Ikea Supply Chain Analysis

4691 WordsAug 8, 201219 Pages
Coursework Supply Management IKEA Supply Chain Analysis Name | Sun Yifei | | Wu Yanli | | Zhang Yuting | Word CountSubmission date | Zhao Yandong4114April 18th, 2012 | Introduction IKEA is short for Ingvar Kamprad Elmtaryd Agunnaryd, as the Swedish furniture corporation, which with more than 200 stores in over 30 countries (Chen et al., 2011). In 2011, IKEA had 23.5 billion euros in sales with 2.7 billion euros net income and 127,000employees worldwide (IKEA sustainability report, 2011). The company is known for being good at cost control and continuous product development, which allows keeping its prices competitive and continue its global expansion (Jonsson et al, 2010). In order to have a better understanding, this report will…show more content…
Finally, raw material (wood, metal, etc.) and low cost are another two crucial criteria for suppliers’ selection. IKEA’s profit is highly impacted by the price in raw materials rather than the price in labour due to the high-level of competition (Ivarsson and Alvstam, 2010). This competition leads little profit and little bargaining power for suppliers. 3. Industry Rivalry The furniture industry is highly competitive, there are a large number of firms compete with IKEA. Some of them are concentrating on low priced furniture, such as Wal-Mart and Costco from the US and Galiform from the UK (Chen et al., 2011). However, IKEA still take advantages in this global intensive competition, because in the housewares, even though Wal-Mart and Costco conduct the price as low as IKEA does, but for the big box and general store types of items, they might not provide as many styles as IKEA does (Ivarsson and Alvstam, 2010). Here is another example, although Crate & Barrel, Ethan Allen and Independents provide furniture in a box, but at much higher prices and aimed at a more high-end market (Chen et al., 2011). In addition, IKEA was trying to sustain their competitive advantage among rivalries by entering some of the largest emerging markets, such as China and Japan (Caplan, 2006). It has a large cult following and high demand for its

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