Ikea Distribution

This will keep driving their costs down, therefore increase their profits and reduce their price that will most likely increase their market share. But most importantly, since IKEA, will have some kind of implementation in these markets, it will be easier for them in terms of sourcing raw materials and manufacturing the products. It will ease the logistic, make it even more efficient thought their network of storage facilities throughout the world.

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

It adds value to the business i.e. it enhances the business operations which would inturn have a positive impact on the business

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).

The self-service system brings benefits to both IKEA and consumers, and it’s concept in the market offer many reciprocal benefits to achieve common progress. For IKEA, the innovative service has contributed to the expanding of the corporation and the growth of sales which in turn increase its economic influence and gives it a very competitive advantage. The self-service benefit also helps the standardization of the service system and enables IKEA to achieve the economic scale while reducing cost. As Nurmandi (2012) said, the standardization of the service management system plays a crucial role in searching economy of scale and reducing costs. The self-service helps reduce the costs of hiring salesman and give more advantages to decrease the goods price because the fixed costs have been cut down. Customers for example, can get cheap products at IKEA while participating as in the role of co-producer not only a client anymore; thus inspire them to have more willingness to buy more products(Inter IKEA Systems B.V., 2015).

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.

The size of IKEA’s stores is also an important feature. With their large centralised combined stores and warehouses IKEA can take advantage of economies of scale. This leads to lower costs in every part of their supply chain (e.g. facility costs, inventory costs, transport, procurement). From the IKEA concept and their supply chain strategy they have managed to reduce their prices to a minimum.

Highly competitive market brings IKEA weaknesses such as magnitude of the global business that is or isn’t capable of managing stakeholders, product differentiation, suppliers’ issues of not abiding by IKEA Group Code (IWAY code) in to limelight. Other weaknesses of IKEA i.e. ineffective communication and information exchange with its consumers and stakeholders due to huge scale of business operations are also identified (Johansson et al., 2008).

The debate about standardization and adaptation for international markets has continuously attracted more attention from multinational companies for several years. The case of IKEA has however tried to help me in understanding the argument involving these two marketing strategies as applied in the international markets.

Ikea was successful in entering the furniture retail market in Sweden because it capitalized on good timing and original ideas. At the time of Ikeas initial phases, furniture prices in Sweden rose 41% faster than other household goods between 1935 and 1946. Ingvar Kamprad, the founder of Ikea Saw this as a great opportunity to offer quality furniture at a much lower price than other retailers, that the majority of people can actually afford. Ikea was also able to overcome adversity through creativity in business processes. When initially traditional retailers fought against Ikea’s ideas and banned them from selling at the Stockholm Trade Fair, the took orders or got names of customers in order to sell to them after the event. On another occasion, they overcame trouble with the retail cartel by establishing manufacturing sources in Poland instead of Sweden. This actually resulted in lower costs for Ikea and therefore allowed them to sell products at even lower prices than before. They also differentiated themselves from other companies not only through price but also through store design and location. Instead of locating in downtown hubs, Ikea set up its stores in areas with a lot of land to provide ample parking space which went hand in hand with their concept of cash-and-carry retailing. Furthermore, within the stores established many basic practices, such as wide

For IKEA, distribution is a vital a part of the equation of making home furnishing articles at costs that square measure as low as potential. About 9,500 IKEA products are factory-made by suppliers and transported to IKEA stores around the world, typically via one in all the company’s central warehouses and distribution centers. At IKEA, distribution is all concerning creating the route from the manufacturer to the client as short as potential.

Target Costing is a process that can significantly improve new product development results in accounting, operations management, and purchasing. It can be defined as a cost management tool for reducing the overall cost of a product during its life cycle. Although the Japanese expanded the concept of Target Costing back in the 1960s, the roots of this concept can actually be traced back to World War II.

Submitted to: John Daly Submitted by: Lindsay Churchman Matthew Holland Jamie Krebs Eveline Man Chris Manellis Chelsea Slade Due Date: February 17, 2011 MRK428MS

IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture. The company is the world’s largest furniture retailer. It was founded in 1943 by 17-year-old Ingvar Kamprad in Southern Sweden. As of October 2011, IKEA has 326 furniture stores, operates in 38 countries and engages 1,500 suppliers of 12.000 products. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009 (http://en.wikipedia.org/wiki/IKEA).

It is a system under which a company plans for the price points, product costs, and margins that it wants to achieve for a particular product. The tool target costing is all about the maximum amount of cost or expense that can be allowed and incurred on a product and at the same time, earn the desired profit margin the company is aiming for on that product. It is a market driven cost that is calculated before a product is produced in which the needs of the customer and the likely reaction of the competitors drive the product and profit planning. Target costing can be represented in a formula as “Target costs = Estimated Target/Selling Price – Targeted Profit”. This tool is mostly helpful when a company functions and runs in a competitive market and due to the high competition, the price is affected by the supply and demand of the market. (Merrit &