Ike The World 's Biggest Home Furnishing Retailer Essay

* 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 the world’s largest furniture retailer, the company was created in 1943 by Ingvar Kamprad, IKEA is the acronym of his initials (IK), Elmtaryd (E) the farm were he grew up and Agunnaryd (A) the village were he lived. Today, IKEA is approximately valued at 11.8 Billion, this number being only an assumption since the company is still in private ownership. Ingvar Kamprad has an estimated net worth of 4,2 Billion.

The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).

IKEA is a global furniture retailer, which is established on the concept of contributing wide range of well designed, functional, and low cost home furnishing products in 40 countries, with 330 stores and 154,000 workers (The IKEA concept, 2012). IKEA was founded in 1943 by Ingvar Kampar and has turned in an international furniture retailer that specialized in stylish but inexpensive furniture designs.

IKEA´s mission statement: IKEA offers a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible can afford them"

At IKEA we design the price tag first and then build up the product to suit that value. IKEA product developers and designers work openly with suppliers to make sure that creating the low prices starts on the factory ground. They contemplate maximizing production tools, using raw equipments proficiently and applying mechanical innovations and the best potential design. It is all about making the most of our production process, keeping waste to a complete least and considering flat-pack transportation and self-assembly. IKEA of Sweden in Älmhult, Sweden, develops the total IKEA range.

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.

IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)

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 aims to deliver all five of its brand attributes including low price, sustainability, form, function, and quality. However, Sykes acknowledged that low price is the first driver in product development. Unlike the most companies’ product development process that starts with consumer trends or competitive whitespace, IKEA starts with a target price point. Doing so keeps IKEA true to their commitment to providing better everyday life for the many people. Sykes said: “True innovation comes when you design quality furniture that’s affordable by

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)

In PEST analysis, we will look into what will be affect by the business environment. It includes political environment, economical environment, social environment and technological environment.

Clearly its product offering is “no frills”. In line with the Scandinavian idea of minimalism, IKEA seeks to eliminate the unnecessary in its prouducts but it makes a point out of not compromising on function or technical quality. IKEA focuses on the use of raw materials but much of its product range uses board-on-frame construction - layering of sheets of wood over a honeycomb core that gives a strong, lightweight structure with a minimal wood content.

IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,

2. The reason of why distribution is such a key element of IKEA’s value chain.. 2