The Key Success Factors of Ikea

2031 Words Jul 1st, 2014 9 Pages
Success Factors of IKEA

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The Key Success Factors of IKEA
Advanced English Writing

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Abstract Taking advantage of three mayor cost-cutting strategies, IKEA has been able to maximize its profit and to succeed internationally with its concept. The self-service and do-it-yourself approach to selling furniture is one of the critical success factors IKEA uses to save costs and increase profit margins. Furthermore, it has a complicated company structure, partially in order to avoid taxes, but also to allow for some flexible management decisions to be made, based on the international needs. The third key success factor that can be held responsible for IKEA’s international triumph is its production and ordering system. The company
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The company profits from the lower employee and production costs, which the self-service technique brings with it. There is also the decentralized management structure of the firm that facilitated the extension of the customer base from the poor southern Swedish region, Smaland (“The secret of”, 2011, para. 3) to Japan (“Fashion Victims”, 2009, para. 7), a country in which IKEA had been rejected in 1986. IKEA’s management structure is also cause for a very advantageous tax situation allowing for lower prices to the customer and higher profit margins than most home furniture companies (“Profile: IKEA,” n.d.). Last, but not least, the mass production and buying of the furniture, and the use of 75% renewable resources for the production in 2009, for example (“SWOT analysis and”, n.d.) are a key success factor for IKEA.

Discussion The self-service approach IKEA sees its clientele as partners, not as customers. The IKEA concept offers “a wide range of well-designed and functional home furnishing products at prices so low that as many people as possible will be able to afford them” (Our business idea, 2012). Therefore the company settles in areas, where a good infrastructure and other shops are guaranteed, so that the customers visit an

Success Factors of IKEA

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