IKEA’s strategies
- Discuss IKEA’s competitive strategy, operations strategy and marketing strategy
Is the operations strategy aligned with the competitive strategy? Discuss in terms of the four key areas of operations strategy
Competitive strategy refers to a long term plan developed by a company/organization with the intention of having a competitive advantage over their competitors. Operations strategy refers to the plan that outlines how resources are used to support the business strategy. IKEA’s operations strategy is aligned with the competitive strategy. IKEA’s competitive strategy is a mix of both cost leadership strategy and differentiation focus strategy. IKEA has made a long term commitment to offering products at lower prices, which attract customers to their stores. Cost leadership strategy involves committing to provide goods at lower prices than your competitors. Second, IKEA uses the differentiation focus strategy to gain a competitive advantage over their competitors. The differentiation focus strategy involves offering unique features and attributes of a product in order to appeal to the target customers. IKEA updates its products consistently such that they match the customer’s expectation and lifestyle.
IKEA’s operations strategy is aligned with the competitive strategy. For example, in the area of product focus, IKEA usually updates its products consistently, such that they much the customers’ expectations and lifestyles. This operation process aligns with IKEA’s competitive strategy of differentiation focus, which is focused on offering unique products that appeal to customers’ tastes and preferences.
The marketing strategy refers to the plan laid out by the company to reach out to their customers and even turn prospective customers into loyal customers for the business. IKEA’s marketing strategy aligns with the competitive strategy. Ikea’s promotion mix show IKEA’s marketing strategy, which is “style without expense.” The marketing strategy is aligned with IKEA’s competitive strategy of providing products at a low cost by using the social media platform to reach out to their customer. Also, IKEA takes staff training as vital since they help the customer who visits their store to have a good shopping experience.
- The five performance objectives
The 4Vs of operations influence the operations design. Discuss the 4Vs of operation at IKEA and then discuss the impact that these dimensions have on the cost of operations.
The 4Vs of operation stands for volume, variety, variation, and visibility. Volume in the 4Vs of operation refers to the amount a specific product is required to satisfy a particular demand. Variety refers to the different kinds of products the company has to develop and sell to the target customers. Variations on the 4Vs of operation refer to the cycles of demand changes over a period of time. Lastly, visibility refers to the time the customer experiences the company processes.
IKEA’s deals with furniture and home accessories, meaning that they require these goods in large quantity. IKEA’s operation volume is based on entering into a contract with a supplier who provides them with furniture and other home-based accessories. Buying in bulk is one of the methods used by IKEA to stock their stores. The main effect buying in bulk has on the cost of operation is that they are able to purchase these goods at a lower price, thus giving them the privilege of selling them at a lower cost that is affordable. Second, on variety, IKEA provides various products to their customer such that they have a wide range of products to choose from. For example, IKEA provides ready to assemble furniture, kitchen appliances, and even other home accessories. The main effect of providing a wide variety of products on the cost of operation is that it ensures customer preference and taste is met. Third, IKEA provides its customer with visibility before buying the product. IKEA provides a platform whereby a customer can see a product in its final stage. They provide an after-sale service whereby assembled furniture is taken to the customer premises and assembled. Lastly, on variation, IKEA experiences little changes in demand because of ensuring that they have the stock and inventory management.
- IKEA’s supply chain
Discuss the meaning of supply chain management. (5 marks)
Supply chain refers to a network between a company and the suppliers to be provided with goods and services. Therefore, supply chain management refers to the management of the flow of goods and services from the supplier to the company. The supply chain is mainly made of five parts, the plan, the source, manufacturing, delivery, and the return system. The plan involves coming up with an objective and committing to fulfilling it. The source refers to where the raw materials can be found while manufacturing focuses on turning the raw material into final products. The fourth is delivery, and it involves transporting the final product from the manufacturer to the retailer who sells the product to the customer. Lastly, the return system refers to an agreement between the supplier and the company on how to deal with defective products
As completely as possible, discuss the supply chain for IKEA from raw materials to consumer purchases. (30 marks)
IKEA sources of raw material are from suppliers they have entered into a contract with them. For example, IKEA’s main supplier for raw material, specifically wood is Hultsfred, which is located in Sweden. Therefore, the IKEA supply chain starts with Hultsfred, who provide IKEA with all the raw materials they required to develop their final product, such as assembled furniture. Second, after acquiring the raw materials, they are taken to a manufacturing plant. IKEA has developed a manufacturing plant in Sweden where most of the household products and furniture are designed. Also, they come up with a manufacturing plant in some developing countries because of the low-cost labor available, which helps them to keep the final product at a lower cost when compared with their competitors. Afterward, the products are shipped to their stores in different parts of the country. The customers get to view and purchase the product in IKEA stores, and the customers do the final assembling of the product.