...Success Factors of IKEA 1 The Key Success Factors of IKEA Advanced English Writing 2 Abstract Taking advantage of three mayor cost-cutting strategies, IKEA has been able to maximize its profit and to succeed internationally with its concept. The self-service and do-it-yourself approach to selling furniture is one of the critical success factors IKEA uses to save costs and increase profit margins. Furthermore, it has a complicated company structure, partially in order to avoid taxes, but also to allow for some flexible management decisions to be made, based on the international needs. The third key success factor that can be held responsible for IKEA’s international triumph is its production and ordering system. The company uses recycled materials and wood alternatives in its mass productions, attracting customers from all kinds of layers of society. IKEA Key success factors International franchise Success Factors of IKEA 3 Table of Contents 1. Table of Contents ..................................................................................... 3 2. Introduction .............................................................................................. 4 3. Discussion ................................................................................................ 4 3.1 The Self-Service Approach ............................................................. 4 3.2 Advantageous Tax Planning and Decentralized Management ........ 5 3...
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...which IKEA has managed its global environment over time. IKEA was founded by Ingvar Kamprad in 1943. Today IKEA is one of the largest furniture chains in the world with three hundred and fifteen stores operating in twenty seven countries. IKEA has managed its Global Environment in the three major ways which has contributed to its great success. These ways are as follows: 1. Ingvar Kamprad was able to identify the changing trend in consumer wants and adapted his products to these evolving needs. Consumers wanted well designed and well-made furniture at an affordable price. IKEA was able to reduce its cost through developing internal departments to complete task which are usually outsourced by its competitors. 2. Developing and maintaining an international reputation that is synonymous with hard works and great values among all of the organizational stakeholders. 3. IKEA has increased the organization’s size and geographical reach through global franchising. 2. How would you explain the rationale behind the success of IKEA’s approach to managing its environment? As listed in Question 1 above, IKEA has attained its success in the global environment through three major strategies. From the very beginning of the establishment of IKEA, owner Ingvar Kamprad was able to identify consumers’ needs for affordable, well made furniture. To be able to satisfy these requirements, the organization had to manage not only the quality of their products but also the cost. IKEA was able...
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...ANALYSIS OF IKEA BUSINESS by Student’s Name Code + Course Name Professor’s Name University Name City, State Date Analysis Competitive advantage In modern economies finding the best unique business idea is hard since nearly everything someone is doing to make money. Furniture business is quite competitive and expensive especially when one considers quality and low price over everything. Considering the case of IKEA, making right choices matters and that’s why Kamprad knew exactly the power of high quality, low price, and quick delivery. This paper analyzes IKEA success strategy as well as weaknesses to give a clearer overview of its operation. The cost of the product in comparison with that of a competitor in any market matters. IKEA knew exactly how to balance the cost to be ahead in the competition. Kamprad, the founder of IKEA, concentrated on cost minimization in every aspect of his trading. That’s why he considered buying fabric directly from the textile manufacturer in large quantities. This ensured that there was enough material for a long time manufacturing at past price. This was advantageous since it helped him mitigate the effect of inflations and other production hazards like a strike. The result of such strategy was continuity in production and supply of furniture at a predictable and fair price. This contributed to the fact that IKEA products were 30-50% less than those of competitors. This clearly shows the importance of using high volume...
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...What factors account for the success of IKEA? Some factors that have accounted for the success of IKEA are the prices they put on the furniture, the cost efficiency in the way of what the furniture was composed of, their form of transportation, and the atmosphere of the store itself. IKEA is known for having extremely low prices. The article states that IKEA would look at the competition’s prices in each category, and then set their own prices somewhere from 30% to 50% lower. The vast price range, while low, offers different levels of prices that range from low to high, draw in customers. These lower prices draw in the customers, but the thing about IKEA is a lot of the things that are inexpensive, don’t necessarily look inexpensive. IKEA utilizes cost efficiency with their building materials so they can still turn a profit. Inexpensive materials that are not very aesthetically appealing are used in places that the eye can’t see very easily. These cheaper materials may be used under a bed or table. The nicer materials are used on surfaces that are most visible, which makes the furniture as a whole look more expensive. In the way of transportation, IKEA cuts down their costs exponentially by shipping their product unassembled. The furniture comes with directions for the consumer to put together themselves in flat boxes. The consumer may both order the furniture and have it shipped, or they can go to an outlet and pick it up. The flat rate shipping boxes make it very easy for the...
