Case Summary - Ikea

In: Business and Management

Submitted By sudeepsodani
Words 383
Pages 2
Situation Analysis
 IKEA vision “To create a better everyday life for the many people” truly reflects corporate philosophy of this value-driven company with a passion for life at home. Started by 1st generation entrepreneur Ingvar Kamprad , In 2002 IKEA was world’s top furniture retailer with 286 million customer, $12 Billion sales and 154 stores in 22 countries. Even though
IKEA was founded in 1943 , the self service store journey started in 1965 and by 2002 IKEA became the world’s most prominent retailer. IKEA core culture of cost cutting sensitivity, reduction of wastage has remained consistent over the years which has been exhibited over the years through company’s products, packaging, processes and people.
 Alignment of key consumer trends, low production cost, global sourcing, Scandinavian heritage is important for sustainable competitive advantage of the company.
 IKEA’s followed a well defined product strategy which was based on identifying consumer trends and then building products across these trends. The company followed a matrix style approach which consisted of pricing and style . This matrix was different for each products.
This matrix helped identified the products retail price . The company worked with 1800 suppliers across 50 countries. The company’s different units and entire operations focused on Quality products at low prices.
Key Issues
 Changes in consumer taste and preference -Over the years IKEA refined its product design, retail approach to suit its consumers.
 Globalization vs. Localization – In order to remain competitive and achieve market share in newer geography IKEA needs to understand the local market and change marketing mix according to local consumer lifestyle & preference.
 The furniture market was widely divided between low end, high end , single brand and multiple brand retailers with increasing…...

Similar Documents

Ikea Case

...What are the core competencies and end products of IKEA? How are they linked with each other? IKEA is capable to design its products in-house; therefore they can reduce their costs because outsourcing their product designing is much cheaper. Despite that they’re designing its product itself, people find it still attractive enough to buy IKEA’s products. Also their furniture and packaging is designed in such a way that it’s easily transportable (‘flat packaging’1) for both customer and IKEA. The assemble-it-yourself furniture, together with the flat packages, reduced space requirements in logistic operations, which lowered the costs either.2 To maintain their low-cost strategy they have to manage an international low-cost supplier network. By 2004, IKEA’s network of international low-cost suppliers had grown to the point where it had 43 trading service offices in 33 countries.3 By well thought allocation of their warehouses and stores they managed to reduce costs even further. So we can conclude IKEA is capable of sustaining its low costs, by managing, establish and designing its supplier network in such a way that IKEA achieves lowest costs in logistics. Even though they’re capable to establish a low-cost supplier network, IKEA is also capable of designing its furniture in such a way that it “fits the IKEA concept of form, function and price”4, “for example the OGLA chair which initially was made of wood but eventually is made out of......

Words: 601 - Pages: 3

Ikea Case

...FOR IMMEDIATE RELEASE Countdown to the 2013 IKEA Catalogue! Petaling Jaya, 16 August 2012 – Let your imagination run wild with the infinite possibilities of making your precious moments at home come true as we count down to the launch of the much awaited 2013 IKEA Catalogue. In anticipation of the arrival of the new catalogue on 30th August, drop by the IKEA store between 21st to 29th August to visit the larger than life IKEA Countdown Room display that will showcase different room settings every day to inspire you to recreate your special moments at home with your family or loved ones. Experience the magic moments of the IKEA Countdown Room Between 21st to 29th August, the IKEA Countdown Room will feature different room settings of a home every day. From the living room and bedroom, to the kid’s room and kitchen, be inspired to complete your moments at home with IKEA. There will be a host of inspiring and engaging activities and games for the family and friends with attractive prizes up for grabs throughout all of the nine days. Loads of IKEA furniture can be won daily in the IKEA Malaysia Facebook contest from 21st to 29th August as well. Celebrity chef Anis Nabilah, host of TV cooking programmes Icip-Icip and Sesedap, will also be on hand to conduct a cookie baking demonstration. For entertainment, up and coming acoustic guitar player Amir Jahari will be serenading visitors with his mix of soulful and sweet tunes. On 21st August, popular comedian Suhaimi Yusof will......

Words: 1685 - Pages: 7

Ikea Case

...Executive Summary IKEA is a “privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories”. The company was established in Sweden in 1943 by a 17-year-old Ingvar Kamprad, who is one the world's richest people in 2013, the company's name is an acronym that consists of the initials of Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Southern Sweden). IKEA is currently the world's largest furniture retailer and arguably the most successful global retailer. Being one of the biggest global retailers, IKEA benefited a lot by the globalization of its business; IKEA’s target market is the global middle class who is looking for low-priced but attractively designed furniture and household items. The company started as a home-furniture retailer in Sweden over 60 years ago. Throughout the years with the use of effective globalization, “IKEA managed to increase its business revenue and profit by selling and making home-furniture in different countries all over the world, and it has over 300 retail stores in more than 30 countries”. Other than that, they sell roughly 10,000 different products, which attract customers from different places all over the world. The basic assumption behind IKEA's global strategy was “one-design-suits-all”. This case “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor ” is about IKEA’s development from......

