...segments: IKEA positions itself as a leading international furniture retailer that provides economical, well-designed and functional furniture. As IKEA’s biggest competitive advantage is the low price, IKEA tries all its best to lower the fixed cost and the variable cost, like building supplier relationships in developing countries to reduce labor and production cost; flat-packaging to reduce the freight fee; use materials in a cost-efficient way and in-house design also reduce the resign cost for IKEA. IKEA also differentiate itself with appealing shopping experience, self-service, as well as developing facilities like childcare, restaurants, and lounge rooms. The Scandinavian design and style is also a niche for IKEA. The target segments of IKEA is price-conscious people, who have tight budgets, like college students, younger adults and new families, who want to make the first furniture purchase, then the IKEA may be a very good choice for them due to its price advantage. Another target segment for IKEA is early adopters. For the modern design and unique shopping environment, people who like innovative things will likely to give it a try to IKEA’s furniture. Benefits & drawbacks to IKEA: The benefit that IKEA gains from its strategy: 1. Its price advantage is very obvious compared with other furniture retailers, which can attract large amount of price-conscious customers. 2. The hip Swedish design and appealing shopping experience is a niche for IKEA. 3. All the IKEA stores...
Words: 629 - Pages: 3
...10 Keys to IKEA's Low Prices Just how does IKEA manage to offer such consistently low prices? Many people think that it's because the furniture is made cheaply, which isn't exactly true. Read on to find out about some of IKEA's less obvious cost-saving strategies. 1 Recycling The Recovery Department (of which, the AS-IS room is part) is responsible for sorting and recycling all recyclable materials, including packaging broken down in-store as well as materials collected from customers at recycling donation bins where available. 2 AS-IS Products not suitable for sale at the full retail price (floor samples, returns, items damaged in shipment, etc.) are placed for sale in AS-IS, generating revenues that might otherwise be lost to waste. The Recovery department also recoups parts from damaged items, making spares available to customers who need them. 3 Waste Reduction IKEA's designers and engineers strive to reduce the amount of material used and wasted in production. Additionally, many waste products are then used to make new products, further reducing overall costs both to the pocketbook as well as to the environment. 4 Automatic selling Despite the showrooms showcasing IKEA furniture in real living arrangements (typically located upstairs), IKEA is a warehouse store designed to maximize customer self-sufficiency with minimal reliance on staff assistance. Cost savings stem from reduced wages, training costs and lower design, maintenance and outfitting...
Words: 629 - Pages: 3
...International Marketing Review Emerald Article: Strategic consequences of retail acquisition: IKEA and Habitat Gary Warnaby Article information: To cite this document: Gary Warnaby, (1999),"Strategic consequences of retail acquisition: IKEA and Habitat", International Marketing Review, Vol. 16 Iss: 4 pp. 406 - 417 Permanent link to this document: http://dx.doi.org/10.1108/02651339910282027 Downloaded on: 25-01-2013 References: This document contains references to 17 other documents Citations: This document has been cited by 3 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 5839 times since 2005. * Users who downloaded this Article also downloaded: * Gary Warnaby, (1999),"Strategic consequences of retail acquisition: IKEA and Habitat", International Marketing Review, Vol. 16 Iss: 4 pp. 406 - 417 http://dx.doi.org/10.1108/02651339910282027 Gary Warnaby, (1999),"Strategic consequences of retail acquisition: IKEA and Habitat", International Marketing Review, Vol. 16 Iss: 4 pp. 406 - 417 http://dx.doi.org/10.1108/02651339910282027 Gary Warnaby, (1999),"Strategic consequences of retail acquisition: IKEA and Habitat", International Marketing Review, Vol. 16 Iss: 4 pp. 406 - 417 http://dx.doi.org/10.1108/02651339910282027 Access to this document was granted through an Emerald subscription provided by LIMKOKWING UNIVERSITY OF CREATIVE TECHNOL For Authors: If you would like to write for this, or any other Emerald publication...
