IKEA Scott Claxton, Kevin Browning, Micheal Marshall
The Beginning • Founded in 1943 • By Ingvar Kamprad • Originally sold basic household goods at a discounted price • Opened first furniture showroom six years later • Flagship store was opened Stockholm
The Problem • If emphasis is on being cost-efficient, is the product durable? • Is shipping apart of being cost-efficient?
Issues • Going green “lets make a difference” • First name basis “employees matter” • Cost efficiency • Prices are important. IKEA outsources the manufacturing of it products to over 50 countries. Customer can choose piece by piece and customize their own purchase. • To lower cost IKEA only uses top quality material for a visual effect. Lower cost material for the less visual parts.
Continued • Searched for the lowest bidder. • Shipping-“We don’t want to pay to ship air” products are shipped in flat boxes and assembled by the customer, which saves money on both ends. • Paying more attention to design. “Becoming more fashionable”. • Products not made to last. • Buying in bulk.
Continued • “Often imitated never duplicated” competitors can never match IKEA in all areas. Cost, experience and production.
Perspectives • “Then and now” IKEA has changed over the generations. In the beginning they were more focused an economically product than they were with looks. • Specialize their products to fit a large demographic. “Different people have different taste”. • IKEA creates a unique experience. Stores have child care centers and are set up to resemble amusement parks.
SWOT Strengths • Price-low cost producers of home furniture • Strives for shipping efficiency. • Fashionable. Products have become more eye-appealing. • Outsources production to reduce prices. • Great customer service.
Weaknesses • Product durability. – does not stand the test of time. • Quality • Reputation-people remember the old IKEA. • Spreading itself to thin to corner all markets. • Assembly- consumers want the final product preassembled.
Opportunities • Branching out to different markets. Such as electronics and home appliances. • Producing higher quality products that are more accepted to the upscale customer. • A higher need for greener products- striving for leaving less of an impact on the environment. • Reducing water usage. • Increase of recycling waste.
Threats • Other competitors offering higher quality products. • Other companies recreating the ideas of IKEA and their business activities. • Smaller companies taking a portion of the business away. • Competitors offering products with zero assembly required.
Actions • IKEA needs to strive for a better quality product. IKEA has been known to have a bad wrap. • Strive for greener products. Reducing waste and continuing to be as efficient as possible. • Strengthen their reputation for the American consumers. • Continue to look for the most effective way of producing the final product at the lowest possible cost.
Consequences • Labor costs may rise due to an increase in quality control and research and development. • Going green can be more expensive for the company. • Continuing to redesign products can seem costly before seeing final results. • By using the top quality wood and other materials on the exterior of the products for eye-appeal causes an increase in price.