...Operations Management:IKEA IKEA’s BUSINESS IDEA (www.ikea.com): “We shall 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." Introduction At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the production process which not only leads to the need for complex and flexible processes but also entails high unit costs. Third, variation in demand will however be low, or at the least predicable (holiday periods for example) so advanced planning is possible which eliminates the need to set resources aside as a “capacity cushion” for unexpected demand. Lastly, IKEA – again as most retailers – have high process visibility, or in other words display a high degree of direct customer experience, which underlines the importance of dedicating sufficient attention to the shopping experience in all its facets. In what follows, and in line with the questions for this TMS, the implications of the five performance objectives to IKEA will be examined...
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...pp.86) All operation managers are designers of the products and operation management is an activity that manage resource which is devoted for production and delivery of products and services. Additionally (Slack et al, 2008) lecture notes of I G Perera. ‘It is about the way in which organisations produce goods and services.’ The below assignment will show how IKEA’ operations management has made IKEA to one of the most successful furniture retailer in the world. The assignment is divided into three parts. The first part will analyze the elements of IKEA and operation management. The second part will identify the main V’s used by IKEA and design process. The third part will identify how IKEA has met customer needs and will explain how the business objectives of IKEA is met. At the end, recommendations for IKEA will be provided and a conclusion is drawn. Every organization has a part for the operations functions as all organization produce products or services. Research has noted that most important element in IKEA furniture’s is that they are self-assembled. A view of the IKEA furniture is outlined in Why You Love That IKEA Table, Even If It’s Crooked, by Shankar Vedantan ( February 06, 2013) Most humans would want to say that I made it, it is my products, that is what IKEA has done. Further the furniture’s are made out of timber, in planet friendly manner, which would result in going to earth after the end of the life cycle in operations management. Operations strategy ...
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...[pic] Operation Management Assignment Task 1 4 Vs of IKEA FURNITURE Name Saqib Ali Enrolment ID 30113460 Submitted to Dr Maria Zenaida Mullin Submission date 14 Aug, 2015 IKEA FURNITURE OUTLETS Executive summary Brief summary findings It’s difficult to manage furniture store like IKEA because lot of employees are required to run the operations smoothly and it’s a big problem to manage bigger workforce, so that’s why it’s one of the biggest issue for the IKEA furniture to handle the big workforce. IKEA furniture retail stores having very big and complicated store structure, which is also one of main problem to organize, in any worst case like fire into the store it’s difficult to move everyone out of the retail store. And big furniture Retail stores like IKEA also having a lot of products like chairs, beds, sofas etc. So in case, sales of the products gone slow all of the product gone dusty and its difficult to maintain all furniture clean and in good condition. (Furniture World 2012). Conclusion After analysing all the operation of the IKEA furniture, I am able to find out IKEA furniture emphasis a lot on efficiency and effectiveness of its operation management. The company has implemented its operations management strategy in all of its business process and operations to maintain low cost model. IKEA furniture’s is one of the best examples of the corporations who concentrate high effective operation management. ...
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...2 Task 1: Nature and the Importance of Operation Management 2 Task 2: The Link between Operation Management and Strategic Planning 4 Task 3: Organizing a Typical Production Process 6 Task 4: Application of Relevant Technique to the Production of an Operational Plan for an Organization 7 Conclusion: 9 References: 10 Introduction Operation management is a part of overall function of a business organization. It means planning, organizing, staffing, leading and controlling the resources of a company those are used to make goods or services of that particular organization. So it can also be said as a part of management function. Operation management is important for any kinds of company including for- profit, not-for-profit, social, commercial etc. IT performs the prime managerial activities of any organization. Weather the organization is service oriented or profit oriented to achieve goals it needs to manage its resources like human, technological, informational etc. organizational management makes the way for a better combination of these resources. In this assignment the nature and importance of operation management will be described. The importance of organization management for an organization, its operation in a selected organization and evaluation of operational management of a selected organization by using a process model also will be described. There is a link between operation management and strategic management it will also be explained. The importance...
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...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...
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...MAN3503-Strategic 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...
