EMBA OPERATIONS MANAGEMENT

FIRST INDIVIDUAL ASSIGNMENT

CASE: IKEA: DESIGN AND PRICING

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CASE: IKEA: DESIGN AND PRICING
1. What are IKEA's competitive priorities?

“IKEA's competitive priority is based on producing quality products at a low price. This

concept is exemplified in its' corporate mantra price with meaning. This is achieved by

creating inexpensive products without making its customers feel cheap. This manta is

followed from design to the customer's home”[ CITATION rit11 \l 1033 ]

2. Describe IKEA's process for developing a new product?

“IKEA starts the process by picking what the new product will cost. This will help to

determine color, materials used, and design. Next they choose a manufacturer using their

network of manufactures. They do this by determining which manufacturer can most

efficiently produce the new product. Next they design the product, keeping in mind

efficiency, i.e. Packaging, shipping etc. Every inch of the product is reviewed in order to

maximize their ability to manufacture ship and store the new product. Finally they ship it.

While shipping, the key word is flat, in fact the flatter the better. From vacuum packing

pillows to exclusively producing disassembled furniture, IKEA is committed to not shipping

air. Lastly they must sell their new product”[ CITATION rit11 \l 1033 ]

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 3. What are additional features of the IKEA concept (beyond their design process) that

contribute to creating exceptional value for the customer?

“The way they ship their products is clearly one of its greatest contributors to its low

prices. By remaining flat, shipping only 65% full containers and by building its distribution

centers near ports, railways, and highways IKEA is able to ship with great efficiency. They are

able to ship the maximum amount of products, at the right time to the right stores keeping

their prices 20 the 30 percent lower than their competition” [ CITATION rit11 \l 1033 ]

4. What would be important criteria for selecting a site for an IKEA store?

“Some of the important criteria are to make sure the space is large enough to

accommodate for the large showrooms and large pieces, to have loading and unloading

dock. The site would also need to be located in a shopping area if possible. Being close to a

main highway or street would not hurt so that customers would not have to worry about

taking surface streets or waiting a long time for their delivery to get to them” [ CITATION

peo12 \l 1033 ]

“Expando, Inc. is considering the possibility of building an additional factory that would

produce a new addition to their product line. The company is currently considering two

options. The first is a small facility that it could build at a cost of $6 million. If demand for

new products is low, the company expects to increase the profits” [ CITATION peo12 \l 1033 ]

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Works Cited

people. (2012, June 24). Ikea: Design and Pricing. Retrieved September 21, 2017, from

https://www.otherpapers.com: https://www.otherpapers.com/Miscellaneous/Ikea-Design-

and-Pricing/30506.html

rita. (2011, September 4). Ikea: Design and Pricing. Retrieved September 21, 2017, from

https://www.allfreepapers.com: https://www.allfreepapers.com/Business/Ikea-Design-and-

Pricing/6309.html