Words: 2411 - Pages: 10

Case Summary - Ikea

...Situation Analysis  IKEA vision “To create a better everyday life for the many people” truly reflects corporate philosophy of this value-driven company with a passion for life at home. Started by 1st generation entrepreneur Ingvar Kamprad , In 2002 IKEA was world’s top furniture retailer with 286 million customer, $12 Billion sales and 154 stores in 22 countries. Even though IKEA was founded in 1943 , the self service store journey started in 1965 and by 2002 IKEA became the world’s most prominent retailer. IKEA core culture of cost cutting sensitivity, reduction of wastage has remained consistent over the years which has been exhibited over the years through company’s products, packaging, processes and people.  Alignment of key consumer trends, low production cost, global sourcing, Scandinavian heritage is important for sustainable competitive advantage of the company.  IKEA’s followed a well defined product strategy which was based on identifying consumer trends and then building products across these trends. The company followed a matrix style approach which consisted of pricing and style . This matrix was different for each products. This matrix helped identified the products retail price . The company worked with 1800 suppliers across 50 countries. The company’s different units and entire operations focused on Quality products at low prices. Key Issues  Changes in consumer taste and preference -Over the years IKEA refined its product design, retail...

Words: 383 - Pages: 2

Ikea Case

...caso de IKEA es de utilización de materia prima no amigable con el medio ambiente y con la salud de sus clientes, lo que provoco una caída en sus ventas. A raíz de nuevas leyes y exigencias de los clientes a cuestiones ambientales, IKEA decide generar mejores políticas de compra de sus productos para la venta en sus tiendas a nivel mundial. Uno de los principales dilemas éticos que de enfrenta la compañía es decidir si sigue expandiéndose debido al incremento de la demanda a nivel mundial, pero esta expansión trae consigo una mayor tala de árboles lo que contradice un poco al lema de la compañía el cual se basa en un cultura socialmente responsable. Y a pesar de que la compañía ha establecido políticas al respecto aun no puede decirse que IKEA utiliza en un 100% madera “protegida” en sus productos ya que muchos de sus proveedores aun no siguen las políticas “verdes” por asi llamarlo que poco a poco IKEA ha implementado a. ¿Cuál es el conflicto de valores y/o responsabilidades que existe? El dilema en el caso o conflicto era de seguir en el camino de comprar productos que sean peligrosos y causantes de enfermedades o crear una filosofía y responsabilidad ambiental en la empresa desde el proveedor, empleados y clientes. Además de la cuestión que se plantea al final del caso el cual IKEA sigue expandiéndose a nivel mundial pero dicha expansión contradice el lema de la compañía de ser una empresa ecológica ya que como su directivo establece a lo largo del texto IKEA......

Words: 2430 - Pages: 10

Ikea Case

...company. IKEA tries to differentiate its product from competitors’ by offering unique designs and high qualities, but at a lower price. Its designs are not everybody’s favor, but IKEA has been successful to identify and target a segment of the market who are interested in its designs. One of the company’s strengths is its strategy to design a product, after surveying the market and finding the right suppliers. That enables the company to know in advance at what price point it is going to release a product, how much margin the company should have and forecast a cost. Therefore when the company is looking for suppliers, it knows about the type of suppliers, and where it should be looking for. That is one of the strengths that gives IKEA the advantage of producing goods that are high quality, yet they are priced lower than competitors. One of the company’s weaknesses is its management style. The company has a preference for hiring younger people who had not worked for other enterprises and then promoting them from within. IKEA has a tendency to avoid hiring highly educated, status-oriented elite, and the company’s ration is that such individuals hardly adapt to the company. This mindset results in intentionally ignoring potential candidates, who could otherwise bring in fresh and new ideas, along with innovations and creativity. The other weakness is the company’s resistance to become a public company. Their ration is that the stock market imposes short-term pressures on......

Words: 662 - Pages: 3

Ikea Case

...firm-specific advantages? Country - specific advantages? IKEA’s firm and country specific advantages could 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......

