Ikea Global Strategy Study

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IKEA
“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

INBOUND:

OPERATIONS:

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
External analysis
General environment: PEST analysis •  Political: globally distinctive political regulatory •  Economics: changes in market conditions •  Social: demand for low-cost and ecofriendly products • ...
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