IKEA Case Study – Alan B. BalesWeek 21. What are IKEA's competitive priorities?
IKEA’s corporate mantra is to have “Low Price with Meaning”. In other words,their desire is to manufacture and present a product that is both functionallysound and inexpensive at the same time. Notice, I did not use the word “cheap”or inexpensively manufactured using sub-standard materials with untested orquestionable processes. They strive to make things less expensive without evermaking customers feel “cheap”. To accomplish this, IKEA has to maintain abalance between design, manufacturing, and distribution.
2. Describe IKEA's process for developing a new product.
The team behind a new product at IKEA consists of designers, productdevelopers, and purchasers of materials who get together to discuss overalldesign, materials and suitable suppliers. Each specialist contributes theirknowledge. For example, a buyer will use their contacts with suppliers all overthe world through the IKEA Trading Services office to determine who can makethis at the best quality for the right price and at the right time. This process is acollaborative effort and takes into account everything from colors to selling priceon the floor of an IKEA store. It is not corporately mandated design; it is design bycommittee if you will.
3. What are additional features of the IKEA concept (beyond their design process)that contribute to creating exceptional value for the customer?
IKEA’s model also creates additional value by working with suppliers to make sure products stack correctly for shipping (more product on a pallet meansmore per container and less per piece to ship which means less per piece theycan charge) thus giving more value for the money. They use suppliers they haverepeatedly done business with for years so both know the expectations, thusgiving the supplier some input on how the product will be