Ikea Business Strategy
IKEA
The strategy of IKEA adopted was cost leadership strategy. The cost leadership strategy is an integrated set action taken to produce goods or services with feature that are acceptable to customers at the lowest cost relative to that of competitors. Firms using the cost leadership strategy commonly sell standardized goods or services to the industry’s most typical customers. IKEA sells a lifestyle that customers around the world embrace a signal they have arrived good taste and recognize value. “If it wasn’t for IKEA,” Wrote the British design magazine Icon, “Most people would have no access to affordable contemporary design.” The firm’s vision is “good design and function at low prices.” In fact that everyone like low price products and everyone like new and good design products. But the good design products seldom mark at low prices, but not many are affordable or want to pay much just for the furniture. So IKEA targets at this group people. Good design is IKEA’s competitive level of quality that creates value for customers.
To achieve its positioning, IKEA has put much effort on several ways.
Firstly, IKEA sells good designed furniture at low prices. But how can IKEA make its product good design and lower its production cost? IKEA has a group of good designers in Sweden. They are responsible for product design and innovation. In order to lower the cost, other members work hand in hand in house production team to indentify the appropriate materials and the least cost suppliers. IKEA works overtime to find the right manufacturer for the right product. It has a big network of suppliers over the world and keeps in good relationship. As primary activities, inbound logistics (e.g., materials handling, warehousing, and inventory control) and outbound logistics (e.g., collecting, storing, and distributing products to customers) often account for significant portions of total cost to produce furniture. Research suggests that having a competitive advantage
The strategy of IKEA adopted was cost leadership strategy. The cost leadership strategy is an integrated set action taken to produce goods or services with feature that are acceptable to customers at the lowest cost relative to that of competitors. Firms using the cost leadership strategy commonly sell standardized goods or services to the industry’s most typical customers. IKEA sells a lifestyle that customers around the world embrace a signal they have arrived good taste and recognize value. “If it wasn’t for IKEA,” Wrote the British design magazine Icon, “Most people would have no access to affordable contemporary design.” The firm’s vision is “good design and function at low prices.” In fact that everyone like low price products and everyone like new and good design products. But the good design products seldom mark at low prices, but not many are affordable or want to pay much just for the furniture. So IKEA targets at this group people. Good design is IKEA’s competitive level of quality that creates value for customers.
To achieve its positioning, IKEA has put much effort on several ways.
Firstly, IKEA sells good designed furniture at low prices. But how can IKEA make its product good design and lower its production cost? IKEA has a group of good designers in Sweden. They are responsible for product design and innovation. In order to lower the cost, other members work hand in hand in house production team to indentify the appropriate materials and the least cost suppliers. IKEA works overtime to find the right manufacturer for the right product. It has a big network of suppliers over the world and keeps in good relationship. As primary activities, inbound logistics (e.g., materials handling, warehousing, and inventory control) and outbound logistics (e.g., collecting, storing, and distributing products to customers) often account for significant portions of total cost to produce furniture. Research suggests that having a competitive advantage
References: Chapters 1-4 of “The Management of Strategy Concepts” (9th edition) R. Duane Ireland, Robert E. Hoskisson, Michael A. Hitt