IKEA CASE STUDY

1. Define the term adding value

- Adding value occurs in a transformation process when outputs are produced that are
worth more than the inputs brought in to provide them

2. Explain one advantage and one disadvantage of IKEA owning and managing most of the
stages of the value chain
- Advantage : Managing the costs/expenses, Ikea optimizes its operations to save costs
since it has complete control over the entire process, from design to production to
distribution. This involves coming up with practical ways to create, package, and deliver
its goods. Specifically, the flat-pack strategy, which lowers transportation and storage
costs, is an excellent example of how IKEA effectively manages expenses.
- Disadvantage : I think one potential disadvantage of Ikea is on the designing and creating
of the product part of the value chain. Especially on the supplier part, because I think it
relies heavily on the supplier. What if their key supplier faces issues? Nevertheless, it
could be fixed by diversifying more suppliers in case of unexpected events

3. Evaluate the importance of the customer in IKEA’s value chain.

- There’s no denying that the customers play a vital role in Ikea’s value chain of products.
To start off, Ikea turns an initial idea based on customers’ needs and preferences into a
product and that is basically the general explanation of things. In other words, the
customers’ needs acts as a guidance to Ikea’s product development and designs. This
“listening to customers” approach is the foundation of all the other stages in the value
chain and by doing so, Ikea can ensure that the products they’re offering aligns with
what the customers want or needs. Ikea’s flat-pack strategy also involves customers to
take the product home, build, and assemble their products themselves and in turn, this
not only does benefits Ikea but also customers by keeping the transport costs down.
FEDEX CASE STUDY
1. State two factors of production used by FedEx apart from capital.
- Labour, as stated, FedEx has a workforce of 490,000 team members working together.
- Land, oil used for the vehicles

2. Explain two ways in which FedEx can add value in its transformation process
- I think the first way is by delivering efficiently, what I mean by this is optimizing delivery
routes so that it reduces the delivery and transit period thus packages reach their
destination faster. The second way is by making it convenient for customers to send and
receive packages. This can be done by making drop-off points such as Pos Laju’s EziBox or
retail stores. This eases the customers to send or receive their packages in their own
schedule.

3. Discuss whether the effectiveness of the FedEx’s transformation process depends on the
speed of delivery
- I think the effectiveness of FedEx’s transformation process does depend on the speed of
delivery. For starters, customers often expect quick delivery of their packages and with
many competitions they have, of course the customers would choose a delivery business
that delivers their package the quickest. Thus, offering faster delivery times can give
FedEx the edge over its rivals. Next, on time and speedy delivery also gives birth to
customer loyalty. Satisfied customers are more likely to continue using FedEx’s services if
they’re happy with their service. For example, if a restaurant serves good food, of course
customers are going to come back for more.