DREAM TEAM

IKEA

Brief introduction

IKEA was the world's largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design

IKEA was the world's largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design

IKEA offered nearly 12,000 items to the home furnishings market worldwide

It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, Middle East and Austral.

Contents

Facts of the caseKey ObjectivesDiagnosis and AnalysisDevelopment and Selection of AlternativesConclusion

Facts of the case

IKEA is a Swedish retailer dominating markets in more than 32 countries.

The IKEA battle plan – keep making its offering less expensive, without making them cheap.

IKEA’s corporate mantra is “Low price with meaning.” The goal is to make things less expensive without ever making customers feel cheap.

At IKEA the process of driving down costs starts the moment a new item is conceived and continues relentlessly throughout its production run.

IKEA has introduced a code of conduct governing working conditions and environmental awareness among suppliers.

Key Objectives

To evaluate IKEA’s competitive priorities;To describe IKEA’s process for developing a

new product;To identify IKEA’s features contributing to

creating exceptional value of customer;And to define important criteria for selecting

a site for an IKEA store.

Diagnosis and Analysis

SWOT Analysis

Strengths (internal) Weaknesses (internal) IKEA is an established

global brand with key demographic customer group.

Dominates 40 countries. Strong distribution network.

260 million customers a year.

Cost-efficient product designs.

Low cost of products that are innovative and functional.

long-term partnerships with its suppliers.

Good business model.

Size and Scale Maintaining product

standards globally. Low level of customer

service.

Opportunities (external) Threats (external) "green" movement Catering to other market

segments. IKEA’s ecommerce site

The regulatory environments across the globe

Competition that’s adopting the model of low-cost flat packed furniture strategy.

Economic concerns

IKEA’s Competitive Priorities

Good value at low cost

Product designs/range

Convenient shopping

IKEA’S process for developing a new product

Pick a price

Choose a manufacturer

Design the Product

Shipping

Sell it

Additional features of IKEA concept (beyond the design

process)

Relationship with suppliersCode of conduct governing work

conditions and environmental awareness

Strong distribution and logisticsIKEA OnlineValue proposition of operational

excellence

What would be important criteria for selecting a site for an IKEA store?

PESTLE Framework

Political Forces ----Stable political healthEconomic Forces ----Availability of suppliers locally. Raw-materials and reliable

access to distribution channels.Social Forces ----Large populationTechnological Forces ----Availability of leading-edge technologyLegal Forces ----Local regulations and laws Environmental Forces ----Policies and campaigns supporting environmental awareness

It’s question time