Ikea business model

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IKEA Case Study

Question 1
Investigate IKEA 's business model and sources of competitive advantage as depicted in the case. Why do you think it has been so sucsessfull in the fragmentated fuurniture industry? What do you concider to be IKEA 's main weaknesses?

To answer question one I will split the question into three parts. Begining by investigating IKEA 's business model and sources of competitive advantage. Then goin on to adress why it has been so sucsessfull in the fragmented furniture industry. An finally explaining IKEA 's main weaknesses.

IKEA 's business model and sources of competitive advantage
Business model
Being one of the largest furniture companies in the world IKEA must be doing things right. By analising the case study we can see IKEA 's strategies within its business model which have created such a sucsessfull business.
Ikea has a very unique business model. It starts with how they design there furniture products in the factorys to ensure money is saved at the earliest stage with the saving being passed on to the consumer. For example the furniture will be produced with the construction and size in mind so it 's efective for transportation pacaging and production . IKEA understand that the majority of its customers will be price consious but are still expecting a decent standard and stylish looks. They know the challenges its customers face when shoping for furniture and egnolage customers tent to like a showroom to be able to view the item errect befor purchasing. They also like minimal delivery costs, this is why IKEA use flatpack pacaging for all its large items which are ready in store for the customer to take home. IKEA utilises a clever shgowroom design which almost fources the customer to view all IKEA 's different departments. This showcases everything on offer while the customer walks round as a result they can see and potentially pick up other items they had not origanally visited the



References: An Essay on Trade and Transformation, Staffan Burenstam Linder, Stockholm: Almqvist & Wicksell, 1961. Bohman, Helena; Nilsson, Désirée. "Introducing income distribution to the Linder hypothesis". pp. 2–3.. Robert C. Shelburne, A Ratio Test of Trade Intensity and Per-Capita Income Similarity, Weltwirtschaftliches Archiv, Volume 123, Heft 3 (Fall) 1987, pages 474-87. Stewart, Frances (1989), "Recent Theories of International Trade: Some Implications for the South", in Kierzkowski, Henryk, Monopolistic Competition and International Trade, Oxford: Clarendon Press, pp. 84–108, Anna Jonsson 1 and Nicolai J Foss. (2011). International expansion through flexible replication: Learning from the internationalization experience of IKEA. Available: http://www.iei.liu.se/fek/aman-per/pers_arkiv/1.429829/JonssonFoss2011IKEA.pdf. Last accessed December 29th 2013. Fabian Suarez . (2006). International Business Strategy IKEA . Available: http://www.actuarisk.be/files/IkeaSite.pdf. Last accessed 27th December 2013.

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