Words: 2156 - Pages: 9

Ikea Case

...IKEA assignment Introduction. This is an informative report about IKEA. IKEA is a company that’s internationally known as a retailer for furniture and home furnishing. IKEA was founded in 1943 in Sweden by Ingvar Kamprad. IKEA started out as solely a retail operation, until Kamrad bought his own small furniture factory in 1953. IKEA then started to design its own furniture line in 1955 and opened its first store in 1963 near Oslo. By now IKEA is one of the world’s top retailers of furniture and home furnishings and has more than 361 stores spread around 45 different countries around the globe. (this information comes from http://franchisor.ikea.com/FranchisingtheIKEAway/Pages/All-IKEA-stores.aspx) IKEA is historically known for its high quality items for affordable prices and for their self shopping stores. Customers can come into the stores, buy the furniture they like and take it with them right away. They then have to put it together themselves when they get home, or in some cases IKEA staff would even come to the customers home to help them assemble the furniture. This IKEA concept immediately became a success, mainly for kitchenware and children’s furniture. In 1973 the first store outside of Scandinavian territory was opened in Switzerland and in 1974 in Germany. After this began the expansion into all the markets on a global basis and by 1990 there were 17 stores situated in Western-Germany...

Words: 1878 - Pages: 8

Ikea Case

...10/22/14 Cultivating Innovation at IKEA As the manager of the IKEA store I have been instructed to change the layout of my store. Corporate headquarters has instructed to me that the change must be “dramatic”. I will use several steps in order to make sure that these changes are in the best interest of IKEA. First, I will form an analysis of opportunities and identify what it is that I want to do. I will then explore multiple different layout options and then select the best option. Moreover, I would begin detailed planning and then implement these changes of the layout of the store. Lastly, I would get feedback to see if it was a good decision or not, if by chance it was not the best layout, then I would choose the next best layout option. After watching this IKEA commercial of the lady taking out her old lamp and putting it on the curb, and setting up her new lamp on her desk, I have concluded that this commercial is trying to convince consumers that they need to part with their old furniture and buy new, from IKEA. In addition, I found this quote from Alex Bogusky, executive creative director at Crispin Porter, says the "Ikea: Unboring" campaign is trying to convince consumers that it’s okay to throw out Mom's old coffee table and splurge on a new one. While Americans overspend on "fashion" purchases such as clothes and shoes, they still cling to a "till death do us apart attitude" with their furniture”, according to Bogusky. An IKEA executive named Bill Agee,......

Words: 552 - Pages: 3

Case Study on Ikea

...Case Study on IKEA   Executive Summary The case study of IKEA has been read, analyzed; and the findings are presented in the report as required. The goal of the report was to analyze the case study of IKEA and then to present the findings as well as performing some tasks that are required in this report. Firstly, some terms that are closely associated with marketing has been described and analyzed. In addition to that, those terms are also discussed in relation with the case study. Brand, Business strategy, retail sector, price sensitive and franchisee are the terms that have been discussed in this report in the first section. In the second section, the required calculation for average number of customers of each sector and average spending of customers has been worked out. A new mission statement for IKEA has also been proposed there along with the justification for the mission statement. In the third section, the importance and nature of SWOT analysis has been discussed and elaborated. It is seen in the case study that IKEA performs a SWOT analysis that supports their process of building strategy. Moreover, the SWOT analysis of IKEA has also been performed and justified. In the fourth section, SMART objectives and some new marketing mix ideas for IKEA has been demonstrated. In the fifth Section, the concept of marketing model and minimizing the threats for IKEA has been included and demonstrated. Ultimately, the report contains what were......

Words: 2740 - Pages: 11

Ikea Case

...A Case Study on IKEA in 2013: Furniture Retailer to the World Prepared for: Md. Rashedur Rahman Assistant Professor Department of International Business University of Dhaka Prepared by: SL No | Name | ID No | 1. | Ummay Sumayea Kotha | 8015-16036 | 2. | Md. Abu Syed Khan | 8015-16070 | 3. | Md. Naoshad Jaman Chowdhury | 8015-Th16082 | Section: A, Theory and Practice of International Business (EIB- 510) Department of International Business. Date of submission: August 02, 2015 Case Study - IKEA in 2013: Furniture retailer to the world Elevatory Pitch: This case is focused on IKEA, which is now another name of success. Because it started small by a person named Ingvar Kamprad but at first it wasn’t a furniture retailer. He used to sell other products, later he added furniture to his product line. His furniture business boomed because he was the one offering better products and a lower price. During that time furniture used to be expensive in Sweden so his easy on the pocket priced furnitures became a hit. At first it was an order based service later on they opened the first ever self service store of their kind. Their business expended to other countries as well. Things were going right but challenges were present too. Because different countries had different cultures so it becomes tough for them to get along in North American culture. But they managed it by becoming......

