BUSINESS PROJECT

Business Project - IKEA Company

Business Project - IKEA Company

Introduction

IKEA is a multinational company that provides consumers with domestic furniture and functional products for residential usage. The company has managed to garner significant popularity in the last few years on account of the maverick approach that it has adopted towards business conduction and operations management. The business has managed to make use of a business conduction approach in whic it has made it possible for consumers to purchase reasonably priced products for domestic usage (Yunker 2007). IKEA was formed in 1940s and is currently a subsidiary of the INGKA foundation from the Netherlands. The front end structure of the company is that which relates to the regular retail business. IKEA's product line comprises products from two sources. The first source is through third parties: IKEA purchases products from third parties and retails them under its umbrella.

These products are generally those that are designer products or those that are designed for specialized purposes. The second source is IKEA's industrial group: Swedwood. A majority of IKEA's products are produced by this group. IKEA's organizational structure falls under the direct control of the INGKA holdings group, which is then further divided into two categories: group support functions and expert functions (Yunker 2007). These are also referred to as inter IKEA systems. The five areas of functioning that fall under these two categories are range, industry, purchasing, distribution & wholesale and retail.

Chapter I: Competitive Position

The meanings of competitive advantage and core competency are misunderstood. Core competencies are the skills that distinguish an institution from competitors. The core competency of an institution is the one function or service that the institution can perform better than any competitors can. A core competency is central to the value-generating activities of an institution.

The goal of academic leaders is to have a core competency that generates a long-term competitive advantage to the institution. A competitive advantage can be either a capability of the institution or a superior resource, such as a recognizable name, a desirable product, or a favorable location, that enables an institution to be successful (Bartol, 2009: 12). A core competency can exist without being a competitive advantage. Administrators of higher education have often viewed technological changes such as online education as being necessary for providing a service or product on demand, meeting the needs of non-traditional students, and maintaining the competitive advantage of an institution in a growing and competitive market.

Porter's Five Forces Model

Buyer power

Buyer power is substantially lowered as individual consumers have little financial muscle and their large number means that retailers' sales are hardly affected by the loss of any individual consumer. However, furniture and floor covering purchases are long-term and infrequent; buyers are more likely to shop around for the best deal, with a focus on price and quality rather than brand loyalty. Buyer power is further strengthened by negligible switching costs. Overall, buyer power is moderate (Stranieri 2008, 18).

As individual consumers, buyers are numerous, with little financial muscle, and have little ...