...Case Study of IKEA’s Global Sourcing Challenge In 1995, IKEA met a problem that its main supplier, Indian rugs, used the child labor to produce products, although they had signed an attachment of the contract to ban employing child labor. In addition, a German documentary maker was about to broadcast the problem of child labor on German television and also invited an employee from IKEA to have a live discussion in the TV program. Marianne Barner, the leader of IKEA, must find a great solution to this serious issue to both save her business and the corporation’s brand image. In this issue, IKEA was not the one who produced products, so they might not realize the use of child labor in the process of production. In addition, child labor did not attract lots of attention from the society at that time, so they did not pay attention to the use of child labor when they were finding their suppliers. However, they sold terminal products so they were to blame. As a result, Marianne had to make several decisions, respectively about whether IKEA should accept the invitation to join the TV program, how to deal with the broken contract with Rangan Exports, how to deal with the child labor on the long term and whether IKEA should use Rugmark. To address this problem and make these decisions, IKEA has four choices. One is that IKEA could utilize its own relationship with its suppliers to solve the issue. The second choice for IKEA is to invite Rugmark Foundation on its behalf to monitor the...
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...ASSIGNMENT SUBMISSION FORM This sheet must be submitted with your assignment. Failure to complete, sign and submit this form will result in a mark of ‘0’ for the assignment. Student Name Mounir TIZI Student ID P1028079 Assessor Name Mr Deji Sotunde Course Title Module Name Date of Submission Systems and Operations Management. 27/01/2015 Plagiarism is presenting somebody else’s work as your own. It includes: copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework from another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the procedures set down by the College. Please see your student handbook for further details of what is / isn’t plagiarism. By submitting this form and signing below, I declare that: I am the author of this assignment and that any assistance I received in its preparation is fully disclosed and acknowledged in this assignment I also certify that this assignment was prepared by me specifically for this course I certify that I have taken all reasonable precautions to make sure that my work has not been copied by other students I confirm that I have understood the College’s regulations on plagiarism I confirm that research resources are fully acknowledged Signature: Mounir...
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...IKEA in India: An Opportunity for Success James Baskerville, Irina Damianoff, Jacquelynn Mantel, and Teressa Paulus Indiana Wesleyan University Assignment ADM510 Team Project Paper Team Project Paper Rubric: The Team Project report was graded according to the rubric below |Criteria |Points Possible |Point Achieved | |Spelling, grammar and mechanics - Excellent |15 | | |Description of the Organization – good detail |20 | | | Opportunities for Global Expansion – great research |30 | | |Challenges to Global Expansion |30 | | |Expansion Options and Recommendations – team did a great job with the analysis and support |30 | | |APA citations & references page |15 | | |TOTAL |140 | | ...
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...| | |Entry Proposal for IKEA | |International market entry to Puerto Rico | | | |International Retailing | |Tuesday 12th March 2013 | | | |Zoe Cole | |Aoife Hughes | |Tinuola Omoyele | | | | | Contents Terms of Reference / Executive Summary 2 Introduction 3 Main Body / Findings 4 References 10 Terms of Reference / Executive Summary In this report, we propose IKEA expand its international market into San Juan, Puerto Rico, South America as mode of entry. The purpose of this report is to make a case for the expansion of IKEA into a new market. The reason we chose Puerto Rico is because the research has already been completed for such a move, and only narrowly missed out to the Dominican Republic as a new destination...
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...After a few years of IKEA undergoing speculation of unreliable suppliers in countries such as India, Pakistan, and Nepal whom used child labor freely throughout their practices, Ikea’s business area manager of carpets, Marianne Barner, was faced with a dilemma that she was quickly forced to overcome, change, and improve. In 1995, a well-known German TV reporter broadcasted an ongoing investigation report naming a main supplier of Ikea used child labor in their work place. Although this supplier claimed to recently sign an agreement in their IKEA contract forbidding the use of child labor or else termination, recent video and still-photographs have proved otherwise. In a whirl-wind of events, Barner was forced to look into alternatives to help save the reputation and image of IKEA as well as maintaining a profit. Three of these alternatives that Barner juggled that were stated within the case included: 1. Sign up to an industry wide response to growing concerns of child labor in India – monitoring manufacturers, importers, and retailers to use the new label of RUGMARK: a label on carpets that states they were made without the use of child labor. 2. Barner started conversing with the Swedish “Save the Children” organization who urged Ikea to respond to this situation in “the best interest of these children,” whatever that change may be. 3. Cut the use of these companies within India to lessen the loss of a profit for the company IKEA. Before investigating...
