Case Study – IKEA

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Case Study – IKEA
i.Introduction
IKEA has the record of being the major furniture retailer in the world. It is a Swedish worldwide company that specializes in designing and selling various items including home accessories, appliances as well as ready-to-assemble furniture. The company was founded in 1943 by its founder Ingvar Kamprad. The company has over 225 stores all over the world and about 90000 employees. This company has been very innovative in creating its products, and as such, it has gained the confidence of consumers. The highly creative and innovative goods have attracted a lot of customers. The company has been addressing the needs of its customers well, and this has made the company successful. This paper seeks to analyze this company in details (Ross 113).
ii.Case study background
According to IKEA case study is that IKEA has continued to attack its competitors by being as innovative as possible. Its victory can also be attributed to the fact that the company offers valuable products that make a difference in the lives of consumers. Kamprad began the company when he realized that the small business he had started was doing very well. At age nine he was selling matchboxes door to door but started to sell soap, stockings, and seedlings at 17 years. He realized that the business was performing greatly and therefore decided to start a company and decided to name it IKEA.

IKEA’s goal was to ensure that its competitors had reduced significantly. The furniture business has lead IKEA to be a successful company since it has an approximate of about 17 billion dollars in regards to revenue. This situation makes Kamprad to be placed among the richest people in the world with a personal fortune of 18.5 billion dollars (Ross 113).
The company has been satisfying customers by seeking to know their needs through interviews. The company offers the services and products that customers demand and this is what differentiates this company from its competitors. The company has invested in other countries, and this has been of great benefits to the company as it has experienced various benefits such as relief of tax and access to cheaper raw materials. Kamprad is an individual who tries his best to save so that he can leave some possessions to his heirs.
iii.Solutions to questions
Question 1
IKEA is a company that uses various innovative techniques to help in saving costs. The company ensures that its supply chain is very efficiently such that there is no wastage of resources especially when the company is transporting goods to customers. The company uses a global transport network which allows the company to reach many customers all over the world. Flat packages help in transporting large volumes and this help in reducing wastage. The company offers one-stop shopping which is a strategy that aids the company in saving spaces such that it does not incur many costs renting them (Brown 12).
Question 2
This company requires a strong operations management to ensure that its broad range of products and its scale of operations are successful. The company has a complicated supply network, and it encompasses 1300 direct suppliers. This company has 26 centers meant for distribution in addition to its 10000 sub-suppliers. The company also depends on a lot on its supply chain which comprises various processes that enable the company from the initial step to the last one. The main operational processes are carried out in the company’s headquarters. However, there are many problems that have been reported in regards to this company. First, customers have been overcrowding in the company due to problems getting products and the long wait times (Jonsson 1080 ).
Question 3
The company offers restaurant and café services where visitors can access food when they visit the enterprise. This service is unique to a company that specializes in furniture. The company also offers a playing field for children who come to the enterprises. This step is a unique service for children who do not want to go inside to shop with their parents or guardian engage in play well in these areas since they are supervised. The company has a large and very distinct store which allows visitors to feel free and at home when shopping. These complimentary services help customers to enjoy their time when they are waiting to be served since they are busy and engaging in activities that they like (Tarnovskaya 599).
Question 4
The visit to IKEA store in Jeddah showed some issues that needed to be addressed. First, the company uses road transport more compared to sea, rail or even air transport. The company needs to use rail transport frequently to ensure that the company protects the environment by reducing emissions from the vehicles it uses. There is a problem when serving customers as they are spending a lot of their time waiting in the queue. Customers do not like this treatment as their desire is to be served fast so that they can go and attend to their other matters. The company needs to improve its job designs so as to promote efficiency and effectiveness of workers. Inventory management system needs to be used to monitor the availability of inventory within the company’s stores. IKEA also should implement quality management systems to improve services delivered to clients (Brown 18).
iv. Your analysis of the situation
IKEA is one of largest firms that deal with furniture. The man behind that business empire is Kamprad who is worth over $18.5B. Based on this case study, it is clear that innovation is the most appropriate approach that can be used in used to reward the customers with value as well as a way to attack the competitors. IKEA has utilized operation management in ensuring it has succeeded in business. The applicability of the concepts of operations management has been contributing factors to the success of IKEA. The firm implemented a cost-effective approach in its business strategy which is one of the main factors that contributed to the achieved the success goal by the company. The firm has come up with measures of making sure that the wastage has been reduced as well as the costs involved in some activities such as shipping. The company used the strategy of offering pricing points that were lower than the ones that were being used by the other competitors. In addition, the quality of the products that were being offered by IKEA was of the same quality or higher than the value that was offered by the competitors (Tarnovskaya 616).