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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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...Case Study – IKEA 1. History (Explain) IKEA was founded in 1943 by 17-years old Ingvar Kamprad in Sweden. First two letters IK of IKEA were taken out of the founders name and last two letters EA symbolise the name of Kamprads parents farm ‚Elmtaryd’ and the village ‚Agunnaryd’ where the farm has been located. First the company sold various consume good such as pens, watches and wallets. In 1947 Kamprad started also selling furniture via distribution, especially to the poorer farmers in Sweden. 1951 the first IKEA catalogue ever was published just offering furniture. In the catalogues the furniture produced by IKEA was pictured as part of a complete furnished room, a thing that was unusual for the time then. In the 1950s Kamprad started hiring designers who designed furniture especially for IKEA. These were sold and shipped first in 1955 as building kits in order to keep the costs of assembly and shipping as low as possible. Three years later in 1958 the first IKEA store was opened in Sweden, followed 1963 by the second store in Norway. In the following 40 years ‚Ikea’ started building stores all over the world, mainly in European and Asian Countries and developed itself to a company with about 150.000 workers and sales about €25 billion in 2014 and 315 stores in 27 countries. 2. IKEA is considered one of the success stories. How have they achieved this success? What barriers have they overcome? They decided to side with the many. That means responding to the home furnishing...
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...IKEA WRITTEN REPORT SUMMARY Introduction:............................................................................................................................................ 3 First question: .......................................................................................................................................... 3 IKEA’s business model: ........................................................................................................................ 3 IKEA’s strengths and weaknesses:....................................................................................................... 4 IKEA’s competences: ........................................................................................................................... 5 Summary about IKEA’s successful: ...................................................................................................... 7 Conclusion: .......................................................................................................................................... 7 Second question: ..................................................................................................................................... 7 The drivers of their internationalization: ............................................................................................ 8 IKEA’s internationalization strategy: ................................................................................................... 9 IKEA’s...
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...Case 2: IKEA DESIGN & PRICING Submitted By: Team Samyeong Arcedo, Lloyd L. ● Ladja, Johnraja-Zaid M. ● Mendoza, Sheila Mozenda C. ● Pangilinan, Jayson E. I. Problem Statement Given IKEA’s success in the global market, how can it ensure continued success in the business? II. Case Analysis What are IKEA's competitive priorities? Describe IKEA's process for developing a new product. Cost leadership and an exceptional supply chain management are IKEA’s major competitive advantage. With the principle of “low price with meaning” IKEA is able to incorporate cost minimization in every process of developing a product that are modern, functional and a true value for money. What are additional features of the IKEA concept that contribute to creating exceptional value for the customer? Aside from creating chic functional products at a low cost, IKEA is also keen to reducing negative impact of products in the health of its customers and the environment. Inbound and outbound logistics also contributes in making IKEA products affordable and available to its customers. What would be important criteria for selecting a site for an IKEA store? IKEA stores and distribution areas should be close to shipping, rail and truck routes to allow a faster delivery response time which also translates to lower logistics costs. A market study should also be done to align IKEA’s array of products with customer needs. Study may include information about the location, cultural background...
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...------------------------------------------------- Leeds Business School ------------------------------------------------- Corporate Strategy Critically examine how the success of Ikea has been supported by its organisational culture Mona Thorvaldsen, Kate Mulvana, Joan Kawalewale, Tom A. Trosterud, Jodie Evans MA Public Relation Management & MA Business Studies Semester Two Module Leader: Lawrence Bellamy Contents Page No Chapter 1 – Introduction | 3 | | | | | Chapter 2 – Background | 3 | | | | | Chapter 3 - Appraisal | 4 | | | | | Chapter 4 – Analysis | 9 | | | | | Chapter 5 – Conclusion | 14 | | | | | Bibliography | 15 | Executive summary This report examines the corporate culture of the global furniture leader IKEA and discusses the link between Ikea’s culture and its performance. The cultural web is used as a device for breaking up the complexity of organisational culture and for demonstrating that Ikea enjoys a strong and consistent culture. The report identifies synergy between Ikea’s culture and strategy, arguing that culture has given the organisation competitive advantage. Furthermore it points to the complex set of factors influencing performance, and how Ikea’s culture is one of several components in its success-formula. 1.0 Introduction Organisational culture is built on the assumptions and beliefs that construct purpose, guidelines and collectivism. In effect...
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...REASON BEHIND SUCCESS 5 LITERATURE REVIEW 7 CONCLUSION 7 REFERENCE LIST 8 INTRODUCTION According to Richard Branson (2000) innovative business is one that live and breathes in out of box thinking and its not just good idea but combination of good ideas and motivated staff and good understanding of customer wants and needs. (Tidd et.al. , 2005) When we talk about IKEA , we start thinking of words like innovative furnishing , cheap , great quality , modern , good store . Ikea has been able to bring a cultural shift how furniture is purchased and who buys the furniture i.e. now middle income families and younger generation are also buying modern furniture as its cheap. Ikea is prime example of out of box innovation as they introduced things like flat pack furniture , furniture catalog , particle board furniture , restaurant in furniture store , and store layout ( ikea maze) where customers travel to all the departments of the store making people imaging their future homes which have previously never done by furniture store as only traditional furniture store were there with their expensive needed to be custom made. Main purpose of the report understand how innovation leads and supports entrepreneurship. This report also give brief history and knowledge of Ingvar Kamprad : the father of modern furnishing and how his idea caused the cultural shift in todays society and also factors leading to the success of his idea and...
