Ikea Case

Introduction

Ikea is the world's largest home-furnishing company from Sweden, selling its own brand of furniture, home appliances, as well as kitchenware. To date, Ikea has a total of 332 stores in 38 countries. Its wide range of products had expanded from just furniture to accessories such as candles, floor mats, and decorative items. Besides its core business of furniture, Ikea operates its own restaurants, catering to the consumers whom were believed to have left Ikea without buying anything due to hunger. Ikea's total turnover was €24.7 billion in 2011, with €1.2 billion made from selling food at its restaurants. (The Telegraph, 2012)

Strategic Planning - The Value Chain

Introduced by Michael E. Porter (1985), the Value-Chain analysis consists of the primary activities and support activities. Primary activities include the production of the products and services, while support activities bring the business to success. "Each step in the manufacture of a product or the delivery of a service can be thought of as a link in a chain that adds value to the product or service." (Needles et al, 2007, p.836)

Brilliant Logistics Strategy

Inbound - Ikea does not produce any of its products. It collects raw materials and components from the manufacturers. As soon as all resources are available, the final product are assembled and packed into flat boxes. This enables Ikea to maximize the number of deliveries in each shipment, and also allow end consumers to easily carry the products home. (Capell, 2005)

Outbound - Instead of the typical standard of charging consumers a fee upon delivery, Ikea sells its products in wraps and flat cartons, enabling consumers to transport the furniture home themselves. The spare parts are made easy to assemble, and consumers are often delighted to fix the furniture themselves.

Marketing and Sales

IKEA's 'showroom' style of displaying its furniture makes the store a wonderful place for family shopping, with products ranging from the kids' to adults' category.

There are also play-areas in the stores, which parents can send their children to before embarking on the megastore shopping experience. The variety of products within the stores is overwhelming, as many of them form up in the different sections with many desirable colors to instill the consumers with excitement.

Consumers can also drop by IKEA's restaurant for a snack while shopping. Over the years, its beef balls and fried chicken wings have become the most popular dishes among its consumers. When people are reminded of chicken wings and beef balls, they get associated with IKEA which in turn boost the popularity of the brand. Many consumers travel to the megastores just for the food delights, after which they would take some good time shopping around the store.

In addition, IKEA publishes the photo and brief profile of the designers on many of its unique furniture. Even though consumers may not know them, they are convinced that the products carry some kind of prestige and value, albeit the low price.

Service

Consumers do not usually need to approach store attendants for store or product information as there are ample pamphlets and catalogs in every part of the store. This reduces the number of service staffs in the megastore and any chance of being blamed for negative customer service.

Technology Development

IKEA has introduced many technological processes into its businesses. For example, its thick book of catalogs is programmed into an application in mobile devices. Users can download the free application named 'IKEA Catalogs' to browse through the products easily anytime, anywhere. This saves IKEA the cost to print hardcopies of the catalog constantly to keep updated.

Customer Relationship Management (CRM)

Being its own retailer, IKEA uses the CRM systems to track the common purchases of its consumers, as well as for customer-profiling. The post codes provided by the consumers aid the firm in determining where most of their consumers come from, how much do they spend, and whether should they open another store in that particular location.

Assessing IKEA's Core Competencies

The