IKEA[Group 9]

8/8/2019 IKEA[Group 9]

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PRESENTED BY:

Akshita Gupta

Preeti Agarwal

Anand Thorat

Nandeep Patel


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IKEA (acronym for Ingvar kamprad ).

Was founded in Sweden in year 1943 byIngvar Kamprad.

Mantra :low price with meaning

1970 International expansion.


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Strengths

Leading furniture retail in the world of well designed,inexpensive and functional home furniture

Ranked 44 in 100 global brands by Interbrand

Prices 30% to 50% below competitors

Corporate brand image

Unique business model

Low prices, good quality, no delay in delivery

wide range ofwelldesigned, functional products at lowprices


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Weaknesses

The size and scale of its global business. This could make it hard tocontrol standards and quality.

o Application of extensive E-commerce has been ignored

Opportunities- Extend through demographics base- Ecommerce can reduce burden on stores.

Threats- Competition from retail markets low price strategy- Economic slow down and low disposable income


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Products- furniture, cookware, tableware, kitchen utensils,

- gadgets, textiles, bedding, cushions, shower curtains,

paint, etc.-Worldwide, IKEAs stores carried over 20,000 products,

of which 12,000 formed a core product set that was sold

in all stores.

price- Low price

- 30% 50% below competitors


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Place

- Started its operations in Sweden i.e. in 1943

Promotion- Off beat advertisement

- Ample parking space

- Self service concept

- Informative catalogs

- Explanatory tickets on display merchandise

- Case and carry concept


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IKEA believed in lean and efficient operations

Cost leadership philosophy

IKEA does not have its own manufacturing facilities

uses sub-contracted manufacturers all over theworld

Profits through efficiency and long production runs

Disassembled products to reduce transportation

costs Redesigning products to maximise products on

pallet


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Replaced traditional teak with less costly

oakProviding manufactures with technical

assistance to increase productivity

Low cost ensured through volume

purchase agreement.

Components widely dispersed and

suppliers locate in different countries.

Support to suppliers technically andfinancially.


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2001 IKEA had a total of 143 stores in 22

countries.

20 stores owned and operated by franchises in

13 countries/territories 2000 suppliers in 55 countries and had 40

offices in 33 countries. Including China, India,

Indonesia, Taiwan, Thailand, and Poland.

In late 2002, IKEA had 18 distribution centres

worldwide, which handled about 70% ofIKEAs

total product line.


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REASON FOR GROWTH

Market saturation of Sweden

GLOBAL STRATEGIESBeach head in countries to assist local

managersSenior management remained

ScandinavianPositioned itself differently in different

countries e.g. niche player, middle upperincome level group, educated people etc.


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Entry into Europe through out 1970 and

1980.

it entered switzerland

Zurich20% of countrys purchasing power

Offered simple contemporary designs

Attracted 650000 visitors first year


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1974 IKEA opened store inMunich . largest and best organized furniture market. Largest furniture producer and exporter Differentiated through promising inexpensive prices,

immediate delivery and quality. 37000 people attracted in first 3 days

Problems: Legal proceedings for deceiving customers (restrainedIKEA)

Legal proceedings against truthfulness of aggressiveadvertising. (curtailed IKEAs activities)


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Cultural factors became an important issue inGermany.

Germans were more disciplined and precise. German employees felt that Swedes were more

result oriented and challenging. Germans were more comfortable with formal

procedures. Which created a cultural rift

UK-1987 home of multinational retailersItaly 1989France accustomed to formal rules. Therefore

non-French workers were minimized.


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In 1979 bought a franchise in Canada

He turned it into a lucrative business

within three yearsContinued to grow within Canada


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In 1980s entered U.S - it initially struggledBy mid -2001 22 stores in North AmericaAug31, 2000 IKEA ranked no.11 in the U.S

in furniture, bedding, accessory.Differences Sweden and U.S

U.S Preferred larger items

IKEAs sofa and armchair were considered tobe too lightly dimensionedNeeded more space, more information, and

anything that saved time.


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IKEAs Strategy

Customization was preferred, and lowpricing not compromised

Redesigned store layoutsOffered home delivery and assembly for

an extra charge.

1998 Chicago opened 4,00,000 sq footmega store

2003 Los Angeles opened 3,25,000 sqfoot mega store


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IKEA is built upon this philosophy all theway from the design teams to suppliers andthe customer

The aim ofIKE

A is to eliminate excessivelevels of management with a very flatorganization.

Bypass formal structureDirect reach to frontline managers.

No recruitment who are immersed in othercultures.

Culture emphasizes efficiency and low cost


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Specification ofE1 standard which was

meant only for German markets was

standardized all overE

urope .Flat packaging and chlorine free paper

used in its catalogs.

Recyclable materials for flat packaging

and "pure" materials for packaging toassist in recycling.


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IKEA at first did not recognise the need to adapt toculture Needed to decide how far they could push theircommon concept in other countries

IKEA does not manufacture its own products butworks with a complex network of suppliers Success is based on the idea of keeping the costbetween manufacturers and consumers down

CONCLUSION

Documents

IKEA[Group 9]