Briefing about the case
The case study talks about IKEA’s Operation practices, it is obvious from the discussion that IKEA has a lot of prominence on effectiveness and efficiency of the business operations because the organization has linked operations management ideas in almost every business process and operation in order to maintain the low cost strategy. IKEA is a major case of a company that relies extensively on effectual operations management.
IKEA’s clear vision is to offer well designed and useful home furnishings at low prices so many customers will be able and capable to afford them. IKEA designs exclusive products that meets firm requirements for task, well-organized delivery, excellence and has a good impact on the environment.
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Highlights
Looking at some key figures from 2013 gives a sight of the year’s highlights.
• 345 IKEA stores in 42 countries were opened and operating by the end of business year 2013
• IKEA stores were visited 775 million times during the year
• IKEA retail sales totaled EUR 29.2 billion
• The majority of the 151,000 IKEA co-workers work in IKEA stores
• The area of all IKEA stores combined was 9,883,241 (m squared)
• The 2013 “IKEA Catalog” application was downloaded close to 10 million times
• IKEA websites were visited more than 1.2 billion times during the year
Appropriate Matrix (SWOT Matrix)
Strengths
• Customer knowledge.
• Constantly using innovations to drive costs down.
• Supply chain integration.
• Market presence.
• Powerful brand image
Weaknesses
• Negative publicity.
• Low quality of products and services.
• Standard products.
Opportunities
• Further expansion into developing economies.
• Growing online sales.
• Expansion to growing grocery market.
Threats
• Increasing
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The IKEA is unlike from other competitors as it offers a broad range of well designed collection of home furniture at very low prices that stay inexpensive to various customers so many people are able to manage to pay for the IKEA products.
Q2. What do you think might be the major problems in running an operation like IKEA?
Ans: In order to handle a large furniture store like IKEA, a batch of workforce is essential. So workforce managing becomes a serious issue for IKEA. In addition while maze like structures of IKEA offer them with vast profits, this tricky layout could be a dilemma for customers in case of any unlucky disaster takes place at the store.
The actual problem is that most people will not consider that a company which uses huge amounts of wood can attire itself in the name of environment preservation. The world is so much concerned with green benefits and most people are staying away from products and companies that are assumed to poison the environment. IKEA is the world’s third main consumer of wood that means a large amount of raw wood goes to the factory for processing
* IKEA’s low cost structure has been the very core of its success. It’s low-cost and high-quality strategy fits with the current state of the economy. Offering convenience factors within IKEA’s stores would fit well with IKEA’s low cost structure. It maintains its low-cost business model by creating a different furniture shopping experience. IKEA supplies customers with all possible materials needed to complete their shopping when they enter the store (that are, measuring
IKEA is a world famous furnishing company known for selling Scandinavian-style furniture and other home-based goods. The company has over 230 stores, with operations carried out in over 42 countries with well over 70 000 employees. The stores themselves can occupy 410 million shoppers per year. It is a Swedish based company built on the idea of offering a wide range of well-designed, functional home furnishing products such low prices, that a majority of people will be able to afford them. The IKEA group is currently solely owned by the INGKA Foundation through a holding company, unlisted on any stock exchange.
IKEA is an internationally known home-furnishing retailer, with over 300 stores in 40 countries, that specializes in products
”The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few.” *http://www.ikea.com/ms/en_GB/this-is-ikea/the-ikea-concept/index.html
IKEA is the world’s largest furniture retailer, specialising in selling stylish, inexpensive, self assembly Scandinavian design furniture, home accessories, kitchens and bathrooms in their retail stores around the world. Delivering good quality contemporary design furniture to the middle class consumer is not the only focus of the IKEA group; it also sells a lifestyle that customers around the world recognise and embrace. IKEA is a global company that has invested and is present in many countries; it promotes its products and services using the same brand in all markets coordinated from its one main corporate office in Sweden which is responsible
IKEA is an international company which designs house products and sells them in the form of ready to assemble furniture. It is one of the world’s largest furniture companies. It is founded by17 years old Ingvar Kamprad in Sweden in 1943. The most important fact about the company is the attention to control the cost of the products, which allows them to lower the prices. Even today they are continuing to expand in the world by looking forward to new product developments. The number of stores of IKEA in the United States is 14 at the moment and they aim to have 50 stores by 2013.
IKEA’s mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them. Founder Ingvar Kamprad’s innovative strategy was to design functional furniture that was easy and inexpensive to build, receive it disassembled at stores, and display it on the showroom floor with detailed explanation tickets, making salesperson assistance unnecessary.
As IKEA stores are located away from the urban areas, many customers may only patronize the stores during weekends. Hence, the store may be relatively quiet during the weekdays and highly packed with shoppers over the weekends. In the case of IKEA, although it adopts the self-service concept in their stores, it actually still maintains a high level of contact with their customers. To ease and facilitate consumer’s shopping, IKEA provides catalogues, measuring tapes, shopping list and pencils. In addition, IKEA stores are designed to have a ‘family shopping experience’ with customer services and facilities such as a restaurant, day care facilities and a Swedish shop. Parents can leave their kids in a supervised play area, or keep their children with them in pushchairs provided (Slack, Chambers and Johnston, 2007). The key point about IKEA is that it is different to the rest of its industry. In typical furniture stores similar products are grouped together and the final delivery of products to customers may take several weeks.
The company is known for modern designs, in various appliances and furniture, and its interior design work with eco-friendly simplicity. Furthermore, the firm is known for its cost control, operational details, and continuous product development. These corporate attributes allowed IKEA to lower its prices, during a period of expansion.
In this business report on the global retail business IKEA, it will cover the nature of business, influences on operations, operation processes, operation strategies and how the business can sustain competitive advantage. IKEA was founded in 1943 by Ingvar Kamprad in Älmhult, Sweden. The business established after and with the money his father awarded him for succeeding in his studies, Kamprad sustained a cash inflow by selling pens, wallets, watches, picture frames, table runners, jewellery and nylon stockings at reduced prices to customers. Although, later on in 1958, IKEA was introduced as a leader of Swedish Furniture Company as they started to produce local furniture by the Swedish local manufacturers, which gained positive attention from their customers. Eventually, developing flat packs of furniture for storage and self assembly, making their signature style of IKEA and turning the small business into a global sensation.
The IKEA group sells quality furniture at a low price, to maintain a strong competitor. For that, the company has to try to cut cost without losing quality in the products that it sells.
Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that as many people as possible can afford to buy them (www.ikea.com)
While IKEA states not to compromise on technical quality, clearly their focus is not on using top of the range materials, e.g. high quality solid wood. This allows the company to present its value proposition of affordable design products. Quality is not a factor on which IKEA aims to be market leader. Customers are
IKEA has adapted to the operations function of a business. This function is the main function of every company. This key function, of which IKEA has adapted to, is the business function responsible for managing the process of creation of goods and services. The operations function is responsible for organising, coordinating, planning, and controlling the resources that are required in the production of goods and services. IKEA has effectively implemented this function by understanding the needs of customers. In particular, this applies to those who have a lower income, and/or, limited space. IKEA’s employees within the product design and product development departments, focus directly on the price and quality, as well as the design and function of products. Elements of the design are typically agreed on within the factory itself, this is where manufacturers and designers work together, to create a product with regard to the greatest use of raw materials and manufacturing opportunities. IKEA’s operations have proved effective as in 2013 it earned $35.5 billion. IKEA has a large amount of suppliers, greater than 1300. IKEA purchases most of their