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...Strategies BUS499 Business Admin. Capstone Aug 10, 2012 Strayer University Introduction When a company chooses what type of business or corporate level strategy they want to use, this decision is important because it will set the tone for success or failure. Many companies will hire a manager to determine what type of strategy is best for the corporation. Other companies will already have something in place that just needs improvement. In order for a company to be successful with theses strategies they need to know what kind of competition is out there. A corporation’s competitor can usually dictate what strategy fits the corporation best. Once a corporation has figured out what strategies to use then they can move forward with building a successful firm. 1. Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. The company that was chosen to be researched is IKEA. IKEA is a well known furniture retailer. IKEA was founded by Ingvar Kamprad in 1943 (ikea.com). Ingvar, at the age of five began selling matches to the local community. He then found out that he was able to buy matches from Stockholm in bulk at a cheaper price and sell it back at a lower price and still make a good profit. Ingvar’s entrepreneurial style brought him to the furniture business...
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...Is IKEA destined to succeed everywhere it cares to establish itself? Question 1 Using a standardized products strategy with universal assortment around the world was the key to IKEA's success. That is, it markets the same basic products in all of its stores; instead of tailoring furniture to regional tastes, it focuses on making furniture that is universally attractive (Rondcha, 2008). Some 90% of the product line is identical across more than two dozen countries. However, in order to adapt to certain countries such as America, IKEA needed to modify their concept whilst still maintaining their original formula. Modification was implemented as the European products conflicted with American tastes and preference (Tracy, 1986). Conflicts arose when it was found that most Americans keep a sofa longer than a car and change their spouse as often as their dining room table (about 1.5 times in a lifetime). America didn’t get IKEA; it was too unswervingly Swedish. (Lewis, 2005). Kamprad believes the word ‘impossible’ is absent from IKEA’s dictionary (Altomare, et al. 1999) and by sticking to this belief, adaption was made to America’s furniture. This included widening the chest drawers by an inch or two which led to an immediate increase in sales by 40%. Despite Kamprad’s belief, it is impossible that IKEA will succeed everywhere it establishes. In 1974, IKEA expanded into Japan as their first Asian market. It had to pull out in 1986 due to differences between culture, lifestyle and...
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...Responding to Sears “Elements” Line of furniture Issue/Problem The Canadian furniture market has brought success to IKEA Canada due to the high quality and low priced “quick-assembly” furniture designed by IKEA’s European engineers. However, this success brought many imitators. Sears Canada has recently published a new catalogue that includes a new line of furniture called “Elements”. The new line of furniture very much resembles IKEA’s knock-down, self-assembled line. IKEA is facing an imitation threat and should tactically respond to minimize its effects. Recommendations IKEA is considered to be a low cost, high quality producer in the furniture industry, therefore it is important to spread that image among consumers. IKEA should expand its target market and reach out to more customers. This can be accomplished by increasing the number of catalogues published every year. In addition, IKEA should re-establish its mail ordering system and minimize its mail orders losses. This can be accomplished by adding a convenience fee which covers handling, shipping and packaging. Discussion Industry Analysis Canadian consumption of furniture accounted for $2 billion dollar in 1985 making the industry a mature one with 1,400 manufacturers. Retailers on the other hand are divided into three types: independent such as the Brick and Leaon’s, speciality chains such as IKEA and department stores such as Eaton’s and Sears. Canadian produced furniture typically followed American and...
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...Identification of the Problem Ikea has gained tremendous success in European and Canadian markets, by offering innovative products that found a great welcome in these markets. In addition, IKEA successful advertising campaigns, which were developed with a humors twist, made a very big impact on reaching the target audience in Germany and Canada. However, the company had some difficulties, when entered the US market, as the company was not as successful, as it did in Europe and Canada. There were two reasons for that. First, the products were less adaptive to the American market. Second, more promotions needed to drive customers to visit the stores, as the stores locations are far away from major cities. In order to keep its success IKEA must make some strategic decisions, the company must choose the place to expand its operation, in United States or in other countries. SWOT Analysis *Strength European market success Canadian market success Reasonable pricing Product fit west and east coast's life styles in the US. Products are easy to pick up from stores and assemble at home. Long-term partnerships with domestic suppliers. Provide products that are appealing to local customers. Cater to local tests as much as possible. *Weakness IKEA is a global company, so product standards may be difficult to maintain. Outsourcing most of the products sold in US store. Quality problems due to complex supply chain. Stores locations. Below expectation customers service in the...
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..." The IKEA vision is to create a better everyday life for the many people. This includes doing what we can to help create a world where we take better care of the environment, the earth's resources, and each other. We know this continuous improvement is a never- ending job, and that we are sometimes part of the problem. But we work hard to be part of the solution". You are required to explain how IKEA is able to implement its vision and mission statements in its work processes? Vision At IKEA our vision is to create a better everyday life for the many people. 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. 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. The IKEA product range focuses on good design and function at a low price. It offers home furnishing solutions for every room in the home. It is co-ordinated so that no matter which style you prefer our designers and product developers work hard to ensure that our products meet your day-to-day needs and eliminates the unnecessary. Low prices are the cornerstone of the IKEA vision and our business idea. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone...
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