IKEA Case Study
Report
To: Carol George
From: Fangyi Shao
Subject: IKEA case study
Date: 24. Apr. 2009
1. Introduction
IKEA is the world’s largest furniture manufacturer who offers a wide range of well-designed, functional home furnishing products at a low price that many people can afford it. IKEA’s mission statement describes the purpose and distinctive advantages of the company clearly. (See appendices Ⅰ) It can also motivate management by saying ‘create a better everyday life for people’ because employees need work together to achieve this goal.
2.0 SWOT analysis (See appendicesⅡ)
2.1 Strength
Ikea was ranked 35th among the best global brands around the world in 2008 with a brand value of $10,913 million. (Interbrand, online, 2009) IKEA is far more than furniture merchant, it sells a lifestyle. Strong brands enhance customer loyalty and lead to repeat purchases. Additionally, the group can leverage its brand strength to expand into new lines.
IKEA design the price tag first and then develop the product suit that price. They identify the appropriate materials and least costly suppliers to maintain the low price. In return for high sales volume, IKEA accepts low profit margin. Meanwhile, IKEA’s stylish home furnishing makes it a favourite.
The organisation is structured by employees who serve customers and managers trained by Kamprad himself and quite likely to switch between functions and countries. There are no directors and formal titles. IKEA culture is egalitarianism and frugality. (Thompson, 2001)
2.2 Weakness
Because of the large land requirement, most of IKEA stores are located in suburb outside big cities where is not convenient to go without a car. The lack of stores in downtown and middle/small cities becomes a barrier of the expansion of IKEA in UK.
IKEA’s products are facing the challenge of quality now. The company has been involved in many product recalls in recent times. These issues affect group’s brand image and sales which in turn
To: Carol George
From: Fangyi Shao
Subject: IKEA case study
Date: 24. Apr. 2009
1. Introduction
IKEA is the world’s largest furniture manufacturer who offers a wide range of well-designed, functional home furnishing products at a low price that many people can afford it. IKEA’s mission statement describes the purpose and distinctive advantages of the company clearly. (See appendices Ⅰ) It can also motivate management by saying ‘create a better everyday life for people’ because employees need work together to achieve this goal.
2.0 SWOT analysis (See appendicesⅡ)
2.1 Strength
Ikea was ranked 35th among the best global brands around the world in 2008 with a brand value of $10,913 million. (Interbrand, online, 2009) IKEA is far more than furniture merchant, it sells a lifestyle. Strong brands enhance customer loyalty and lead to repeat purchases. Additionally, the group can leverage its brand strength to expand into new lines.
IKEA design the price tag first and then develop the product suit that price. They identify the appropriate materials and least costly suppliers to maintain the low price. In return for high sales volume, IKEA accepts low profit margin. Meanwhile, IKEA’s stylish home furnishing makes it a favourite.
The organisation is structured by employees who serve customers and managers trained by Kamprad himself and quite likely to switch between functions and countries. There are no directors and formal titles. IKEA culture is egalitarianism and frugality. (Thompson, 2001)
2.2 Weakness
Because of the large land requirement, most of IKEA stores are located in suburb outside big cities where is not convenient to go without a car. The lack of stores in downtown and middle/small cities becomes a barrier of the expansion of IKEA in UK.
IKEA’s products are facing the challenge of quality now. The company has been involved in many product recalls in recent times. These issues affect group’s brand image and sales which in turn
References: Books Campbell D et al (2002) Business strategy- an introduction (2nd Edition), Oxford: Blackwell. Johnson G (2005) Exploring corporate strategy (7th Edition) Harlow: Pearson Education Limited. Lynch R (2006) Corporate strategy (4th Edition), Harlow: Pearson Education Limited. Thompson J (2001) Understanding corporate strategy, London: Thomson Learning. Journal Reeve T (2007) ‘Sustainable suppliers, sustainable market’