IKEA

IKEA -Value Chain

IKEA -Value Chain

Introduction

If retailers are to be successful in international market, they should not just be perfect in the traditional market segment skills, however, they need to master in economic and cultural traditions as well. IKEA founded in the year 1943, currently it is the world's leading furniture retailer. IKEA provides stylish however expensive designs of furniture, the furniture are based on Scandinavian design. In 27 countries. IKEA has 129 completely owned stores. These stores of IKEA are visited by more than 109 million individuals yearly. IKEA has international sales of about $6 billion, in the year 1994. The success of IKEA in retailing industry can be credited to its immense experience in the retailing market, cost leadership and product differentiation. The IKEA Company is, possibly, one of the most successful international retailing organisation. IKEA is a multinational organization that has been established on unique idea that helps in providing the furniture to its customer at their door steps, and in the different kits.

Value Chain of IKEA in Retail Industry

The mission of IKEA is to provide a large range of furniture items of stylish function and design, excellent durability and quality. The prices that IKEA offers on its products are very low, so the majority of individuals can afford to purchase these items. The IKEA Company focuses the customer who is seeking for value and is eager to do a little bit of effort in serving them, transporting the furniture items at the door step of customer and collecting the furniture at reasonable prices (Lalonde, 1996). The main customer of IKEA is young individual who belongs to middle income family.

IKEA does not have its particular facilities of manufacturing. However, for supplies, IKEA is utilising subcontracted manufacturers all across the world. On the other hand, all development and research activities are centralized in Sweden. To maintain the lower cost, the purchasers for IKEA products are Pro-sumers, which are half consumers and half producers. In other words, this can be said that IKEA has to collect its products or goods themselves. To allow shopping, IKEA gives tape measures, catalogs, shopping lists, and pen for writing measurements and notes. Roof racks of car are available at reasonable cost and IKEA trucks and vans are available on rent (Kotler & Keller, 2012). The success of IKEA is based on comparatively simple concept of keeping the low price between customers and manufacturers. In the view of Ingvar Kamprad, who is the founder of the organization, in order to make a desk which can cost $9,000 is easier for a furniture designer, however to design a good and functional desk which would cost $60 is not that easier. Expensive solutions to all types of issues are often indicators of weakness. At the design point of the value added chain, prices are kept low. In addition to this, IKEA keeps prices reasonable by wrapping items neatly in flat identical stacking and emalages as much possible in order to reduce space ...