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...Executive Summary IKEA is the world's largest furniture retailer and the world's third-largest consumer of wood, behind The Home Depot and Lowe's. The company is known for its modern architectural designs on various types of appliances and furniture, often associated with a simplified eco-friendly interior design. They are owned and operated by a complicated array of not-for-profit and for-profit corporations. The corporate structure is divided into two main parts: operations and franchising. Older IKEA stores are usually designed in a one-way layout, designed to encourage the customer to see the store in its entirety as opposed to a traditional retail store. IKEA has suppliers in 50 countries, roughly ⅔ of purchasing is from Europe with about ⅓ from Asia but for most of its products, but the final assembly is performed by the end-user. They also have 28 distribution centers and 11 customer distribution centers in 16 countries using flat packs, transporting goods where possible by rail and sea, and utilizing fuel-saving techniques that allow them to be cost-effective and environmentally friendly. Their consumers are often the means of out-bound logistics, responsible for picking up and transporting the products. There's no room for wasted space in product packaging. Logistics roles exist at every stage in the supply chain at IKEA, from the moment a product leaves the manufacturer to the moment it is in the hands of the customer. The in-store logistics manager uses a proprietary...
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...Nowadays customers more concern about how long their ordered product reach to them rather than worrying how the company will deliver the products. As a consequence, time can be used as an indicator in distribution logistic. This research is conducted to explain the consequences of distribution logistic and the way IKEA will gain competitive advantage by utilizing it. We will identify the key elements in distribution logistics and find the competitive advantages of IKEA through analyzing the case study of IKEA and they are: speed, dependability and last but not least is flexibility. Keyword: IKEA, Distribution logistic, Competitive advantage. INTRODUCTION 1.1 BACKGROUND Logistics management is the governance of supply chain functions. Logistics management is important not solely to producing and assembly industries, that are goods-oriented, however conjointly to selling, transport and alternative distribution or service- oriented industries. Daskin (1985) defined logistics as “the design and operation of the physical, managerial and informational systems needed to allow goods to overcome time and space”. Another definition promulgated by the Council of Logistics Management Ballou (1992) is: the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements Moreover,...
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...MAN3503-Strategic 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...
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...structure IKEA Sweden: CEO CEO Human resources Human resources Sales management Sales management Production management Production management R&D Management R&D Management Finance management Finance management Exhibit 1: Sweden. Org. Structure Organizational structure of IKEA Sweden is function structure, functions are carried out in a similar way, some functions such as such as research and development are centralised in Sweden. Other functions such as human resources, finance and store construction also span the whole company regardless of organisational boundaries. Other support functions including, Information Technology, Communication, and IKEA Indirect Materials and Service also provide service to IKEA stores globally. From which, IKEA can maintain centralized control over function activities and at the same time take advantage of low cost and enhanced quality from international suppliers. On top of that, control over strategic direction is improved and functional lay-offs are minimized, in order to ensure efficiency in the logistics process, the organization has integrated purchasing and distribution process under one umbrella function. In addition, IKEA was also applied flat organization structure, the system of IKEA is not hierarchy that they only have three levels of responsibility between the manager and co-workers in each store their own. CEO CEO IKEA America: Corporate Management Corporate Management Distribution ...
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...IKEA: Ecommerce Expansion/ IT Capacity Management Information System Initiative LASA 1 Organizational Structure IKEA currently holds the position as the world’s largest furniture retail chain, with 332 locations, in 32 countries worldwide. IKEA is operated and owned by an array of no-for-profit corporations. The Organizational Structure is divided into two main entities: Franchising and operations. Many of IKEA’s operations, including the manufacturing and design of products, the managerial operations, and the supply-chain processes, are overseen by INGHKA Holding, which is private, for-profit Dutch Corporation. INGHKA Holding currently runs 235 of the IKEA stores, the remaining are operated and ran by franchises that are outside of INGHKA Holding. IKEA has differentiate themselves from their competitors, by satisfying the needs and wants of their consumers, with upholding a value proposition that is center on providing, high-quality products (furniture), at affordable prices. IKEA’s value proposition differentiated them from their competitors, secured competitive advantage and positioned themselves as the leader in furniture retailer, on a global level, by their value-based services, and marketing mix that emphasizes on areas such as: Location, Merchandise, Store Format, Market Communications, and Service and Selling Environment, which produced a remarkable “brand image”; “The essential role of brands is to differentiate a product or service from others in satisfying a...
