IKEA Case Write-Up Q1-Q4
(1) What are IKEA’s competitive priorities?
IKEA’s competitive priorities are to supply quality home furnishings at a low price without making the customer feel cheap. IKEA keeps its offerings less expensive by driving down costs associated with production and shipping by introducing new efficiencies into the process, in other words superb execution of supply chain management.
(2) Describe IKEA’s process for developing a new product.
IKEA’s process for developing a new product includes five steps. (1) Pick a price, (2) choose a manufacture, (3) design the product, (4) ship it, and (5) sell it. IKEA’s low price priority starts at the early stages of developing a new product. Cross-functional teams contribute their knowledge discussing design, materials, and suitable suppliers. IKEA maintains long-term relationships with its suppliers and works in tandem during the design phase to introduce new efficiencies during production that are cost effective. Trust is built and maintained and IKEA ensures that strict adherence to international human labor laws and regulations are followed by all members of its subsidiary. IKEA also claims to be environmentally aware. Knowing a products price point and manufacturer, an internal designer for IKEA submits a design for production. In an effort to pass savings to its customer IKEA “strives to deliver the right number of goods to the right stores at the right time…[making] sure deliveries are efficient.” Part of this process is shipping their products flat. Their products come to store disassembled. Flat packaging maximizes the space inside shipping containers and lowers the cost of shipping significantly. Lastly, in-store displays are important. Lavishly designed model homes guide customers definitively through the store on their way to great purchases.
(3) What are additional features of the IKEA concept (beyond their design process) that contribute to creating exceptional value...
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