ByRahul Karangutkar (0951826)Parag Jain ()Atoosa Zand (0)TrungSeun Fayemiwo (0)Amanda (0)
Outline
IntroductionVision And MissionGrowthGeographical ScopeStrategyAttractiveness Of MarketStrategic CompetenciesStrategy
Introduction
Ingvar Kamprad Elmtaryd Agunnaryd Founded: 1943 in Almhult, Smaland, Sweden Founder: Ingvar Kamprad Headquarters: The Netherlands Parent Company: INGKA Holding Industry: Retail Product: Self Assembly Furniture Chain of Product: Restaurant, Manufacturing, Housing, Revenue: €23.1billion (2009) Employees: 127,000 (2009) Area Served: Multinational 316 stores (2010) 699million visitors (2010)
IKEA
Vision: Mission Statement: Ikea's mission is to offer a wide range of home
furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them
Growth
1954
1964
1974
1984
1994
2004
2006
2007
2008
2009
0
5
10
15
20
25TURNOVER € BILLION
TURNOVER € BILLION
Source: Ikea, 2010
Growth Pattern
Started 1943 as a one man mail order company
The Ikea concept started in 1950
The company started sourcing supplies from other European countries
In 1960, the warehouse principle was introduced
In 1963, Ikea went abroad, opening in Norway 19
5420
06 208
2010
0
50
100
150
200
250
300
350
No of IKEA retail outlet
No of IKEA retail outlet
Geographical Scope
SALES BY REGIONEurope – 81%, North America -16% and Asia & Australia -3%TOP SUPPLIER COUNTRIESChina -18%, Poland- 12%, Sweden -9%, Italy -7% and Germany -6%
Supply Chain (IKEA)
Source: Thetimes100.co.uk, 2010
Business Strategy
Segmentation Middle-class population, All age group. Advanced Economies – Europe, USA,
Australia Emerging Markets – China
Positioning Cost Leadership Differentiation
Business Strategy
Competitive Advantage
Economies of Scale:
Standardisation
Economies of scope: Furniture and Restaurant Share facilities
Economic Design
Logistics
Network of Supply: 1300 suppliers in 53
Countries
Large Warehouse Showroom in Sub-
Urban centres
Customers included in the value chain,
minimum staff
Strength of brand name
Distinctiveness in Design
Diversity in Assortment
Value chain of IKEA
PurchasingRange
Stores
DISTRIBUTION
SUPPLIERS CUSTOMERS
Resource Based View (IKEA )
PHYSICAL ASSETS OWN 313 STORES WOLDWIDE AND ARE USUALLY LOCATED OUTSIDE THE TOWN37 STORES THAT ARE FRANCHISED38 COUNTRIESWORLD LARGEST FURNITURE RETAILER
FINANCIAL ASSETS PROMOTION AND ADVERTISINGSOURCE FROM FRANCHISEEXPERIENCED A 15% SALES INCREASE BETWEEN 1990-20052005 THEY MADE 14.8 BILLION EURO2010 THEY EXTIMATED $23 BILLION
INTELLECTUAL RESOURCE
GOOD RELATIONSHIP WITH GOVERNMENT SKILLED STAFFSUNIQUE FURNITURE STYLINGOPERATE 24 HOURS DAILYGOOD RELATIONSHIP WITH SUPPLIERSBUILDING STRUCTUER
Resource Based View
REPUTION RESOURCE BRAND NAMEFRANCHISING$128 MILLION FOR UNICEF IN 2015WELL KNOWN IN EUROPE ASIA AND AMERICA
HUMAN RESOURCE 127,000 STAFFSSKILLED EMPLOYEE’S IN STORE’S AND WOOD’SGOOD TRANSPORT SYSTEMEXPERT DESIGNERSGOOD CUSTOMER SERVICEOVER 12,000 ITEMS PRESENT IN THE WEBMOTIVATION OF EMPLOYEES (REWARD SYSTEM)
RELATIONAL RESOURCE 28 DISTRIBUTION CENTER GOOD INTERNET ACCESSNETWORKING SYSYTEM 550 MILLION PEOPLE USING THEIR WEBSITE EVERY YEARGOOD TRANSPORT SYSTEM
INTERNATIONAL BUSINESS STRATEGY (SMM 206) PRESENTATION
PORTER’S DIAMOND MODEL: IKEA
DEMAND CONDITIONS
FACTOR CONDITIONS
FIRM STRATEGY,
STRUCTURE & RIVALRY
SUPPORTING INDUSTRIES
(Porter, 1990)
• Low cost low price strategy
• Low bureaucracy
• Rivalries: British “B&Q” Germany
• Population: 1.3 billion
•The raising of Middle class
• Cheap furniture demand
•Labour force: low cost
•Infrastructure: poor => good
•Government policy
• Suppliers
• Technology
Transnational Strategy
Pressure for global Integration Standardising whenever possible 90% of product line is similar across in
more than 12 countries IKEA’s marketing is centrally developed at
headquarters Pressure for local responsiveness
Adapting when necessary Modification of its furniture to suit
individual countries e.g longer hangers in Italy and deeper wardrobes in USA
Implementation of local adjustments in marketing to suit language and catalogue.
Comparative Advantage
Supply from China Low cost labour Labour skill Raw material accessibility
Sales in EU, North America Very Large middle class group
Conclusion
Since IKEA’s target consumers are the middle-class, they should extend their retail services to Emerging Market Economies where Middle class population is rapidly increasing.
IKEA should increase sourcing its supply from emerging markets, which are characterised by low cost labour to sustain its competitive advantage.
REFERENCES
Baraldi, E.(2008) “Strategy in Industrial Networks: Experiences from Ikea” Carlifonia Management Review, 50(4), 99 – 126.
Beard, B. (2006) “IKEA facing competition on furniture row” Arizona Business Gazettes, available online at: http://www.azcentral.com/abgnews/articles/0824abg-tr-emerald0824.html , accessed 01/12/2010
Boscor, D., and Bratucu, G. (2009). “Transnational strategies adopted by furniture manufactures- case study:IKEA” ProLigno, 5(3): 55 – 61.
Datamonitor (2008). “Ikea Group”
Thank You !
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