Strategies for improvement - Ikea

1. By Rahul Karangutkar (0951826) Parag Jain () AtoosaZand (0) Trung SeunFayemiwo (0) Amanda (0)

2. Outline Introduction Vision And Mission Growth Geographical Scope Strategy Attractiveness Of Market Strategic Competencies Strategy

3. Introduction Ingvar KampradElmtarydAgunnaryd 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)

4. 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 Source: Ikea, 2010

5. 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

6. Geographical Scope SALES BY REGION Europe – 81%, North America -16% and Asia & Australia -3% TOP SUPPLIER COUNTRIES China -18%, Poland- 12%, Sweden -9%, Italy -7% and Germany -6%

7. Supply Chain (IKEA) Source: Thetimes100.co.uk, 2010

8. Business Strategy Segmentation Middle-class population, All age group. Advanced Economies – Europe, USA, Australia Emerging Markets – China Positioning Cost Leadership Differentiation

9. Business Strategy

10. Value chain of IKEA CUSTOMERS SUPPLIERS DISTRIBUTION

11. Resource Based View (IKEA )

12. Resource Based View

15. Low bureaucracy

16. Rivalries:

17. British “B&Q”

20. Population: 1.3 billion

21. The raising of Middle class

22. Cheap furniture demandSUPPORTING INDUSTRIES INTERNATIONAL BUSINESS STRATEGY (SMM 206) PRESENTATION (Porter, 1990)

23. 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.

24. Comparative Advantage Supply from China Low cost labour Labour skill Raw material accessibility Sales in EU, North America Very Large middle class group

25. 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.

26. 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”

27. Thank You !