Ikea is a global renowned large furniture retail set up in 1943 by Ingvar Kamprad in Sweden. The primary business likes stationery of email order, grocery and so on. Then finally embracing furniture as its main business. At the moment, it has 292 large-scale stores in 34 countries and areas about the world. Ikea has been promoting the motto of "better life for everyone" since its inception. It focuses on low price, good quality home furniture to do. So, Ikea make an effort to create customer and public benefits as the center of business.
Business Model of Ikea
Complete industrial chain
Ikea hold the supply of natural material, product design and development, development and processing production, sales circulation and customer support five techniques. It tightly seized the product design and sales of both profit maximum link, at exactly the same time will service into the sales, return low link the essential way of outsourcing complete industry chain synergy.
Powerful R&D design potential & standardization of ground breaking thinking
First, Ikea have a thorough market review each 3 years, it is to listen to the customer to the merchandise of the effect. Second, in order to further reduce the cost, it use of environment friendly materials like re-cycle of recycleables wood instead of deforestation. The launch of new technology, it will gas injection composite plastics to conserve material and reduce weight and faster production product. Third, the household product of Ikea is divided assembly goods, products split into different modules, individual design.
Experiential marketing
Ikea just how of experience marketing is understanding the customer mindset. It doesn't create products to customers but let customer to experience products. It has gained the trust of customers and let the customer know its quality confidence. It is a far more kind more life of the online marketing strategy.
Supply string management of Ikea
According to porter (1998, p55) a "strategy is the creation of a distinctive and valuable"Supply string management (SCM) is an activity of optimization transfers that in regards to a product, service and information from the dealer to customer.
Ikea acquired 1, 400 global suppliers, 60% its suppliers are from European countries. And the large provider market in China and Poland. The idea of Ikea's relationships with suppliers is based on the company business idea of manufacturing low price products in a socially dependable and environmentally friendly way. all products are created in according to with a especially designed code of habit" the Ikea way on purchasing home furnishing products"(IWY), which also offers a basis of the business's relationships using its global suppliers. in additional, the retail concept of Ikea from the original showroom to warehousing, shops act as ware houses. unlike most furniture companies, Ikea has ready inventory to meet customers' needs. Their distribution centers located worldwide to focus on needs of its retail stores. It experienced 42 syndication centers with the large inventory and variety of products. Ikea minimizes logistics costs by the customers as part of their supply string; customers collect their furniture's from self-serve area without long waits and assemble the furniture themselves.
Ikea's innovative approach to designing and packaging of product
4. 1Ikea's ground breaking method of making of product
Ikea design product prior to the first to determine the priceThis practice is generally to adhere to the design of the product and then the price predicated on cost and other furniture manufacturers. Ikea's creator to support all procedure costs like recycleables, manufacturing and transportation to the product reaches the store to the target price given. "Wood and cotton" are their main recycleables, and it's owned by green resources. Ikea is very hard to ensure that from the liable way management of forest and farmland, and between men and nature-oriented all the time. Look this, we realize that Ikea implemented such as a method at a relatively low cost to develop a superior quality products so let more and more people are able it. The company's goal was to provide low price and good quality products to customers.
4. 2 Ikea's product packaging of product
Ikea has considered a flat presentation system packaging in order to reduce air quantity for its furniture that namely free space furniture in travel and storage. It is especially concentrate on design useful furniture that can be dismounting and transferred to its retailers. Regarding these products can't be load into toned package, Ikea needed to make them stackable. Transporting part in level packaging allowed Ikea to maximize the vector space, so when cost slicing in comparison to other furniture retailer which transportation set up products. Although the business's focus on retailing affordable furniture, it does not compromise the technology design products and the power they offer. The flat product packaging not only can the convenience of our customers to travelling products by personal, but also helps save the company's transportation cost. In addition, it also helps Ikea in the utilization of the best of warehouse space and reducing the types of trays used to storage the merchandise.
How Ikea's SCM can reduce the cost
Ikea reflect the essential business philosophy "cheap however, not inferior" on the complete supply chain management, from various areas of the design, development, suppliers, logistics, sales to the implementation decrease the cost.
Design, Ikea shown its low priced strategy on the design. For example, design product not only from the function and digesting into consideration, early on should be inspection for choice of raw materials, packaging and transport factors. For example, make an effort to use light color layer instead of brunet color, because brunet car paint expensive, design detachable easy to move structure and so on, reduce transport cost, and through the inner design team co-operation, muilti-sectoral open public with discourse of product design program to lessen cost.
Manufacturing, Ikea using within global opportunity for developing outsourcing way into creation, to maximize reduce making cost. It creates the "horse race" mechanism for suppliers, and motivates the free competition among suppliers. Furthermore, Ikea every years to its suppliers will arranging a fixed index of reduce creation cost is to help make the production cost can become a continuous loss of virtuous pattern. So Ikea provides a privileges to customers at low price, and in the market its more competitive.
Logistics, Ikea is often said that "we do not carry air, " Ikea adopt the "flat product packaging" way to transport goods through the complex design logistics system, and take full advantage of the use of the means of transport of the travelling space, reduce the ineffective transportation, at exactly the same time transportation material used consistently.
Sales, Ikea allow customers' assemblage furniture by self applied, customer can pick transfer ways like pay delivery or just how of by home to save money. Not merely save the transfer cost, and given a free of charge tranquil space to customers.
6. 1 Strengths of Ikea's resource chain
The advantages include Ikea's professional marketing techniques or its market position. It enhances value to its service or product from any facet of the business enterprise.
Ikea's talents include:
A strong global brand which guarantees the same quality and global size, and draws in key target teams.
Its vision - "to create a "better life for everyone".
A 'realistic design' - achieved a good balance between quality, function, design and price. Ikea's Cost Consciousness' means that low prices strategy are believed first when each product was created right from the start.
These strengths are benefits for Ikea having the ability to entice and keep its customers.
6. 2 Weaknesses of Ikea's resource chain
Ikea must acknowledge its weaknesses in order to build up and administrate them. This can play a important role in helping it to building purposes and develop new strategies.
Ikea's weaknesses include:
This will make it difficult to control requirements and quality in this size and scale of its worldwide business. Ikea products are created do not appliance the legislation to control at work conditions in the some countries. This may signify a weakened website link in Ikea's supply chain, effecting customer opinions of Ikea's products. The IWAY code is due to by coaching and checkers visit factories to ensure that suppliers satisfied its demands.
Ikea dependence on low cost resource. It requires to be well balanced making high quality. Ikea must also differentiate itself and its products from competition.
Ikea has to hold on to good communication with consumers and shareholders about its actions of environmental. The scope of the business makes this a hard project. Ikea produces periodicals on the net and online. Such as 'People and the Environment', and holds out key Tv set programs and radio propaganda to permit the business enterprise to hook up with different concentrate on groups.
7. 0 Realization and suggestions
In short, Ikea's successful factors can boil down to its different theory. Ikea business principles support the Ikea empire widening growth, its global range affect and value concept ongoing reveal. Though it has towards globalization, but still did not forget localization, their strategies in an increasingly uncertain financial environment timely adjust. Based on the Ikea existing business design, supply chain, impressive product design and alternative raw materials, Ikea will get better in further.
In the other palm, Ikea should pay more attention to its target groups who in urban centers and universities, through so that it is possible for them to come to the store and make purchase. Because those areas where the populations are move house frequently. And it should build up consumers of high value, through keeping touching them and pushing them to return.
