“To create a better everyday life for the many people.”
IKEA Case Study
‘The Democratization of Style’
IKEA Executive Summary
Business model based on: Affordability due to buying power, global design and resulting economies of scale Stylish and diverse products, not localized Past success: Costumers ‘buy in’ to the IKEA philosophy New challenges: Increased presence in traditional markets is continuing to shift IKEA’s image from ‘affordable’ to ‘cheap’ Simultaneously: Fight for share in emerging markets A way forward: Invest more in quality, less in expansion Relax business structure for entry in new markets
‘Affordable and Pleasurable Living’
Strategic Purpose & Core Features Identification
Identity: Furniture not for the Rich but for the Smart Corporate Governance: Family business Ingvard Kampard, founder Series of foundation & trusts Values: The home is very important Good design Fanatical devotion to cost cutting
Between ‘Affordable’ and ‘Cheap’
IKEA’s Past Key Success Factors
Design Contemporary aesthetics One size fits all Inexpensive materials Flat packed Network Worldwide distribution Experiential showroom Stores in high traffic areas Scale Large worldwide production Profitable while offering Value
Customers ‘Buy-In’ to Cost Cutting Measures
The Business Model in Terms of a Value Chain Analysis
Strong bargaining position vis-à-vis suppliers.
Production cost targets in R&D, one-size-fits-all for economies of scale.
OUTBOUND: ‘Flat Packs’ and warehouse style shops minimize logistical and personnel cost.
SERVICE: Reduced to a minimum, DIY for better prices.
The IKEA Business Model in a Midlife Crisis
General environment: PEST analysis • Political: globally distinctive political regulatory • Economics: changes in market conditions • Social: demand for low-cost and ecofriendly products • ...