Ikea

I. Introduction IKEA, a company that offer relatively cheap and quality furniture had modest roots during its early years, a brainchild of Ingvar Kamprad, IKEA started selling consumer goods: pens, matches, and etc. The furniture business didn’t happen after he hired photographer Gillis Lundgren, who helped designed simple and decorative furniture. The sudden threat of IKEA to the local furniture business forced them to move their operations in Poland; they began taking ground through mail orders which gave birth to their first store in Sweden’s capital Stockholm. From then on IKEA garnered international acclaim which led to their uprising and expanding from different continents from Europe to America and even Asia, IKEA has remained one of the most favorable brand names associating with quality and cheap furniture.

II. Analysis Strengths  Cheap and Affordable Easy to assemble due to democratic designs and easily packed because it is flat-packed.  Company culture Due to “democratic design”, self Store size Expand store size to accommodate greater number of customers.  Furniture durability and life span. With low cost furniture durability is not certain so as its life span. IKEA doesn’t engage much on advertising.  Store layout -it would be hassle for someone who want a particular item only  Web offerings Weakness

assembly and self-service which saves  Poor advertising costs. Also, raw materials are being source with cheaper price.  Existence of a good leader Ingvar Kamprad developed a system and culture in IKEA that looks after the stakeholders and the consumers.  Furniture is easy to assemble and ship. It has become IKEA’s culture to hire not the ones who finished a degree in order to extend hope and love to those who are unfortunate. Also, in IKEA employees depict equality, top to bottom employees wear the same shirt.

 New and cheap technologies used for production.  Powerful brand image Image of affordability, cheap but stylish and functional.  Strategic store layout The store is layout in a manner where customers can buy in an impulse. It serves a one stop shop because it has restaurants inside the store. Also, it provides customer experience of

assembling and convenience because it also has daycare centers.  Tight financing  Wide range of product and stylish functional designs Opportunities  Expansion Expand on untapped market  Web offerings Increase presence. online sales and Internet Threats  Threat of Subtitute Existence of indirect competitors, such as Walmart, home depot, may divide the market of IKEA. More so, the existence of luxury brands- direct competitors.

 Offering high-end product for a different  Diverse customer culture target market Every place has its unique culture. Swedish style may not adaptive to one’s lifestyle.  Economic Depression Because of economic depression people are cutting their “unnecessary” expenses such as purchasing of furniture.

III. Problems and Alternatives Problem #1: Treading new territory like tapping a culturally different market, especially Asia, IKEA is left with a dilemma on how they could relate their furniture to their culture. IKEA has been recognized with stylish lines which appeals to western market but not to eastern standards. Asia in particular has rich culture which is entirely different with western standards. Solutions: 1. Proper market research and consultation will create a fruitful approach. Costs  Research will cost time  Will incur additional cost  Trial and error Benefits  Proper knowledge about the market environment, and the targeted market.  Firm grasp perspective about the territory

2. Another solution would be hiring competent individuals that have firsthand knowledge about the culture of the territory. Costs Benefits  Hiring new employee might result into  With firsthand knowledge we can already differentiation of ideas  Hiring may delay operation create product suited to their culture  Help promote diversified ideas and

enrich the culture of that territory  More innovative and creative product designs

Problem #2: Increasing future demand will result in high customer traffic especially in stores that are small to medium sized. Solutions: 1. Utilize online stores that which can regulate customer traffic, by providing the same service at the customers own home. Costs  Added cost for delivery  Added cost for employee training Benefits  Customer convenience  Easy to manage and develop database  Reduce traffic in the store

2. Renovation can also help redesign the structure and redefine the store to suit and ease customer traffic. Costs    Costly May disrupt the normal the store Takes long to achieve operation of   Benefits Spacious store Regulate customer traffic

Problem #3: IKEA’s culture has been reflected through the personality of Ingvar, a frugal and simple mannered man. With time passing by it is inevitable that his seat as the leader will be replaced, IKEA may be susceptible to changes in their culture as a company. Solutions: 1. Utilizing a selection program that help facilitate the needed requirements and capabilities of a potential leader for the company. Costs  Risky Benefits  Competent leader  Creates future ground for future leaders  Generates new ideas for the company

2. Hiring more Swedes that inhabit similar work ethics and cultural similarities. Costs  Hiring similar individuals will inhibit  Similar creativity and diversity similarities work Benefits ethics and cultural

IV. Recommendation Problem 1 Traversing new territory to expand your business will be risky, you are currently unaware of what the general public of a certain area perceives your offering they might be in favor or maybe not, either way the proper solution for this it to do proper market research. Market research levels out the playing field at first companies doesn’t have the proper knowledge about the area but by doing research, IKEA can utilize information gathered from researching and employ strategies that are guided and supported by the data gathered. Strategies like the quality of product they want,

how they should offer it to them, how IKEA and their consumer could communicate, where they want to offer it, and what after services they need. By answering these questions IKEA has now advantage before risking the name of the company. Problem 2 A digital age has dawned over several years, and it was time for IKEA to utilize technology to their advantage. They had the catalogs they delivered to their customers, it was effective but at the same time cost them money. IKEA has already been an established brand so product awareness is a thing of the past and the consumers are the ones who are looking for them. By doing business online, IKEA now has a different channel where they could do business, customers can just browse to their virtual catalog and when they want something all they have to do is pay via credit card or other modes of payment and send them via delivery. Problem 3 By having a good selection program, IKEA can chose out the most competent leaders that will lead them in the future. The key for the program was to maximize diversification since they already established a global images, countries have different preferences and culture, but by being a diverse company, IKEA can create new concepts and ideas or even revolutionize the industry they are partaking.

V. Conclusion IKEA is a very well know company that sells quality furniture, though they aren’t the most luxurious brand, but they have a large following of loyal consumers who are craving for new designs and concepts. The future is inevitable for IKEA, and has a lot of variables, they could go up or go down, either way they must come prepared for what’s coming. Globalization was the main concept here, it made the world small in every way from communicating to doing business, and it was time that IKEA created something that the whole world want and need.

VI. Implementation

Period Activity Jan. Apr. Planning Market Feasibilty Study Submission of Proposal Approval of Proposal Project Implementation Procedural Implementation Construction May Aug. Sept. Dec.

Person Responsible Managers Managers Managers CEO Managers Managers Managers

Budget: Meetings Suppliers Construction Materials Labor Cost Documentation Communications Transportation Training Programs Contingency *** *** *** *** *** *** *** *** ***