Case study IKEA Questions PDF

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Case study (IKEA) Questions What are the some of the things IKEA is doing right to reach consumers in different markets? What else could it be doing?  They are following different things to reach consumers in different markets. Always they are try to doing a right & accurate things. They are following global trends.  In today's global society, we don't live in isolated communities. In a single location, people of all backgrounds, cultures and languages interact in a single space all the time. People are never free of culture. They have their own customs, language, food, beliefs and way of life. This phenomenon is in almost all communities and organizations, like IKEA, thus confirming the idea of a multicultural society.

 This phenomenon is connected with globalization, which are connected with the development in technology, communication and transportation. What happens in one part of the world will consequently affect another part faster than ever before. Traditional borders are almost out-of-date as people are able to easily move from one place to another. Globalization is a very positive trend for IKEA because it spreads the popularity of the company around the world. If IKEA is popular in some continent, like it is in Europe, that popularity will probably spread to another continent, like America and the emergent markets -the BRICS countries. It gives an opportunity to IKEA to expand to new countries. In this globalized economy and in this multicultural society, culture is constantly present. As a consequence, the significance of culture should never be disregarded because it is able to act as an entrance into understanding humanity. For example, by analyzing different social groups, an understanding of employee's behavior, thought, and perception at the company may increase individual performance as well as IKEA output.  Summarizing they are doing like that steps. They doing unique value proposition which is leading Scandinavian design at extremely law prices. Reduce their prices 2% to 3% and then 10% margin annually. And also they have source materials from different countries. They location of outlets that lower rental costs. They are used energy saving lightings.

 And also they give long operating hours. They consider about the local adaptation.  They are following many objectives by using reduce prices They are:

Many people think that it's because the furniture is made cheaply, which isn't exactly true. Read on to find out about some of IKEA's less obvious cost-saving strategies.

1.Recycling The Recovery Department (of which, the AS-IS room is part) is responsible for sorting and recycling all recyclable materials, including packaging broken down in-store as well as materials collected from customers at recycling donation bins where available.

2.Waste Reduction IKEA's designers and engineers strive to reduce the amount of material used and wasted in production. Additionally, many waste products are then used to make new products, further reducing overall costs both to the pocketbook as well as to the environment. 3.Automatic selling Despite the showrooms showcasing IKEA furniture in real living arrangements (typically located upstairs), IKEA is a warehouse store designed to maximize customer self-sufficiency with minimal reliance on staff assistance. Cost savings stem from reduced wages, training costs and lower design, maintenance and outfitting costs associated with the marketplace and warehouse areas of the stores. 4.Thriftiness Frugality is a value highly prized by IKEA's founder, Ingvar Kamprad. Though listed as one of the world's richest men, he continues to fly economy as do IKEA's top-level managers when on business travel. Stores encourage employees to turn out lights in offices, turn off computers and reduce overall energy consumption by using compact fluorescent lightbulbs. 5.In-house design Virtually all of IKEA's products are designed by IKEA's staff of in-house designers who are well versed in creating trend-setting designs while working from a set pricepoint. In-house design also means there are no large design commissions to be paid.

6.Economies of Scale IKEA utilizes it's massive economies of scale to secure long-term contracts with manufacturers and to reduce costs of raw materials through bulk-buying. Because of their sheer size, they can demand lower prices for materials which suppliers can afford to give if they have a steady income.

7.Transportation All transportation of IKEA products is by cargo container - either via cargo carrier for overseas transportation or via tractor-trailer for ground transport rather than by more expensive air transport. Transportation costs are also minimized by carefully locating distribution centers and stores for optimum travel efficiency (see below). 8.Strategic Placement IKEA Stores are strategically placed in high-density areas to guarantee store traffic and along highway/interstate routes to maximize visibility. Expansion plans take into account not only the proximity to a highway, but also the distance from a distribution warehouse - this minimizes the expenses associated with stocking the warehouses. 9.Minimal packaging The ubiquitous plain brown corrugated cardboard is the packaging material of choice for a reason - it's cheap, easy to recycle and can be made to fit around almost any product. Small labels on the boxes identify the products within. Printing wordless instruction materials also saves money by eliminating the need to translate the written word to the native languages of the many nations in which IKEA retails. IKEA is constantly seeking ways to reduce costs as it is in integral part of the corporate culture. With IKEA, you're not getting reduced prices on previously overpriced products, you're getting real honest to goodness value. And that's something worthwhile.

IKEA has essentially changed the way people shop for furniture. Discuss the pros & cons of this strategy.

Pros: Because of the wide variety of item displayed and the layout of the shop designed in a one way format results in customers seeing everything available. They might therefore end up buying even something that they hadn’t thought about convenience for the customers because everything is boxed and they do their own assembling. It easy to transport(on buying and when people move) Also saving shelf spaces for other IKEA products and reducing transport costs for their products that people can easily remember(belief is that people remember names better than they do codes).

Cons: The size and scale of IKEA sometimes affects the quality standards of their products and therefore negatively affect the view that customer has of them. As such customers will have to pay more attention to the products they are buying the format of the shop can be too overwhelming for the customers such that they may not even know where to start from not maximizing on the growing technology available for marketing and advertising, so consumers might end up going elsewhere the fact that people have to assemble their own items can be problematic for people who are not good at fixing or assembling items.

Recommendations: IKEA needs to find more local suppliers to keep price lower. To understand local culture and purchasing habit, the company should carry out extensive market research. To attract more middleclass consumer huge adaption is necessary. Extensive training for the employees and better supply chain management will solve customer service and out-ofstock problems for IKEA.

Conclusion: Therefore it is apparent that IKEA has managed to both capitalize on its cost leadership and ensure they meet local demands through differentiation of products thus using transnational strategy. IKEA has chosen to mostly enter markets through wholly-owned subsidiaries in order to maintain their brand image, although when compelled, other methods such as joint ventures and franchising has been made use of. This strategic decision has enable IKEA to maintain a competitive advantage, and earn above average returns due to leadership in the market....