Words: 635 - Pages: 3

Ikea Case Study

...Management IKEA Case Study Sharleen Suwaris-SUSND11 Sharleen Suwaris Executive Summary The following is an analysis of the IKEA case study found in the Strategic Management Text book. This analyses the strategies used by IKEA to gain competitive advantage in markets outside its original area. The report begins by providing a background into IKEA. It studies International Business Level Strategy and the three international corporate level strategies. The case study goes into informing its target market and pricing strategy, which is already discussed. This case study further says how different people in different parts of the world thinks about IKEA, how elegant their designs are and how affordable for them to purchase IKEA products. Some of IKEA’s main markets are in three of the fastest growing markets such as Russia, US and China. IKEA store bring out products such as furniture to small product like a scented candle. IKEA has over 1300 suppliers in about 53 countries. They further have 12 full time in- house designers with 80 free lancers and other production workers to identify the correct raw materials and produce products efficiently and cost effectively. Primarily, IKEA produced standardized products however; this international strategy did not work for one of its vital markets that is, US. Therefore, they had to emphasize on taking corrective actions. The report also analyses the entry methods used by IKEA and its sustainability. IKEA Case......

Words: 1187 - Pages: 5

Ikea Case Study

...Ikea Case Study Executive Summary This report gives the main findings and conclusions of a small research process for IKEA in the Czech Republic market. It identifies and explains why the Czech Republic represents a good opportunity and holds minimal risk based on a review of objective and subjective secondary research into the potential of the country as a source of product (specifically, it suggests establishing a joint venture with a local manufacturer by 2018); for furniture marketing (it recommends the opening of a store in Prague by 2020); and as a platform base (which could be achieved through the establishment of a warehouse and distribution centre near Brno by 2025). The aim is to establish the size and structure of the market while the objectives are to find out the number of customers and expected average spend per capita ... The key research questions are ... A specific challenge identified was XXX so one of the questions relates to XXX. The methodology adopted is objective and positivist and uses a deductive approach. The main methods used are a review of internal documents (the assignment case study); and analysis of secondary data including the CIA Factbook and the MarketLine Furniture Industry Report for the Czech Republic. ... The report concludes that the Czech Republic represents an appropriate target country for IKEA over the next decade and recommends further primary and desk research to establish the precise size and nature of the opportunity. The...

Words: 840 - Pages: 4

Ikea Case Study

...In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While such a move would disrupt supply and affect sales, she found the reasons to do so quite compelling. A German TV station had just broadcast an investigative report naming the supplier as one that used child labor in the production of rugs made for IKEA. What frustrated Barner was that, like all other IKEA suppliers, this large, well-regarded company had recently signed an addendum to its supply contract explicitly forbidding the use of child labor on pain of termination. Even more difficult than this short-term decision was the long-term action Barner knew IKEA must take on this issue. On one hand, she was being urged to sign up to an industry-wide response to growing concerns about the use of child labor in the Indian carpet industry. A recently formed partnership of manufacturers, importers, retailers, and Indian nongovernmental organizations (NGOs) was proposing to issue and monitor the use of “Rugmark,” a label to be put on carpets certifying that they were made without child labor. Simultaneously, Barner had been conversing with people at the Swedish Save the Children organization who were urging IKEA to ensure that its response to the situation was “in the best interest of......

Words: 6875 - Pages: 28

Ikea Case Study

...Executive Summary Background IKEA, the world’s largest home furnishings retail chain, was founded in 1943 by a Swedish entrepreneur Ingvar Kamprad. IKEA offers standardized products worldwide that are Scandinavian in design worldwide. The unique idea of this famous brand is to offer the option of assembling products to customers. The design of the furniture is very modern and light as it is made of particleboard. The products are of contemporary design and function with the concept that is based on low price. High quality, convenience, affordability, consistency, functionality and good design are the essence of this world class home furnishing retailer. Challenges IKEA faced many challenges in terms of culture and business practices as well as socio-economic and political conditions in China. The biggest challenges were pricing, copycat producers and cheap labor cost for assembled furniture. Alternatives To make the price more affordable for Chinese consumers IKEA has developed manufacturing units in China and collects raw materials locally. Due to country specific environment IKEA chose franchising in China. Because of cheap labor cost of Chinese assembled furniture IKEA offers reasonable fee-based assembling services. IKEA has built its stores near public transportation lines inside cities since only 20% of customers own cars in Shanghai. Recommendations IKEA needs to find more local suppliers to keep price lower. To understand local culture and purchasing habit,...

Words: 2857 - Pages: 12