Assignment: Ikea
The Swedish retailer dominates markets in 32 countries, and now it's poised to conquer North America. Its battle plan: Keep making its offerings less expensive, without making them cheap.
Above all else, one factor accounts for IKEA's success: good quality at a low price. IKEA sells household items that are cheap but not cheapo, at prices that typically run 30 to 50 percent below the competition's. While the price of other companies' products tends to rise over time, IKEA says it has reduced its retail prices by a total of about 20 percent during the past four years. At IKEA the process of driving down costs starts the moment a new item is conceived and continues relentlessly throughout its production run. The price of a basic Pöang chair, for example, has fallen from $149 in 2000 to $99 in 2001 to $79 today. IKEA expects the most recent price cut to increase Pöang sales by 30 to 50 percent.
IKEA's corporate mantra is "Low price with meaning." The goal is to make things less expensive without ever making customers feel cheap. Striking that balance demands a special kind of design, manufacturing, and distribution expertise. But IKEA pulls it off in its own distinctive way: tastefully, methodically, even cheerfully, and yet somehow differently than any other company anywhere. Here's a step-by-step guide to how IKEA designs, builds, and distributes the items that the entire world wants to buy.
Questions:
1. What are IKEA's competitive priorities? Do these priorities align well with their supply chain and their sustainable furniture initiatives? Discuss and support your argument.
2. Describe IKEA's process for designing and developing a new product. What manufacturing processis best suited for their sustainable furniture? Of the four types of organizations we discussed and given the state of consumers which type of organization should IKEA seek to emulate? Or does their current model work best? Explain your decision.
3. What are additional features of the IKEA concept (beyond its design process) that contribute to creating exceptional value for the customer that IKEA can leverage for their sustainable furniture?Of course, you can't be a master of everything. To help them continue their sustainable furniture initiative should IKEA hire more LCA Certified professionals, contract out to an LCA Certified Organization or purchase a LCA Certified organization. Explain your thinking and potential costs that need to be taken into consideration regarding your decision.
4. IKEA has decided they want to open retail stores to better showcase their sustainable furniture. What would be important criteria for selecting a site for an IKEA sustainable furniture retail store?Consider their supply chain. Make sure you find supporting evidence to support your decision.
Attachment:- IKEA-Case-Study.rar