Ikea's Global Sourcing Challenge

It can also help them gain a temporary competitive advantage because other firms will not be able to imitate them to speak regarding IKEA’s strategy , IKEA’s strategy has continually been to style and develop product supported consumers’ everyday wants, keeping costs low and providing purposeful, engaging and reliable furnishings and solutions. property has been at the basis of IKEA’s strategy throughout its evolution. In 2012 it launched its folks and Planet Positive property strategy, that sets out the company’s approach to achieving positive social and environmental impacts. This property strategy brings all the weather of vision, values and mission along to drive innovation and rework the IKEA business. this may strengthen IKEA’s aggressiveness by securing long access to big raw materials and energy provides, maintaining and developing its provider base, developing relationships with co-workers and customers, and increasing market share

IKEA’s main competitive advantage derives from low costs, which in part are achieved due to standardized products (JUREVICIUS, Ovidijus, 2013). IKEA has been setting up many new stores in different countries all over the world. While most purchases are still done in the European market (59%), the Asian market has expanded quickly (currently 35%) (IKEA, 2014). This expanded market, caused by growing wealth in Asia, created the option to lower costs even more due to economies of scale. The ability to keep selling standardized products however is decreasing quickly with this expansion of the company. IKEA has experienced first-hand that cultures differ too much to keep the old system of ‘one-size-fits-all’

As explained in the “bargaining power of consumers”, it is hard to substitute the products that are offered by IKEA. This is further intensified by the fact that IKEA has formed a brand perception that makes it stand out amongst its

In order to assess and give recommendations to IKEA, it is important to fully understand the operations and the values that drive the company, ant its philosophy. Since was founded in 1954 by Ingvar Kamprad the Swedish company’s vision of “creating a better life for the many people” inspired them to develop high quality and lower cost products in the furniture business, and almost a decade later, after they consolidate in the Swedish market, they made the decision to expand abroad opening stores in Northway and Denmark respectively (Exhibit 1). With a relatively rapid expansion the company needed to transmit their unique philosophy and created the testament of a furniture Dealer and trained ambassadors to help spread and secure the firm’s values (Exhibit 3). Furthermore, IKEA’s adopted another principle, the company preferred to focus on establish close ties with business partners and supporting their suppliers in a long-term relationship rather than just

Marianne Barner has two possible ways to respond to the German video program invitation. She could refuse for an IKEA representative appear on the upcoming broadcast, or she could accept for a representative of IKEA to appear on set. Of the two options, one will give a better view of IKEA than the other. If Marianne Barner refuses for a representative to appear on the broadcast, it could send a negative image of the company and the journalist could tell whatever he would like as no one would be there to explain IKEA’s version of the story. If, however, Marianne Barner does accept the invitation, she can make sure the interest of the company is correctly represented against the accusations, and that would be the best choice.

In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While such a move would disrupt supply and affect sales, she found the reasons to do so quite compelling. A German TV station had just broadcast an investigative report naming the supplier as one that used child labor in the production of rugs made for IKEA. What frustrated Barner was that,

Ikea is investing 10, 500 crore in India, that send a positive signal to other investors, and had uncertain view of

Global sourcing is an important sourcing strategy for IKEA Company. According to Hultman, Hertz and Johnsen (2012), in 2008, IKEA has 54 different sourcing countries and 30 purchasing departments which were located all over the world. With the expansion of its market, IKEA was not satisfied with selling its product only in domestic and Nordic market instead it put its higher goal in global market. Therefore the sourcing market also expanded with the growing market. There were 64% of its products were sourced from European countries which were mainly in eastern part like Czechoslovakia, Rumania and Hungary; China with a 22% share of the supply was the largest single supply market, and Poland with a 16% share (IKEA 2007). However, IKEA also trades off the cost of raw materials and cost of transportation, hence IKEA combined the Global sourcing with local sourcing strategy to lower the total cost.

Cultural Boundaries. IKEA is a multinational company that is faced with a diverse culture of customers and employees. This diversity can complicate the supply chain, by altering different approach, strategies and perspectives of the business functions. Standardization in operations, processes and regulations has helped the company in resolving differences and gaps in actual production / business settings(PWC, cited in Mukazhanova, 2014, p. 12). For IKEA and most businesses, outsourcing can bring significant value and advantage. However, close relationship and monitoring must be implemented to ensure success and alleviate differences (Christopher, cited in Mukazhanova, 2014, p. 12).

We believe what is good for society is good for IKEA. We are passionate about creating a successful business where we act in a responsible way through small and large actions. It is a way of being. This is why sustainability is a cornerstone in the IKEA strategic direction – it is highly prioritized and serves as a driver of further innovation and development. Economizing with resource, finding new ways of doing things and developing our knowledge and expertise are important parts of our business idea and heritage. A low price company must be a low cost company, and this includes being careful with earth’s limited resources. IKEA has unique capabilities and tremendous enthusiasm to make a positive contribution across the world – from the forests of Siberia to the cotton fields of India and all the way into people’s homes in New York, Lisbon and Shanghai. Our customers rightly expect us to not only to make our products in a responsible way, but also to help them live more sustainable

Ikea, the world’s largest home furniture retailing company, was founded by Ingvar Kamprad. He built his business empire through developing a distinct corporate culture. The Ikean

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)

Based in Denmark, IKEA International A/S is one of the world 's top retailers of furniture, home furnishings, and housewares. The company designs its own items, and sells them in the more than 140 IKEA stores that are spread throughout approximately 30 different countries worldwide. The company also peddles its merchandise through mail-order, distributing its thick catalogs once a year in the areas surrounding its store locations. IKEA is characterized by its efforts to offer high-quality items at low prices. To save money for itself and its customers, the company buys items in bulk, ships and stores items unassembled using flat packaging, and has customers assemble many items on their own at home. The company is owned by

IKEA is a multinational company that designs and sells ready to assemble furniture, home accessories and appliances. IKEA was founded by a 17-year-old Ingvar Kamprad in Sweden in 1943. The Company’s name is an acronym that consist the initials of Ingvar Kamprad, Elmtaryd (his farm) and Agunnaryd (his hometown). In January, 2008 IKEA was listed as the world’s largest furniture retailer. Based upon the march, 2016 stats IKEA owns and operates 384 stores in 48 countries.

IKEA’s strategy towards its suppliers is that of a low production costs strategy. IKEA wants to sell its products at the lowest possible price therefore their