Words: 5911 - Pages: 24
...The reason behind choosing the IKEA is because IKEA is one of the world’s most successful retailers. IKEA is a global furniture brand inspired by the egalitarian society of its Swedish heritage and appears to the public to be forever Swedish. It expands its retail stores all over the world including North American, European Middle East and Asian countries but also spreads a kind of its own a highly strong business culture and values with a strong Swedish image to other countries through the establishment of business there. History: IKEA was founded in 1943 in Sweden by Ingvar Kamprad. Kamprad was born in 1926 as the son of a farmer in Småland, a region in southern Sweden. At the age of five Ingvar Kamprad starts selling matches to his nearby neighbors and by the time he is seven, he expands to selling flower seeds, greeting cards, Christmas tree decorations, pencils and ball-point pens. In 1943, at the age of 17, Kamprad became an entrepreneur and created a commercial company called "IKEA." The word IKEA was an acronym of his name and “Ingvar Kamprad” and the address, the name of his farm and village: “Elmtaryd, Agunnaryd”. Company initially sold fish, vegetable seeds, and magazines to customers in his region. Then in 1950 IKEA added furniture and home furnishings to the product line. IKEA entered new markets around the globe in the 1980s. IKEA expands dramatically into new markets such as USA, Italy, France and the UK. Operating Environment: Ikea is the world's largest furniture...
Words: 2452 - Pages: 10
...5) Environment 6) Local communities All of these factors have an impact on the workplace. Products/ Production: This is a print screen from the Ikea website and this shows that Ikea is very caring about the environment and they try to make sure that even at low prices that the quality of the product is still very good and they ensure they’re customers that products are safe, have good quality and are still designed to be efficient even if they are at low prices. This on they’re website ensures the customers because it is against the law to sell goods or services with the wrong description of the product and the customers will get they’re money back if the product isn’t what the description told them it would be. In my personal opinion I would trust Ikea’s ensurence of they’re products and the way they are made because my personal experience with Ikea is good every product my parents or my family has bought from Ikea lives up to it’s expectation and this proves to they’re customers that even with low prices their products have good quality, the materials used efficiently and that they are caring for the environment. If a customer’s still not sure weather they should buy an Ikea product then they can check reviews from other customers and based on their experience weather good or bad then they can decide weather to buy Ikea products or not. Source: http://www.ikea.com/ms/en_GB/about_ikea/our_responsibility/products_and_materials/index.html Suppliers: This is a print screen...
Words: 2700 - Pages: 11
...previousnext 36. previousnext 37. previousnext 38. previousnext 39. previousnext 40. previous Post a comment 1. DHL DHL provides international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. The company’s name DHL is derived from the last names of the then three budding entrepreneurs, Adrian Dalsey, Larry Hillblom and Robert Lynn who founded the company. (Photo: Getty Images) 2. IBM IBM’s full company name is International Business Machines Corporation. It is a multinational technology and consulting corporation. The company was founded in 1911 and headquartered in the United States. (Photo: Reuters Pictures) 3. TLC The specialty cable channel TLC is the initials for The Learning Channel. The company also operates the Discovery Channel, Animal Planet and The Science Channel, as well as other learning-themed networks. (Photo: Wikimedia Commons) 4. FIAT The full company name of FIAT is Fabbrica Italiana Automobili Torino meaning Italian Automobile Factory of Turin. This company is an Italian automobile manufacturer which was founded in 1899. \...
Words: 1801 - Pages: 8
...1. What factors account for the success of IKEA? a. There are three main factors that account for its continual success in the furniture retailing industry: Scandinavian designs, cost efficiency, and product strategy i. Scandinavian heritage is showcased beautifully through IKEA’s simple yet unique designs. In the early years, IKEA’s designs were functional at best, ugly at worst (Moon, 2004). Now, due to a deliberate focus on adapting a more design aesthetic (Moon, 2004), consumers began appreciating IKEA’s furniture for the appeal instead of its functionality. Ingvar Kamprad’s Scandinavian culture is something that cannot be easily copied, as one must be from Scandinavia to fully embrace its aesthetic (Moon, 2004). Moreover, Ingvar was able to create relationships with local manufacturers in the forests close to his Scandinavian home (Moon, 2004). It was quite possible for IKEA’s success story to fall apart if not for the close proximity of those manufacturers in Scandinavia. Also, IKEA’s “Low price with meaning” slogan accelerated consumers to believe these designs were not cheaply made (Moon, 2004). And as Ingvar said, “Scandinavian design is what makes [IKEA] unique,” (Moon, 2004). ii. The most important factor in IKEA’s cost efficiency plan is its flat packaging. In 1956, IKEA began testing flat packaging for tables and legs (Moon, 2004). This obvious idea created more storage space, more items able to be shipped, reduced labor costs, and less...