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...IKEA entering to Egypt 1. Intrоduction Home accessories and furniture, has always had a demand. The Swedish cоmpany IKEA, founded in 1943, 17 year old Ingvar Kampard, is оne оf the largest companies in the industry (IKEA 2013). In 2012, IKEA's net profit amounted to 3.2 billion еuros, it has increased by 8 pеrcent since 2011 (BBC News 2013) IKEA has еxpanded strongly and is the first stоre аbroad in Oslo, was оpened in 1963. To date, IKEA has its cеnters in 42 cоuntries around the world, and will cоntinue to expand (IKEA 2013). Despite this, Africа has no stоres IKEA, and Egypt may be the first mоst suitable cоuntry to enter IKEA in Africа. This repоrt will fоcus оn explоring оpportunities tо enter IKEA in Egypt. 2.PESTLE аnalysis First оf all, it is impоrtant to exаmine the mаcrо-envirоnment in Egypt аnd the regiоn, which cоuld аffect the input оf IKEA in Egypt. PЕSTLЕ Anаlysis examines various еxternal fаctors, such as political, ecоnomic, sociо - cultural, tеchnological, lеgаl and еnvironmental) in order to dеtermine that this cаn аffect the organization. 2.1 Pоlitical In 2011, the rеvolution begаn in Egypt (CIA 2013). Egyptian oppоsition, inspirеd by the revоlution in Tunisia, 25 January 2011 оrganized a mass dеmonstration, followed by strikes and strikes, this dаy is known as the "Day of Rаge." In cоnnection with these еvents, Prеsident Mubаrak resignеd. The prеsidential еlection took plаce in mid-2012, and the еlectiоns to the pаrliament in 2013 (Wоrld Bank 2013)...
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...IKEA IKEA เป็นที่รู้จักกันทั่วโลกสำหรับความทันสมัย คุณภาพและเฟอร์นิเจอร์ที่ราคาไม่แพง (Low-cost furniture เฟอร์นิเจอร์ใช้ต้นทุนต่ำ) และของตกแต่งบ้าน ความสำเร็จของบริษัทขึ้นอยู่กับกลยุทธ์ของการดำเนินงานที่เป็นเลิศในการผลิต การดำเนินงานโซ่อุปทานและการตลาด IKEA-ได้รับความนิยมในยุโรปอย่างกว้างขวาง ความมีชื่อเสียงแบรนด์เองเพื่อเจาะตลาดในประเทศอื่น ๆ อย่างไรก็ตามการเจาะของตลาดสหรัฐมีอุปสรรคจากภาวะเศรษฐกิจที่อ่อนแอและความไม่ลงรอยกันระหว่างตลาดเฟอร์นิเจอร์แบบดั้งเดิมสหรัฐอเมริกาและปรัชญาการดำเนินงานของ IKEA ที่ใช้ต้นทุนต่ำIKEA ต้องค้นหาความสมดุลระหว่างกลยุทธ์ด้านความเป็นเลิศในการปฏิบัติงาน และความต้องการของผู้บริโภคในสหรัฐสำหรับการปรับแต่งบริการที่ดี มีความสะดวกสบายและมีคุณภาพความเป็นเลิศในการปฏิบัติงาน, เป้าหมายด้านการตลาด, การออกแบบผลิตภัณฑ์, กลยุทธ์การสร้างตราสินค้าการวางตำแหน่ง , การตลาดระดับโลก ม กลยุทธ์การกำหนดราคา, ห่วงโซ่อุปทาน, ค้าปลีก,การดำเนินงานความสัมพันธ์กับลูกค้า, การวิเคราะห์(SWOT)เมื่อ Kamprad Ingvar อายุ 17 ปี เขาก่อตั้ง IKEA ขึ้นในปี 1943 เขาไม่ได้คิดว่าบริษัทของเขาจะกลายเป็นหนึ่งในบริษัทที่ได้รับความนิยมมากที่สุดในโลก และเป็นแบรนด์ที่โดดเด่น หรือเป็นร้านค้าปลีกที่ใหญ่ที่สุดในโลกเฟอร์นิเจอร์ IKEA คือการรวมกันของชื่อย่อของ Kamprad (IK) และตัวอักษรแรกของฟาร์ม (Elmtaryd) และหมู่บ้าน (Agunnaryd) ในภาคใต้ของสวีเดนที่เขาเติบโตขึ้นมา จากจุดเริ่มต้น IKEA ก่อตั้งขึ้นในจุดประสงค์ที่แตกต่างกันกล่าวคือหลักการประหยัดและต้นทุนต่ำ เพราะบริษัท เฟอร์นิเจอร์ส่วนใหญ่ เลือกให้บริการเฉพาะบุคคลและอยู่ในโชว์รูมหรูหรา ที่พนักงานขายแข่งขันสำหรับค่ากันทำค่าคอมมิชชั่น อย่างไรก็ตาม...
