IKEA Ecosystem: brief overview

By John Dudovskiy
August 17, 2022

Increasing popularity of ecosystem thinking in business has not gone unnoticed by the Swedish furniture chain as well. Currently, IKEA ecosystem is cantered around the notion of smart home. The Swedish furniture chain is investing in the new unit and expanding the range of products “which currently includes smart light bulbs, smart plugs, and other connected devices to automate home control.”[1]  Named as Home Smart, the new full-fledged business unit is dedicated to smart home products. In other words, increasing numbers of smart home devices are being added into IKEA ecosystem. It can be forecasted that IKEA ecosystem is going to be aggressively expanded with hardware products that can be effectively paired with smart home technologies such as Google’s Nest and Amazon’s Alexa.

IKEA Ecosystem

James F. Moore, economist who coined the term business ecosystem defines the following four evolutionary stages of business ecosystem: birth, expansion, leadership and self-renewal. The evolution of IKEA ecosystem according to this concept is taking place in the following manner:

1. Birth. The world’s largest furniture retailer has already identified smart homes as the basis of its ecosystem. The choice of smart home as a basis of ecosystem is strategically appropriate taking into account increasing integration of internet into various aspects of daily life and chores.

2. Expansion. The company has developed a wide range of innovative products such as Symfonisk WiFi bookshelf speakers and lamps, Riggard LED lamp with wireless charging, Tradfi remote control and others that are considered as smart home products. Furthermore, the latest IKEA additions to smart home concept include electric blinds that go up and down at pre-programmed times and smart air purifiers.

3. Leadership. The furniture retailer is communicating its vision to internal and external stakeholders to strengthen its leadership position in home improvement industry with the focus on innovative products. The company is increasingly utilising social media through developing viral marketing messages to reach the target customer segment.

4. Self-renewal.  The world’s largest furniture retailer is forming strategic collaborations with suppliers and other businesses in order to bring new ideas to its ecosystem. The company is committing with significant amount of financial resources for these purposes.

In 2015, the world’s largest furniture retailer purchased its own forest as a notable step to create IKEA ecosystem. Specifically, the company purchased more than 100,000 acres of forest in Romania and the Baltic region and started to manage its own commercial forest operations for the first time.[2] Taking into account increasing importance of ecosystem for businesses IKEA is expected to further strengthen its ecosystem at various levels.

IKEA Group Report contains the above analysis of IKEA ecosystem. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA. Moreover, the report contains analyses of IKEA leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy and addresses issues of corporate social responsibility.

IKEA Group Report

[1] Newman, P. (2019) “IKEA is looking to broaden its smart-home ecosystem with a new business unit” Business Insider, Available at: https://www.businessinsider.com/ikea-is-creating-smart-home-unit-2019-8

[2] Hutchinson, S. (2015) “Ikea Buys Its Own Forest, Becomes an Ecosystem” Inverse, Available at: https://www.inverse.com/article/5070-ikea-buys-its-own-forest-becomes-an-ecosystem

Category: Strategy