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...COMPANY HISTORY IKEA was founded in 1943 by Ingvar Kamprad. Its first store was opened in 1958 in Almhult, Sweden and its flagship store opened in Stockholm in 1965. By 1965, IKEA was a well loved household name in the home of many Swedes. The company’s corporate slogan was “‘Low price with meaning’” (Moon, 2008, p. 24). Its main objective was to challenge the status quo by producing a good product at a low price with the development of innovative and cost-efficient methods. Beginning in 1969, IKEA began to expand its business into additional foreign markets starting with Denmark. IKEA continued to provide its consumers with quality products by utilizing “high-quality materials on the furniture surfaces that were visible and …lower-quality materials on surfaces that were low stress and less visible to the consumer” (Moon, 2008, p. 23). This idea was well received by its consumers and helped IKEA maintain a competitive advantage within the furniture industry. By 1984, IKEA had expanded into 16 different countries with over 167 stores (IKEA Timeline, 1999-2008). IKEA made its debut appearance onto U.S. soil in 1985 with its first store in Philadelphia, PA. From 1997 to 2001, IKEA’s revenue had doubled in the United States from $600 million to $1.27 billion. By 2002, the United States was IKEA’s third largest market and housed 14 of IKEA’s stores (Moon, 2008, p. 27). IKEA’s goal is to have 50 stores in operation in the United States by 2013. SWOT ANALYSIS Strengths...
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...Date of Submission Systems and Operations Management. 27/01/2015 Plagiarism is presenting somebody else’s work as your own. It includes: copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework from another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the procedures set down by the College. Please see your student handbook for further details of what is / isn’t plagiarism. By submitting this form and signing below, I declare that: I am the author of this assignment and that any assistance I received in its preparation is fully disclosed and acknowledged in this assignment I also certify that this assignment was prepared by me specifically for this course I certify that I have taken all reasonable precautions to make sure that my work has not been copied by other students I confirm that I have understood the College’s regulations on plagiarism I confirm that research resources are fully acknowledged Signature: Mounir TIZI Date: 26/01/2015 1 To be corrected by: Mr Deji Sotunde. By: Mr Mounir TIZI. 2 Abstract This paper focuses on highlighting some characteristics of the international home furnishing company, IKEA. Also, a discussion on the current operations of the company was carried out...
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...IKEA IN CHINA INTRODUCTION TO IKEA HISTORICAL CHAIN OF IKEA BRIEF INTRODUCTION OF IKEA IN CHINA IKEA entered China in 1998 through a joint venture and started its first in Shanghai. This was followed a store in Beijing in 1999. Since 1980s, several economic trade and investment reforms have enabled the growth of furniture industry in China by 2004, Chinese furniture production was $24 billon and its exports were $7 billion. CONCEPT: SIMPLICITY IS BEAUTY. YI JIA-COMFORTABLE HOME Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Market: emerging market; small to high size market; customer quality is low but shows an increasing trend Competition: intensity of rivalry is strong; facing some entry barriers; bargaining power is high; a longterm profitable business Country market & industry opportunities Resources: raw materials from China Incentives: declining of the duty rate Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. Political The reform of China since 1980?s Entered through a joint venture In 2005, first wholly owned store in Guangzhou.(China entered WTO in 2001) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. 4. 5. Economical Emerging market Basic need updated to sophisticated wants New market space for newcomers Cheap labour cost Wood industry (top supplier) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Social 1. Updating of the basic needs(urbanisation) 2. Large...
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...IKEA- Case Study Analysis Short Summary : IKEA was founded by Ingvar Kamprad who was a resident of Sweden. He had started doing his business in 1943 at the age of 17. He opened a start up of his own of selling furniture. He had to face heavy resistance initially when he had tried to sell his furniture due to a price war with their main competitors. Finally IKEA made the decision to produce its own furniture due to competitors trying to force suppliers to boycott IKEA products. They also contacted independent makers and sources in Poland to help them out. And their products gained tremendous response. By 1961 , its turnover went over 40 million US $.Slowly yet steadily it expanded . Its features and concepts such as Self Service, Low charges, Cash and Carry added new dimensions to IKEA. By virtue of its impeccable marketing ,planning and other strategic steps, IKEA became world leader in production and export of Swedish furniture. Employees had been given due freedom and bureaucracy was discouraged. In due course of time, it became an international brand with its off shore operations in USA, China, Canada etc. In a nutshell, IKEA followed its basic idea of “Retail in Detail” to provide customer satisfaction and hence it became one of the best companies in the world. Strategy of IKEA • Self Assembly features cuts operational and transportation costs • It concentrated on individual marketing rather than mass marketing • It focussed on diversified business and gave varied...
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