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...“IKEA Solution” IKEA is a Swedish company producing home furnishing products at low prices to make them affordable to people. The company was founded in 1943 by Ingvar Kamprad and kept growing tremendously from 2 stores in 1964 to 114 stores in 1994 to 231 stores in 2007 in 24 countries welcoming a total of 522 million visitors. Besides its success stories, the company has faced environmental and social issues. IKEA’s Global Sourcing Challenge involving Indian rugs as well as child labor is a complicated case of social issues. Whenever a company founds itself involved in a child labor controversy, it can severely damage the customer’s perception of the company. This impact can prove to be irreversible. In 1994, a Swedish television network showed a documentary film about children working in Pakistan, targeting IKEA. In India, IKEA faced criticism about child labor from various international organizations. In the spring of 1995, another film is threaten to be shown on German television about children working at looms at Rangan Exports, a company used by IKEA and the producer then invited IKEA to send someone to take part in a live discussion during the airing of the program. These events urged the company to consider environmental and social issues more seriously, and therefore, find a solution. Just like any other globalizaed company, IKEA needs to get the cheapest supplies and therefore go to countries that offer cheap labor. However, developing countries involved...
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...IKEA Case 1) IKEA’s vision to “create a better life for the many people” defined IKEA as a company and separated them from their competitors. In the early years of the company, IKEA faced many hardships from the cartel of furniture manufacturers who controlled the Swedish industry to keep prices high. To counteract these hardships, IKEA created a unique business model that was different from competitors. This model included key features such as the use of a catalog and having self-assembled furniture, which saved the company on transportation and storage costs. Ingvar Kamprad, founder of IKEA, developed the strategy of selling affordable, good-quality furniture to mass-market consumers around the world. Another important part of IKEA’s vision was their relationship with their suppliers. Kamprad wanted to develop close ties by supporting its suppliers with long-term relationships. A manager in the case states, “We commit to doing all we can to keep them competitive—as long as they remain equally committed to us.” IKEA also serviced customers with features such as a playroom for children, a low-priced restaurant, and grocery store. All of these features were highly beneficial and profitable for IKEA while also helping everyone (suppliers, customers, etc.), as their mission strives for. Although IKEA had achieved success with their business model and vision, they experienced multiple environmental and social issues that tarnished to company’s image and reputation...
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...In the wake of recent changes within the regulatory environment, specifically related to use of formaldehyde and child labor, IKEA is struggling with maintaining its business-as-usual operation. The past formaldehyde and recent child labor scandals are symptoms of a larger underlying problem. Recent context developments, specifically in the macro environment, have made the firm’s previously profitable strategy inept. Since the current context is beyond the control of IKEA, it has to alter its existing strategy in order to maintain strong financial performance. The myopic cost minimization strategy, which places price at the root of each business decision, needs to evolve into a “triple bottom line” strategy. This proposed strategy, in addition to profit, would incorporate environmental and social factors in the business decision-making process. While difficult to quantify, these added factors would ultimately benefit the financial health of the firm by mitigating compliance penalties, lawsuits, and negative press. IKEA’s failure to take proactive business measures to monitor suppliers, action that would have entailed little upfront costs, cost the firm sizeable financial losses. Such poor decision-making began in the early 1980s, when Danish authorities passed formaldehyde regulations and the firm suffered a 20% decrease in Denmark sales due to lack of compliance. The firm failed to fully resolve this issue as a decade later the firm incurred an additional $6mm-$7mm loss...
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...IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor Nathan Johnson Case Analysis MGT 400 – 10/27/09 1) How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German Video Production? The offer to have a representative appear on the upcoming broadcast of the German Video Production seems like a total setup. This movie sounds like it is totally geared towards tearing down the corporation’s credibility, etc. If a representative goes, most likely there will be set questions created by the group that made this video in attempt to incriminate IKEA on camera. I would recommend that Marianne Barner thank the German Video Production company for the invitation but to politely decline and say something to the extent that IKEA is currently investigating the operations of its suppliers to ensure compliance with IKEA’s policies. Thereby, as kindly as possible you extend politeness and it is implied that IKEA is now aware of the child labor IKEA is actively seeking to resolve the issue. 2) What actions should she take regarding the IKEA supply contract with Rangan Exports? The most logical approach towards addressing this issue would be to perform some sort of investigation on ALL of IKEA’s suppliers to make sure that all of them are in compliance. If IKEA singles out Rangan Exports, they could risk some sort of discrimination suit. Additionally, if there are more suppliers in violation of their...