IKEA used a positioning approach that is regarded as a reverse positioning which became a success in the in the market for furniture. Most of the competitors focused on offering extra services to the employees such as delivery at home and even assembling for the customers. However, IKEA eliminated all these activities that were conducted by the competitors and opened self-service stores. Further, the work of assembling the furniture was given to the to the customers. The form also ensured that it had added some features to the furniture such as coming up with designs that were unique and the affordability or the products. The competitors did not offer these unique features that IKEA was giving to its customers. Through the application of operations management such as coming up with unique positioning strategy as well as the change in the proposition of value in the furniture industry thus making sure that IKEA has attained a competitive advantage (Slack 20).
Innovativeness and the invention the unique product strategy was another factor that gave the company a competitive edge. The company was also keen in the identification of the consumer trends such as setting prices that were lower than the ones set by the competitors was a great idea that made IKEA one of the largest firms in the world. The company was keen on increasing efficiency and reducing the costs. However, the company has always ensured that the quality of the products that they make have not be compromised in any way. The unique characteristics that have been offered have increased the value of the consumers. The firm has combined affordability, form, and affordability of the services offered to the consumers an act that the other competitors have not been applying. The packaging of the furniture from IKEA is currently packaged in flat boxes, and they are usually unassembled to reduce the costs involved in shipping. Firms are supposed to apply strategies that minimize the costs while maintaining the quality of the products as well as the value to the consumers (Ross 114).
Kamprad has demonstrated leadership abilities as well as the abilities to manage the firm. His success as a leader has been attributed to the strategies that he uses as well as the individuals who he has employed have strong management skills. Leaders are expected to demonstrate strong leadership skills like the ones that Kamprad has been using. The company has demonstrated how streamlining of operations in the company can be outstanding in giving a company a competitive edge. The uniqueness of the strategies as well as observing the customer trends so as to design a product that is exceptional for the consumer as well as increasing their values and making them affordable (Slack 14).
v. Conclusion and Recommendations
IKEA is a firm that was founded in 1943 and it the largest retailer of furniture in the world. The company has increased its value to the extent that it has over 225 stores in more than thirty countries around the globe. The leadership of Ingvar Kamprad was outstanding because he revolutionized the retailing the of furniture. His abilities worked perfectly making him undercut other companies that are involved in retailing of furniture. The combination of strategies has played an imperative role in making sure that the company has achieved a competitive edge.
Most companies and leaders and managers should emulate from Kamprad as well as IKEA in making sure that their companies have grown to a global level. Other leaders are expected to embrace humbleness, simplicity, responsibility, and enthusiasm traits that have contributed to Kamprad. IKEA should expand to regions around the world rather than concentrating on only thirty countries. Additionally, companies should compete fairly and encourage transparency in the leadership. IKEA is a firm that has used strategies that are unique to gain a competitive edge which is crucial for the success of other firms.
Works Cited
Brown, S. Strategic operations management. Routledge, 2013.
Jonsson, Anna, and Nicolai J. Foss. “International expansion through flexible replication: Learning from the internationalization experience of IKEA.” Journal of International Business Studies 42.9 (2011): 1079-1102.
Ross, Emily. 100 Reat Businesses and the Minds Behind Them. North Sydney: Random House Australia, 2007:112-115. Print.
Slack, Nigel. Operations strategy. John Wiley & Sons, Ltd, 2015.
Tarnovskaya, Veronika V., and Leslie de Chernatony. “Internalising a brand across cultures: the case of IKEA.” International Journal of Retail & Distribution Management 39.8 (2011): 598-618.