Management: A First Basic Understanding." The Quintessence of Strategic Management. Springer Berlin Heidelberg, 2016. 5-22.

Kotler, Philip, Roland Berger, and Nils Bickhoff. The quintessence of strategic management: What you really need to know to survive in business. Springer, 2016.

Larsson, Rolf G. "Ikea's Almost Fabless Global Supply Chain—A Rightsourcing Strategy for Profit, Planet, and People." Lean Management of Global Supply Chain. 2016. 65-82.

Lebherz, Matthias, and Jonathan Hartmann. "Applying the value grid model to the furniture industry: the example of IKEA." (2017).

Mason Carpenter, Gerry Sanders,(2009), Strategic Management: Concepts: International Edition,2ndEdition, Pearson International Edition

McNamara, Tom, et al. "Can IKEA adapt its service experience to India?." Emerald Emerging Markets Case Studies 6.1 (2016): 1-14.

Mena, Carlos, Martin Christopher, and Remko van Hoek. Leading Procurement Strategy: Driving Value Through the Supply Chain. Kogan Page Publishers, 2014.

Olson, Aaron K., and B. Keith Simerson. Leading with Strategic Thinking: Four Ways Effective Leaders Gain Insight, Drive Change, and Get Results. John Wiley & Sons, 2015.

Percy, Larry, and Richard H. Elliott. Strategic advertising management. Oxford University Press, 2016.

Rafique, Muhammad, Richard David Evans, and Muhammad Tahir Nawaz. "Absorptive capacity: A hub of blue ocean and red ocean strategies and capability transformation in innovative business environments." Knowledge-Based Engineering and Innovation (KBEI), 2015 2nd International Conference on. IEEE, 2015.

Rothaermel, Frank T. Strategic management. McGraw-Hill Education, 2015.

Singh, Harbir, and Michael Useem. The Strategic Leader's Roadmap: 6 Steps for Integrating Leadership and Strategy. Wharton Digital Press, 2016.

Souto, Jaime E. "Business model innovation and business concept innovation as the context of incremental innovation and radical innovation." Tourism Management 51 (2015): 142-155.

Teece, David J. "Short Note on Intangible Assets, Intellectual Capital, & the Mission & Focus of the Tusher Center." University of California, Berkeley(2017).

Turner, Raymond. Design leadership: securing the strategic value of design. Routledge, 2016.

Wenzel, Henning, and Andreas F?rster. "Blue Ocean Strategy. How IKEA created a new market." (2013).

West, Douglas C., John Ford, and Essam Ibrahim. Strategic marketing: creating competitive advantage. Oxford University Press, 2015.

Yilmaz, Ayse Kucuk, and Triant Flouris. "Enterprise Risk Management in Terms of Organizational Culture and Its Leadership and Strategic Management." Corporate Risk Management for International Business. Springer Singapore, 2017. 65-112.

How to cite this essay: