Ikea case study
IKEA Case Study
24/09/2013
Henk Ritsema
1. The core competencies of IKEA are the ‘assemble it yourself’ furniture and the streamlined way in which it is packaged.The end products of IKEA are quality furniture products at a low cost. The core competencies and the end product are the backbone of the company and are linked substantially in IKEA’s success. The flat packaging reduces storage and transport costs and the fact that customer’s assemble the products themselves reduces the need for assembly staff. These factors help IKEA to produce a quality end product at a much lower cost than its competitors.
2. IKEA has been diversifying from its beginning. The very fact that IKEA produces and sells its own furniture is because of diversification. IKEA started out as a small firm which sold products as ‘diverse as watches, jewellery and picture frames’, however as time grew they sought out new markets. For example, they consulted with child psychologists’ to gain a better understanding of children’s needs and built special kids areas in stores.
3. To begin with IKEA expanded in Europe which was relatively simple as the core competencies of the company translated well in these countries. IKEA prefer to just ‘go out and look’ when exploring new markets and while this works on the most part, some need’s must be tailored to in some countries. For instance in China, customer’s do not like the idea of assembling the furniture themselves. So IKEA added a small fee-based assembly service. Since the cost of labour is low in China, this allowed IKEA to adapt while maintaining its core competencies. Similarly in the U.S IKEA adapted to the needs of the American public for example by introducing bigger glasses to cater for Americans great desire for ice. Also Americans ‘profoundly’ dislike waiting at cash registers so, simply, IKEA added more cash registers in their stores. These are small tweaks which allowed IKEA to make a profit in the U.S while
24/09/2013
Henk Ritsema
1. The core competencies of IKEA are the ‘assemble it yourself’ furniture and the streamlined way in which it is packaged.The end products of IKEA are quality furniture products at a low cost. The core competencies and the end product are the backbone of the company and are linked substantially in IKEA’s success. The flat packaging reduces storage and transport costs and the fact that customer’s assemble the products themselves reduces the need for assembly staff. These factors help IKEA to produce a quality end product at a much lower cost than its competitors.
2. IKEA has been diversifying from its beginning. The very fact that IKEA produces and sells its own furniture is because of diversification. IKEA started out as a small firm which sold products as ‘diverse as watches, jewellery and picture frames’, however as time grew they sought out new markets. For example, they consulted with child psychologists’ to gain a better understanding of children’s needs and built special kids areas in stores.
3. To begin with IKEA expanded in Europe which was relatively simple as the core competencies of the company translated well in these countries. IKEA prefer to just ‘go out and look’ when exploring new markets and while this works on the most part, some need’s must be tailored to in some countries. For instance in China, customer’s do not like the idea of assembling the furniture themselves. So IKEA added a small fee-based assembly service. Since the cost of labour is low in China, this allowed IKEA to adapt while maintaining its core competencies. Similarly in the U.S IKEA adapted to the needs of the American public for example by introducing bigger glasses to cater for Americans great desire for ice. Also Americans ‘profoundly’ dislike waiting at cash registers so, simply, IKEA added more cash registers in their stores. These are small tweaks which allowed IKEA to make a profit in the U.S while