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...Brand Management IKEA Invades America Case Study #2 1- What factors account for the success of IKEA? IKEA has many factors for success that put it as one of the leading brands in its industry. We see IKEA built strong image in many countries and culture, and its loyal customer numbers are increasing day after day and actually all my family are in love with their products. I think one thing makes IKEA has this image is its ability to create low price products in good quality and it always focuses on is seeking to balance cost-effective labor with the company’s product quality standards. This advantage came through saving money on labor and production, IKEA constantly is on the lookout for opportunities to build supplier relationships in developing countries as many other companies, but the good thing is that they manage their designs effectively and seek the best match materials from different locations depends on the needs and product’s design. IKEA makes it easier for customers to transport furniture home because all of the products were transported flat. Also, the flat packaging saves money for the company on shipping by making all furniture designed to ship disassembled. This packaging way creates more storage space, more items able to be shipped, reduces labor costs, and less reported damages. IKEA also focuses on design or the products it sells as we read that they have expert designers who create Scandinavian heritage designs that are showcased beautifully through...
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...be the following: IKEA sells the same furniture all over the world, so IKEA rips huge economies of scale from the size of its stores and the big production runs necessary to stock them. IKEA also offers a low competitive price because of the economies of scale (30% lower than competitors) Exclusive relationship between IKEA and its suppliers, offering modern and exclusive designs for IKEA. Designers also work closely with suppliers, keeping the costs low. Ready-to-assemble kits help to stack products in shelves in order to maintain larger inventories. The cash and carry shopping formula; you can go to the rack directly to collect the product and go home to build it by yourself. Successful use of the word of mouth and the use of catalogues in order to reduce the advertising costs. IKEA has simple and plain staff levels, lowering the fixed costs and giving more freedom to its employees. This management structure also helps making decisions in a faster way. 2. What are the cultural factors that make expansion abroad in retailing difficult? What has made it possible in IKEA’s case? Ikea has encountered many problems when entering the U.S. market because it had to adapt its products and its shopping style to the American standards. IKEA had to redesign its beds because the American citizens were not buying the European size beds (Beds in America are wider than in Europe). We can see an adaptation to the American shopping culture in the installation of new cash registers...
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...IKEA IN CHINA INTRODUCTION TO IKEA HISTORICAL CHAIN OF IKEA BRIEF INTRODUCTION OF IKEA IN CHINA IKEA entered China in 1998 through a joint venture and started its first in Shanghai. This was followed a store in Beijing in 1999. Since 1980s, several economic trade and investment reforms have enabled the growth of furniture industry in China by 2004, Chinese furniture production was $24 billon and its exports were $7 billion. CONCEPT: SIMPLICITY IS BEAUTY. YI JIA-COMFORTABLE HOME Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Market: emerging market; small to high size market; customer quality is low but shows an increasing trend Competition: intensity of rivalry is strong; facing some entry barriers; bargaining power is high; a longterm profitable business Country market & industry opportunities Resources: raw materials from China Incentives: declining of the duty rate Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. Political The reform of China since 1980?s Entered through a joint venture In 2005, first wholly owned store in Guangzhou.(China entered WTO in 2001) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. 4. 5. Economical Emerging market Basic need updated to sophisticated wants New market space for newcomers Cheap labour cost Wood industry (top supplier) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Social 1. Updating of the basic needs(urbanisation) 2. Large...
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...A VERY BRIEF MARKETINGPLAN 2/26/2013 Ikea as an example – Pooneh Tabei “The IKEA business idea is to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them.” is strategic planning tool and is placed as the first stage in marketing plan. The goal is to help the company focus on key terms and ultimately reach its objectives. Strengths & Weaknesses – internal aspects and is under the company’s internal control. Opportunities & Threats – external factors and is outside of the company’s internal control. 1) Strong global brand, which promises quality. 2) Strong concept offering design, quality & functionality at low prices. 3) Strong attractive vision statement. 1) Growing demand to eviromentaly friendly products. 2) Growing demand for low-price products with regard to current global financial trends. 1) Size & scale of global business, which makes the controling aspect difficult. 2) Employment working conditions not the same in all countries. 1) New entries to the low-price home furnished industry. 2) Global economic recession affecting comsumer purchase behaviour. Values creating factors & partners 1) Very costumer centered 2) Strong network & Ikeas as a hub company of network 1) Co-creator of value Strong involvement in value creation Well-informed about their role 2) Highly efficient logistics Central role in the network chain ...
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