IKEA & Pro Flowers

Reconfiguring Industry Value Chains to Create competitive

Business Model

IKEA

• A Swedish company that is registered in Netherlands.

• Design and sells self-assembly furniture

• Founded during 1943 by Ingvar Kamprad

• Company is known for eco-friendly simplicity product

• Modern architectural design for various types of furniture and appliance

IKEA

• In 1943 IKEA is mostly a mail-order sales business, five years later is started to sell furniture

• As of Jan. 2014 it operates 349 stores in 43 countries

• IKEA stores are represented with color blue and yellow( Sweden’s national color)

Pro Flowers

• Major “flower” retailer company in the United States

• An E-commerce company

• Started during 1998 by Jared Polis

• Online retailer that ship fresh flowers, but was sued by Florist Worldwide Delivery (FTD)

Question 1

• Do you think that IKEA and Pro Flowers have plans that effectively describe what the firm offer to customers. How could these firm’s models be changed so they would be more appealing?

• In my opinion, both companies describe effectively what they offer to customers through their plan (or model).

• IKEA provides stylish, good value furniture with a very competitive price for customers who do not mind assembling those products by themselves. With a substantial cost savings through the new value chain, IKEA becomes even more unique with playrooms for children and Swedish cuisine restaurants which are offered in its stores.

• ProFlowers is able to offer a wider selection than most florists with a lower price also. In addition, its customers can receive fresher and higher quality flowers

How could these firm’s models be changed so they would be more appealing?

• Both two firm’s models are successful in taking advantage of cost savings which is enable them to add more values to their customers.

• Those values adding to customers help IKEA and ProFlowers to become more appealing compared to other firms.

Question 2

What is IKEA’s core competency? What are its strategic assets? Is there anything about IKEA’s business model that makes what the company is doing hard to replicate?

• IKEA’s core competency is the “outsourcing service”. It gives IKEA several distinct advantages.

• IKEA’s strategic assetsWell design products

New value chain

Good customer service

• IKEA’s business model take the advantage of pioneer. When the model becomes old, it is hard to be successful for those who come later.

Question 3

Supose that you are CEO of Pro Flowers and you just receive an e-mail from Carolyn Anderson, a highly reputable and sought-after rose grower, who is interested in learning more about your company. You have to convey her that your organization has a good story and she should be part of it.

• Pro Flowers was the first company which has developed Unique Business Model in our industry.

• We are successful to improve Quality of Service by offering only fresh and wide range of roses to each home within the country with new business model.

• Only Best Rose Growers are chosen and we hope to cooperate with you because of our benefits

• Our good service with your good products will be Perfect Combination for our customers, and it will be also the Good Business Fit for both sides

• We would like to announce you that most of the Reputable Rose Growers are doing business with us, and we are doing business successfully with High Profit. Moreover, our business will develop faster due to higher demands.

How does ProFlowers business model motivate its customer and partners to participate in business?(Scale 1 to 10)

GrowerImporter

(distributor) Wholesaler Retailer Customer

Grower Customer

The Traditional Flower Industry Value Chain(all, or most, steps completed by different companies)

ProFlower’s Reconfigured Flower Value Chain(ProFlowers e-commerce platform enables the process)

Flowers delivered to customer via FedEx or UPS

• In our customer point of view, this kind of business, quality is very important.

• We can scale their company as 8 or 9 , reasons are because they deliver their product on time and the freshness of the product is still remain.

• Grower may find a hard time to keep up with the demands of the customer or chances of having shortage on flowers.

• The customer may enjoy the less cost for the shipment and less time to wait for the product they have ordered.