Words: 2174 - Pages: 9
...Success of IKEA Success of IKEA The secret of success of IKEA is the IKEA-feeling, the culture. The company has Swedish origins, and it's no accident that the IKEA logo is blue and yellow. The IKEA concept, like its founder, was born in Småland. The people are famous for working hard, living on slender means and using their heads to make the best possible use of the limited resources they have. Like the founder Ingvar Kamprad said „wasting resources is a mortal sin”. “This characterizes the whole company itself. This way of doing things is at the heart of the IKEA approach to keeping prices low. But quality is not compromised for the sake of cost. Swedenhas an international reputation for safety and quality you can rely on, and IKEA retailers take pride in offering the right quality in all situations”. The IKEA product range is wide in several ways; it comprises 9,500 products that are largely the same in all IKEA stores. First, it's wide in function: you'll find everything you need to furnish your home, from plants and living-room furnishings to toys and whole kitchens. Second it's wide in style. The romantic at heart will find just as much as the minimalist. And finally, by being coordinated, the range is wide in function and style at the same time, and at all times. IKEA offers not just furniture, but smaller fixtures for rooms as well, that can be bought at the same time as furniture. Customers can spend a lot of time in the stores, even if they don’t want to buy any furniture...
Words: 1313 - Pages: 6
...Stirling FK9 4LA, Scotland, UK Department of Business Administration, Lund University, P.O. Box 7080, SE-220 07 Lund, Sweden c Department of Communication Studies, Lund University, Campus Helsingborg, PO Box 882, SE-251 08 Helsingborg, Sweden b a r t i c l e in fo Available online 29 September 2010 Keywords: IKEA Retail internationalisation Retail marketing mix Standardisation Sweden the UK China abstract IKEA is often cited as an example of a ‘global’ retailer which pursues a similar ‘standardized’ approach in every market. This paper systematically assesses the degree of standardisation (and adaptation) of four commonly identified retail marketing mix activities – merchandise, location and store format, the selling and service environment, and market communication – within three countries. These countries – Sweden, the UK and China – represent different cultural settings and are markets in which IKEA has been operating for different lengths of time. The data upon which the comparison is based was generated from personal interviews, in-country consumer research, company documentation and third party commentaries. The conclusions drawn suggest that whilst IKEA operates a standardized concept, degrees of adaptation can be observed in customer facing elements, and in the supporting ‘back office’ processes which support these elements. These adaptations arise from differences in consumer cultures and the length of...
Words: 12051 - Pages: 49
...IKEA Christopher A. Bartlett and Ashish Nanda With a 1988 turnover of 14.5 billion Swedish kronor (U.S. $1 SKr6 in 1988) and 75 outlets in 19 countries; IKEA had become the world's largest home furnishings retailer. As the company approached the 1990s, however, its managers faced a number of major challenges. Changes in demographics were causing some to question IKEA's historical product line policy. Others wondered if the company had not bitten off too much by attempting major new market entries simultaneously in two European countries (United Kingdom and Italy), the United States, and several Eastern bloc countries. Finally, there was widespread concern about the future of the company without its founder, strategic architect, and cultural guru, Ingvar Kamprad. IKEA BACKGROUND AND HISTORY In 1989, furniture retailing worldwide was a fragmented industry in which small manufacturers and distributors catered to the demands of their local markets. Consumer preferences varied by region, and there were few retailers whose operations extended beyond a single country. IKEA, however, had repeatedly bucked market trends and industry norms. Over three and a half decades, it had built a highly profitable worldwide network of furniture stores (see Exhibit 1). COMPANY ORIGINS IKEA is an acronym for the initials of the founder, Ingvar Kamprad, his farm Elmtaryd, and his county, Agunnaryd, in Smäland, South Sweden. In 1943, at the age of 17, Kamprad began his...
