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
0
5
10
15
20
25
TURNOVER € BILLION
TURNOVER €
BILLION
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
0
50
100
150
200
250
300
350
1954
20…
20…
2007
208
20…
2010
No of IKEA retail
outlet
No of
IKEA
retail
outlet
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%
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
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, minimu
m staff
Strength of
brand name
Distinctiveness
in Design
Diversity in
Assortment
10. Value chain of IKEA
Purchasing
Range
Stores
DISTRIBUTION
SUPPLIERS CUSTOMERS
11. Resource Based View (IKEA )
PHYSICALASSETS OWN 313 STORES WOLDWIDE AND ARE USUALLY LOCATED
OUTSIDE THE TOWN
37 STORES THAT ARE FRANCHISED
38 COUNTRIES
WORLD LARGEST FURNITURE RETAILER
FINANCIALASSETS PROMOTION AND ADVERTISING
SOURCE FROM FRANCHISE
EXPERIENCED A 15% SALES INCREASE BETWEEN 1990-2005
2005 THEY MADE 14.8 BILLION EURO
2010 THEY EXTIMATED $23 BILLION
INTELLECTUAL
RESOURCE
GOOD RELATIONSHIP WITH GOVERNMENT
SKILLED STAFFS
UNIQUE FURNITURE STYLING
OPERATE 24 HOURS DAILY
GOOD RELATIONSHIP WITH SUPPLIERS
BUILDING STRUCTUER
12. Resource Based View
REPUTION RESOURCE BRAND NAME
FRANCHISING
$128 MILLION FOR UNICEF IN 2015
WELL KNOWN IN EUROPE ASIAAND AMERICA
HUMAN RESOURCE 127,000 STAFFS
SKILLED EMPLOYEE’S IN STORE’S AND WOOD’S
GOOD TRANSPORT SYSTEM
EXPERT DESIGNERS
GOOD CUSTOMER SERVICE
OVER 12,000 ITEMS PRESENT IN THE WEB
MOTIVATION OF EMPLOYEES (REWARD SYSTEM)
RELATIONAL
RESOURCE
28 DISTRIBUTION CENTER
GOOD INTERNET ACCESS
NETWORKING SYSYTEM
550 MILLION PEOPLE USING THEIR WEBSITE EVERY
YEAR
GOOD TRANSPORT SYSTEM
14. 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.
15. Comparative Advantage
Supply from China
Low cost labour
Labour skill
Raw material accessibility
Sales in EU, North America
Very Large middle class group
16. 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.
17. 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”
