IKEA Value Chain

Value chain analysis refers to a set of value creating activities, ranging from raw materials to marketing or producing a product or service and distributing it to the final consumer. Currently in present-day context, firms turned to outsource certain resources to reduce their cost of the product. This corporate value chain framework can be used for identifying competitive advantage methods of displaying and categorizing activities to contribute positively to the firm’s competitive strategy. If it becomes sustainable, profitable, defensible and valued by the market, the firm can generate high rates of return with average profitability from the industry in the market. (Srinivasan 2008) IKEA, the world biggest global furnishing mega store, provides products that are well- designed and functional, with prices that many consumers are able to afford them. It all begins from the internal analyze of IKEA’s resources, capabilities and both primary and support activities, also the external analyze of economy, social and technology aspects that made it all possible for their operations. One major resources of IKEA was to harvest woods from sustainable forest. Wood plays a big part for a furnishing industry and IKEA looks for excellent materials from a quality and responsibly managed forest. According to IKEA, the company is moving forward to build a more sustainable direction by the year 2015. The company wants to influence the entire value chain, from product design and development to the very end of a product’s life, to eventually produce products in a responsible way and also to live more sustainably.(Group 2011) Sociologically, it helps IKEA to create corporate social responsibility awareness which strengthen the company’s branding and able to attract consumers. IKEA have a few major manufacturer located in Poland and Sweden. IKEA’s capabilities were to plan different manufacturers to operate and focus on different sectors. According to the podcast, Kattilstorp in