A Case Study Of IKEA And Walmart

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

With further global expansion, in order to maintain profitability it was crucial for IKEA to establish the main potential customer group, who would not only appreciate the product concept but will be able to afford it and recognise it as being a "good-value”. The IKEA concept proved to be successful in the developed countries and free trading markets, but the same acceptance can’t be anticipated in the countries with large variations in exchange rates, high inflation and/or high import tax and other restrictions, e.g. bureaucratic obstacles in Russia and China.

IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.

Market trends in the retail market are not difficult to track. “Any major initiative Wal-Mart undertakes has enormous supply chain implications worldwide” (ThomasNet News, 2010). The analysis for this paper is to look at the approach of Wal-Mart in a very competitive industry and examine how Wal-Mart is so successful. Some of the areas that will be examined are the Market Structure, the impact of new companies entering the market, prices, productivity, and cost structure, price elasticity of demand, competitors,

A large multinational company such as Walmart experiences different opportunities and challenges in the countries in which it does business. Walmart being the largest retailer in the world, must adapt to varying business environments. Canada’s competitiveness relative to Walmart’s expansion is viewed through Porter’s diamond framework.

What factor is the biggest reason for IKEA 's growth and popularity: product value, service value, or branded image? Discuss the reasons for your answers.

Being one of the leading Companies in Furniture, IKEA offers an extensive variety of decently composed, useful home outfitting products at costs that are reasonable to individuals who are attracted to their Swedish design. This is the real trick which led to IKEA’s success, advancement in product design development, targeting proper designers and suppliers to how they offer their products in IKEA stores. Over the past six decades, IKEA went from the cozy forested areas of southern Sweden to being a one of the largest competitors in the retail industry in over 40 countries around the globe. The story of IKEA began in 1926 when organizer Ingvar Kamprad is conceived in Småland in southern Sweden. He is raised on 'Elmtaryd' where he began his entrepreneur skills by selling matchsticks as a source of income where he discovered bulk purchases at discounted rates and learnt how to expand his inventory which in turn led to IKEA. IKEA expands their markets, for example, Japan and Russia. Everything from the

entered a recession. The sales of Macy’s are decreased. Also, in 2011, the price of gasoline and cotton were increased. This increased the cost of Macy’s. So the profit and market share of Macy’s reduced. As the department stores industry was attracting fewer and fewer consumers, Macy’s entered into the declining industry life cycle model. The recession and the declining industry life cycle model are both negatively affect the success of Macy’s.

Spatial and place concerns are the most detrimental issues of modern day marketing approach. There has been an increased emphasis on sensory marketing as a new addition to the branding literature (Hoyer). Companies and brands are realising the importance of involving the customer in non-product characteristics of their sale. The retailer is constantly interplaying with various places through different resources including business units, facilities, inventory, and the product or service itself (Heizer). There are many factors that are responsible in conjecture for specific purchase behaviour of a customer. These factors include space, layouts, lighting, furnishing, music, floor, décor, scents and aromas, aisle positioning, and many more. These factors together make up a retail environment which is essentially influential in the sales of a company (Nath).

Strengths of Wal-Mart include their ability to control operating costs, immediate restocking of shelves, and everyday low prices that they pass on to the consumer. Weakness of Wal-Mart includes the perception of crushing “mom and pop” stores in communities they enter and a lack of workers’ rights. These weakness are minor compared to their distinct advantages concerning cost, and are vigorously defended against. Wal-Mart’s bargaining power with suppliers is immeasurable. Whereas traditionally, retailers like Wal-Mart would make requests and wait for orders from suppliers, due to the sheer size and reach of Wal-Mart, they dictate to suppliers the terms, and often have increased clout concerning prices of units they wish to carry. Wal-Mart can make or break suppliers due to the reach they have with the American consumer. It is estimated that everyday one-third of Americans shop at Wal-Mart (Zimmerman 2008). Thanks in part to their dominance in the industry and

I used online resources, academic journals and the course prescribed textbook to understand and analyse and develop a theoretical explanation of IKEA 's expansion, hurdles and The approach clarifies how IKEA 's traditional competency base needed to be preserved, renewed, adapted, and reinvented to match the market and institutional demands of the variation in the global market. The focus of my theory-based analysis is on the identification of the enabling and constraining factors that influence IKEA 's success. Political, environmental and social factors have been highlighted to illustrate IKEA’s accomplishments and its deficits. These factors have been accounted in since they draw attention to the changes and developments in the global arena, vital for globalization and growth of trade across nations. This helps understand the macro environment and the strategies aligned with the global changes affecting the business landscape.

Wal-Mart saw that their competitors’ sales were increasing, so they had to take action. The key facts and issues presented in this case were the declining sales and reducing profit. Wal-Mart had to revise their marketing strategy, while maintaining what they are known for; which, is their everyday low prices (Ferrell, Hirt, & Ferrell, 2009). In order to stay on top, the company must keep up their market strategies. Wal-Mart felt the pressure form their competitors, so they had to adapt to the new and change the existing strategies (Our History, n.d.). It is so important in the business world to be able to embrace the change. When Sam Walton started Wal-Mart he had ten simple rules. They are commit to your business, share profits with associates and treat them as partners, motivation, communication everything, appreciate everything associates do, celebrate our success, listen to everyone in the company, exceed your customers’ expectations, control your expenses, and swim upstream (Our History, n.d.).

Wal-Mart had a very sophisticated IT infrastructure in place to help integrated its suppliers into its supply chain. This IT system was a source of competitive advantage for Wal-Mart in the US allowing it to be a top notch negotiator and lower prices from vendors (Kim R. B., 2008). In Korea, however, Wal-Mart met with resistance from its distributors regarding integration into the IT system and ultimately did not create a nation-wide distribution network. (Kim R. B., 2008) The managerial style of Wal-Marts executives, especially their direct demands for lowering prices while negotiating and having distributors pay to have their wares displayed in good shelf space were direct causes for the soured relations between Wal-Mart and its vendors in Korea (Chang, 2008).

AC 4.1 – Explain the role of logistics in the supply chain management of IKEA and then evaluate procurement practices.

Ikea first entered Japan in 1974 but it then quit later in 1986. From a developing country to a developed country, Japanese experienced rapid industrial growth after World War II. Japanese became the largest economies in Asia with an annual GDP growth of nearly 10 percent. With the increasing number of population living in the city, the demand for products and services in Tokyo increases significantly. Thus, Ikea decided to enter Japan as the first step of its expansion on the international market in Asia.