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”

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