IKEA's SUPPLY CHAIN

Strategic Decision Making in IKEA's Supply Network Chain

Strategic Decision Making in IKEA's Supply Network Chain

Introduction to the Paper

This paper will be making a positive contribution to Cowling and Sugden's work on the theory of the strategic decision making in the multinational companies. It will be focusing on their study “the essence of the modern corporation: markets, strategic decision-making and the theory of the firm.” It will extend this definition to account for the fact that strategic decision-makers engaged in the coordination of production operate under conditions of 'fundamental uncertainty'. The significance of such an extension is that it avoids many of the problems associated with Cowling and Sugden's framework while reinforcing their main conclusions and providing a technical definition of the concept of strategy. It further will be discussing the theory of Strategic Decision Making in Multinational Companies by Cowling and Sugden and the case of IKEA's supply network chain.

Discussion

Background of the Company

IKEA has been very thriving because of the time they spend comprehending their customers. Ingvar Kamprad founded IKEA in 1943 at the age of 17. Ingvar originally traded ballpoints, wallets, image borders, table runners, watches, and jewelry and nylon stockings through IKEA at a decreased price. Ingvar understood that he could purchase goods in bulk at a smaller cost and still sell them cheap while making a profit. IKEA's achievement has arrived from the way they offer a wide variety of well conceived furniture products at charges lower than the competitors. By keeping their goods prices low, they have been able to create a large demand for their products. IKEA had a vision, expressed by founder Kamprad that the company should sell a basic product that is "typically Swedish" wherever it goes in the world. IKEA accepts as true in employed closely with manufacturers, suppliers, designers and other specialists. Expertise of these diverse stakeholders is combined in to come up with innovative methods to decrease charges so that these can be passed on to the customers. Its clientele groundwork consists of persons who are dynamically seeking better worth for cash in their products.

Supply Chain Network of IKEA

Logistics management successfully adapts to the characteristics and product positioning. Part of the success of the chain is given by a control and reduction of many of the logistical costs, allowing the company to offer competitive prices. The customer takes home the furniture in your car and rides it home. Manipulation of the movable means removable transport costs and storage significantly lower. This savings, in addition to the costs of delivery and installation, enable the company to offer the product at a competitive price, significantly lower than its competitors for a piece of furniture of the same features. But IKEA's comparative advantage lays not only in reducing logistics costs. The company knows its target audience, and outlets designed to facilitate the purchase process. The furniture is a durable good choice, which determines the purchasing process and subsequent use of the product. Consumers expected to give furniture a service for ...