It was also extremely important to make IKEA international because the Swedish furniture market was very adequate. One of the challenges that IKEA faced was the fact that the average age and the income level in most developed countries was expected to increase while IKEA’s target market segment of young families which have a low to middle income, would be decreasing. However to overcome this issue, IKEA choose to solve this issue by expanding to different categories of furniture depending on the age factor; such as a variety of traditional designs for older people who are financially stable. Also different work based furniture for workers. IKEA also had to think about the different trade rates and the economical
Those benefits consists of, discounts to save money, special events taking place in-store, inside scoops and sneak previews. Diverse portfolio The main business of the firm is designing, manufacturing and selling furniture, but the company also operates restaurants, supermarkets, houses and flats. Everything can be bought As mentioned earlier, what has been eaten in the restaurant can also be bought in the supermarket. Its vision and strong concept The vision of IKEA is “to create a better everyday life for the many people”. Their business idea is “to offer 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”.
Some of these suppliers, in the Swedish Forests around the origin of IKEA, have been working with IKEA since its most punctual days. This empowers them to make the essential speculations and to guarantee the supply of crude materials over a drawn out stretch of time. This long haul supplier affiliation improves made products, additionally put in inside worth to the suppliers. Furthermore, this quality chain adjustment separates IKEA from specific
IKEA has also been always offer unique and differentiated products for that suits the customers’ preferences. This causes the threat of substitution for IKEA to be very low. There is also not much other alternative furniture company that provides the quality that IKEA has. 4. Bargaining power of customers There is moderate customers’ bargaining power in IKEA as the competition is averagely enough for the customers to switch from this company if they are not satisfied with the price that has been offered by IKEA.
With their vision and values as guiding tools, providing direction, they are also actively shaping the "landscape" they are working in (Browaeys & Price, 2015, p. 223). In my opinion IKEA has a transnational/global strategy. IKEA 's strategy is to offer the same product range in most countries. However, they are also offering some products that are adjusted to the needs in a specific region, such as preferences for type of wood, and a few products are produced only for that specific market. I believe that the balance that IKEA has found when it comes to global standardization has contributed to their success (Browaeys & Price, 2015, p. 204, 230,
As the product range diversified, the company used the vertical integration approach to manage its resources, processes and over all supply chain. Meanwhile, in 1990, the company imposed an ideal strategy in purchasing. It transferred its production in Asia, where wages were low, yet the number of suppliers where substantially reduced. As a result, competition intensified among different suppliers that came from various countries. In 1991, IKEA acquired Swedwood, which was a manufacturer that had factories in Europe.
According to UK Customer Insights report on IKEA by Verdict, IKEA’s customers are less than satisfied with both products and services as compared to other customers in UK buying at other stores. IKEA was also accused of putting low waged employee is unsafe working conditions as stated by Szkotak , Associated Press, (2011). Such negative publicity could have an impact on IKEA’s brand reputation and their customer’s loyalty. Rivalry Competition between IKEA and other existing major players in the industry such as, Home Depot, Wal-Mart, Argos and others are pretty intensive in the tight global market of discounted mass produced furniture due to these large retailers having the same similar traits with IKEA such as low cost products, a huge market presence and a well managed supply chain. With such intense competition competitors could very well gain some market share from IKEA through superior products, better service standards and positive publicity.
Communication between IKEA and its materials manufacturers and suppliers. Manufacturing takes place in the secondary sector where the value-added process occurs. To achieve this, IKEA designs its commodities in a manner that the least quantity of resources makes up the best products. Examples include the use of hollow legs in their furniture and the use of filling material made from honeycomb paper for the tabletops interior in the place of solid wood. IKEA retail shops also add value to the manufactured goods in the tertiary sector through the provision of a way of shopping that differs from the usual high street practice.
University of Business and Technology IKEA Case Study Analysis OPM511 By: Sarah Alshimmary PAM164 Nada Alsallum PBM095 To: Dr. Mahmood Ali i. Introduction In 1943 an internationally known home furnishing retailer known as IKEA comes to live and it has grown rapidly since then. Now it is considered to be the world's largest furniture retailer. IKEA's furniture is famous of the flat-pack that is ready to be assembled by the end user. IKEA have a range of around 9,550 products.
Ikea is also a global leader by not having a class structure at his company. During lunch all the employees eat together, this lets each employee feel that they are important. Upper management does not have special dining rooms at this company. The owner does not want anyone to feel they, are better than anyone else is. This prevents workers from turning against each other.