Assignment on Case- IKEA: DESIGN AND PRICING
- 1. SERVICE OPERATIONS ASSIGNMENT IKEA: DESIGN AND PRICING SUBMITTED TO: DR: PUJA CHHABRA SUBMITTED BY: YOGESH SINGLA 160MBAGEN027 MBA (SECOND YEAR)
- 2. SUMMARY / BACKGROUND OF THE CASE IKEA Swedish retailer Dominates markets in 32 countries. Corporate Mantra: “Low price with meaning” Good quality at low price. 30-50% below competitors Last 4 years – Retail prices reduced by 20% P ROBLEM STATEMENT Given IKEA’s success in the global market, how can it ensure continued success in the business? SWOT ANALYSIS STRENGTS IKEA’s low cost concept keeps it ahead of its competitors. IKEA has successfully combined low cost with good quality. IKEA’s research and development team finds ways to alter designs to save on manufacturing costs. A key feature of IKEA furniture is self-assembly. WEAKNESS Its organizational culture can become a demotivating factor for many of its employees. IKEA is not at all customers focused. IKEA lacks product innovation. It lacks thorough market research on customers’ preference before entering into a new market. IKEA never took economic issues into consideration before being faced with the problem. IKEA has a tendency of making mistake first and then realizing that it should have taken matters into consideration beforehand.
- 3. OPPORTUNITY IKEA can expand its product line by producing high end products IKEA can expand its business into interior designing and cookeries products IKEA should listen to the customer demand to make more sustainable solution Product customization can boost up IKEA’s sales THREATS Changing social trend can hinder the growth of sales of IKEA Accelerated market competition in USA The risk of global financial crisis QUESTION 1. What are IKEA’s competitive priorities? Globally known Eco- friendly Strive for the lowest cost Established supplier and Distribution centers Lush store environment QUESTION 2. Describe IKEA’s process for developing a new product. Team Development What works best for the customer The product size and shape play a crucial role Does the product fit the flat concept Question 3. What additional features of the IKEA concept (beyond its design process) that contributes to creating exceptional value for the customer. Store setups Easy flow, daycare, and restaurants Laid out floor concepts to develop a vision High quality
- 4. Question 4. What would be important criteria for selecting a site for an IKEA store? Closer to the distribution centers Larger cities (Chicago, New York etc.) Closer to the mode of the product transport CONCLUSION As it is about all about operating in International Markets, and International Business, we do not know which strategy will best suit such multinational companies that is we do not know whether a Global standardization, or Internationalization, Transnational, or Localization, which international strategy is going to work in which corner of the world. All we can conclude by saying is that before entering into a new market a firm should do its “necessary homework’s” unlike IKEA, which always did mistakes first and then learnt from it. This will save millions and billions of dollars of a company and this will also help sustain in the long run and secure its competitive advantage in the global market as well.