Ikea secures its position in the furniture market using Porter’s cost leadership strategy.  However, in the past several months, the Swedish furniture retailer has lost its position in the hearts of many employees and customers.

Early in the summer, I headed to Ikea for some room décor, and was unexpectedly greeted by people with signs and flyers reading “WE’VE BEEN LOCKED OUT.” Customers were being asked by picketing staff to not shop at, and sequentially patronize, Ikea.  Exceptionally few cars were in the parking lot, and the normally bustling store was relatively empty.

Since May 2013, Ikea Richmond and its employees have been in dispute due to Ikea’s new contract offer. The company states its purpose is “to align the Ikea Richmond store’s wage progression with the rest of Canada,” while employees feel they are being offered “reduced wages and benefits.”

It is perfectly reasonable for a business to maximize profits.  Yet, upon reducing expenses in its cost structure, Ikea is losing employees’ commitment to the company and risking customer relationships with negative publicity. Will Ikea still be maximizing profits with a collapsing business model canvas?