Ikea Case

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1. What are the core competencies and end products of IKEA? How are they linked with each other? The most important core competencies of IKEA is their ability to design furniture and interior products with a strong focus on a nice and appealing design combined with the lowest integral costs. IKEA uses its open warehouse and self-service approach as a USP (unique selling point), while at the same time it reduces space requirements and thus costs. Their unique level of core competencies enables IKEA to use their formula Europe – and even worldwide. IKEA developed the recombination ability via learning by doing. If necessary, IKEA redesigns its products to local habits and demands and is also able to adapt its routines. For example, for the Chinese market, they even offered assembly services, because the labor costs are that low over there. The IKEA concept of form, function and price is unique. Especially their consequent attitude that all their products in all aspect meet their requirements. For example, if it is not possible to fit a design product to pack it efficiently in a box, it has to be redesigned, or canceled. 2. How did IKEA diversify?

IKEA did diversify both product wise as well as expanding globally. The company decided to focus on special target groups, for example children and Young families. IKEA diversified also by introducing a new line of kitchen appliances. Their global difersification was made posiible by Ikea’s strategy of trusting the intuition of its (local) staff (decentralization with the ability to even adapt product to local requirements), combined with their extensive internal training programs. They even gave up on central, internal budgeting. The locals only had to meet a fixed ratio of costs to turnover. A key factor for Ikea’s international success is also the founding of Inter IKEA Systems BV. They introduced a personal interest from the local managements by making them franchisees. Doing this IKEA initiate a strong...
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