Words: 3535 - Pages: 15
...OPERATIONS MANAGEMENT GROUP PROJECT Report on the Operations Management strategy of Xuan Hoa Furniture and IKEA Prepared for Prof. Noel By - Group 7 - Lê Quang Anh Đỗ Thị Hà Anh Vũ Kim Phượng Nguyễn Thị Mỹ Linh Nguyễn Thị Thùy Linh May 22, 2014 EXECUTIVE SUMMARY Operational management is line management of organizations that highly affect the company’s performance. It is a business function that organizes, coordinate and control the resources needed to produce a good, operational management is a business process to create highest level of efficiency and value add. Operations management is a dynamic field and presents exciting new issues and challenges for operations managers. This is also a very important coursework for everyone of us who want to become a successful leader in the future. For that reason, after completing a 3-week Operations Management course, we – Group 7 would like to present a report about our findings on the comparison of the operations management strategy between 2 companies on the field of furniture manufacturing and retailer: Xuan Hoa Furniture and IKEA. Our report is divided into 9 main parts, each one represents a strategic Operations Management decision. And every main part will be broken into 2 part: one from Xuan Hoa Furniture and one from IKEA. 1. General Introduction 2. Operations Strategy 3. Product Design 4. Managing Quality 5. Process Strategy 6. Location Strategy 7. Human Resources and Job...
Words: 5538 - Pages: 23
...1. What factors account for the success of IKEA? There are several factors that can be accounted to IKEA’s success, however there is one factor that can be considered as the key factor: - The low cost approach which is demonstrated by the following: o IKEA corporate culture: even after the extreme success and growth that the company has achieved, its corporate culture of cost cutting sensibility remains the same. Employees and Managers are encouraged and reminded to cut cost by reducing unnecessary expenses. o IKEA designs it own low priced furniture which allow them to cut the middle man by removing the suppliers and in turn allow them to reduce cost which were then passed to their customers. o IKEA stores are strictly self-service which reduces the cost of having to hire additional personnel. o IKEA furniture comes unassembled and in flat packaging. The flat package not only allows customer to transport the products easier to their home, but also allows IKEA to ship more items in bulk and cargo as well as reducing the storage space required for the items. Also, labor costs are reduced as an assembly personnel is not longer necessary and cost related to transportation damages are less frequent due to the flat packaging. o IKEA’s corporate slogan, “Low price with meaning,” shows their commitment to offer attractive and cleverly designed products while maintaining their low cost. 2. What do you think of the company’s product strategy and product range? Do you agree...
Words: 1821 - Pages: 8
...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...
Words: 6420 - Pages: 26
...Background IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds, chairs, desks, appliances and home accessories. The company is the world's largest furniture retailer1. Founded in Sweden in 1943 by Ingvar Kamprad, who later became one of the richest people in the world, 2 The Company is known for its modern architectural designs on various types of appliance and furniture, often associated with a simplified eco-friendly interior design3. In addition, the firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an average of two to three percent over the decade to 2010, while continuing its global expansion.4 As of October 2011, IKEA has 332 stores in 38 countries. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009.5 On February 17, 2011, IKEA announced its plans for a wind farm in Dalarna County, Sweden, furthering the furniture giant's goal of running on 100 percent renewable energy.6 The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470 million visitors to the IKEA websites in the year from September 2007 to September 20087. IKEA is the world's third-largest consumer of wood, behind The Home Depot and Lowe's.8 Things were going so well for the company, that in 1973, the company's German executives...
Words: 1054 - Pages: 5
...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 Study ...
Words: 1187 - Pages: 5
