CASE STUDY OF IKEA

Case Study of IKEA



Case Study of IKEA

Ans-1)Global sourcing is amongst the most important strategic challenges for companies in order to manage their supply and purchase. Under such circumstance where pressures to reduce costs are increasing, companies have made changes to their sourcing by shifting from local suppliers to country-based suppliers who also offers low cost. The present economic downturn demonstrates a slight confirmation for overturning this trend; in practice, it will possibly augment the pressures for companies to shift towards global sources. Nevertheless, the process of global sourcing is very challenging as it entails complexities, which the firm often takes too lightly. Even though, IKEA is far much different if compared with its status in 1976, the principles of basic operations at IKEA seems to be sustainable in the longer run. A major element in IKEA's strategy for low cost strategy is the belief to be the owner of only a few means of its productions. Thus, the products, which are sold at IKEA stores, along with the signature products such as the PAX wardrobe, BILLY bookshelf, SULTAN bed and the LACK table are sourced from network of global suppliers, to a significant extent (Campbell et al, 2002).

Another major reason for IKEA's success is dependent on IKEA's strategy of not to customize its products according to the needs of the local markets; rather, it maintained a standard for its operations and products across the globe. This strategy standardization led to internationalizing reduced costs. Although maintaining close relationships with the suppliers along with appropriate functioning is critical; however, in IKEA's case this at times, appears to be an apparently neglected driver of the success. Establishing Poland as a market for its sourcing marks the commencement of an extension of sourcing markets, this is in practice to date. In 2008, IKEA sourced its line of furniture from 54 countries around the globe and this was done by purchasing 30 offices scattered over strategic places, across the globe. IKEA stirred up its success by developing its of supply chains in those regions which offered low-cost, situated apart from the immediate markets of IKEA's sales, this was done at the time when IKEA commonly sold its furniture to the Nordic and local market. This originally occurred in other Eastern parts of Europe; for instance, Hungary, Rumania and Czechoslovakia and afterwards in other distant places across the globe like Malaysia, Indonesia and China (De Wit and Meyer, 2005).

Ans-2)The managers at IKEA describes a few issues related to supply as factors creating limitations in IKEA's for expansion to other parts of the world. In order to resolve these issues, investigation for bringing improvement in the supply chain management of IKEA shall be made. This is necessary because the raw materials including wood are those commodities which can be reached far and wide across the globe. IKEA plans to speed up the rate of its expansion and the reach it has in different parts of the ...