By Rahul Karangutkar (0951826) Parag Jain () Atoosa Zand (0) Trung Seun Fayemiwo (0) Amanda (0)

Outline
Introduction

Vision And Mission

Growth Geographical Scope

Strategy
Attractiveness Of Market Strategic Competencies

Strategy

Introduction
Ingvar Kamprad Elmtaryd Agunnaryd Founded: 1943 in Almhult, Smaland, Sweden Founder: Ingvar Kamprad Headquarters: The Netherlands Parent Company: INGKA Holding Industry: Retail

Product: Self Assembly Furniture

Chain of Product: Restaurant, Manufacturing, Housing, Revenue: 23.1billion (2009) Employees: 127,000 (2009)

Area Served: Multinational

316 stores (2010) 699million visitors (2010)

IKEA
Vision: Mission Statement: Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them Growth TURNOVER BILLION

25 15 10 5 0

20 TURNOVER BILLION

Source: Ikea, 2010

Growth Pattern
Started 1943 as a one man

1954

2004

2006

2007

2009

208

2010

mail order company The Ikea concept started in 1950 The company started sourcing supplies from other European countries In 1960, the warehouse principle was introduced In 1963, Ikea went abroad, opening in Norway

No of IKEA retail outlet

350

300
250 200 150 100 50 0

No of IKEA retail outlet

Geographical Scope

SALES BY REGION Europe 81%, North America -16% and Asia & Australia -3% TOP SUPPLIER COUNTRIES China -18%, Poland- 12%, Sweden -9%, Italy -7% and Germany -6%

Supply Chain (IKEA)

Source: Thetimes100.co.uk, 2010

Business Strategy

Segmentation Middle-class population, All age group. Advanced Economies Europe, USA, Australia Emerging Markets China Positioning Cost Leadership Differentiation

Business Strategy
Economies of Scale: Standardisation

Economies of scope: Furniture and Restaurant Share facilities

Economic Design Logistics

Diversity in Assortment

Competitive Advantage

Customers included in the value chain, minimum staff

Network of Supply: 1300 suppliers in 53 Countries Distinctiveness in Design Strength of brand name

Large Warehouse Showroom in Sub-Urban centres

Value chain of IKEA

SUPPLIERS CUSTOMERS

Purchasing

Range

Stores

DISTRIBUTION

Resource Based View (IKEA )

PHYSICAL ASSETS OWN 313 STORES WOLDWIDE AND ARE USUALLY LOCATED OUTSIDE THE TOWN 37 STORES THAT ARE FRANCHISED 38 COUNTRIES WORLD LARGEST FURNITURE RETAILER PROMOTION AND ADVERTISING SOURCE FROM FRANCHISE EXPERIENCED A 15% SALES INCREASE BETWEEN 1990-2005 2005 THEY MADE 14.8 BILLION EURO 2010 THEY EXTIMATED $23 BILLION

FINANCIAL ASSETS

INTELLECTUAL RESOURCE

GOOD RELATIONSHIP WITH GOVERNMENT SKILLED STAFFS UNIQUE FURNITURE STYLING OPERATE 24 HOURS DAILY GOOD RELATIONSHIP WITH SUPPLIERS BUILDING STRUCTUER

Resource Based View

REPUTION RESOURCE BRAND NAME FRANCHISING $128 MILLION FOR UNICEF IN 2015 WELL KNOWN IN EUROPE ASIA AND AMERICA 127,000 STAFFS SKILLED EMPLOYEES IN STORES AND WOODS GOOD TRANSPORT SYSTEM EXPERT DESIGNERS GOOD CUSTOMER SERVICE OVER 12,000 ITEMS PRESENT IN THE WEB MOTIVATION OF EMPLOYEES (REWARD SYSTEM)

HUMAN RESOURCE

RELATIONAL RESOURCE

28 DISTRIBUTION CENTER GOOD INTERNET ACCESS NETWORKING SYSYTEM 550 MILLION PEOPLE USING THEIR WEBSITE EVERY YEAR GOOD TRANSPORT SYSTEM

PORTERS DIAMOND MODEL: IKEA

FIRM STRATEGY, STRUCTURE & RIVALRY

Suppliers Technology

Low cost low price strategy Low bureaucracy

Rivalries: British B&Q Germany

FACTOR CONDITIONS

DEMAND CONDITIONS

Labour force: low cost Infrastructure: poor => good Government policy
SUPPORTING INDUSTRIES

Population: 1.3 billion The raising of Middle class Cheap furniture demand

INTERNATIONAL (Porter, 1990) BUSINESS STRATEGY (SMM 206) PRESENTATION

Transnational Strategy
Pressure for global Integration

Standardising whenever possible 90% of product line is similar across in more than 12 countries IKEAs marketing is centrally developed at headquarters Pressure for local responsiveness Adapting when necessary Modification of its furniture to suit individual countries e.g longer hangers in Italy and deeper wardrobes in USA Implementation of local adjustments in marketing to suit language and catalogue.

Comparative Advantage
Supply from China Low cost labour Labour skill Raw material accessibility Sales in EU, North America Very Large middle class group

Conclusion
Since IKEAs target consumers are the middle-class,

they should extend their retail services to Emerging Market Economies where Middle class population is rapidly increasing. IKEA should increase sourcing its supply from emerging markets, which are characterised by low cost labour to sustain its competitive advantage.

REFERENCES
Baraldi, E.(2008) Strategy in Industrial Networks:

Experiences from Ikea Carlifonia Management Review, 50(4), 99 126. Beard, B. (2006) IKEA facing competition on furniture row Arizona Business Gazettes, available online at: http://www.azcentral.com/abgnews/articles/0824abg -tr-emerald0824.html , accessed 01/12/2010 Boscor, D., and Bratucu, G. (2009). Transnational strategies adopted by furniture manufactures- case study:IKEA ProLigno, 5(3): 55 61. Datamonitor (2008). Ikea Group

Thank You !