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Copy of IKEA

IKEA
by

Roman Seling

on 11 May 2016

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Transcript of Copy of IKEA

The combination of unique Scandinavian design, functionality and quality at a low price
The IKEA brand; unique profile and customer value TBrBrna
Location in suburban centres
The IKEA Approach
Team B:
Sandra Knezevic
Matilda Lewerin
Beatrice Rosenqvist
Roman Seling
Carolina Stenzel
Seminar 4
Case: The IKEA Approach
Fundamentals of Strategic Management
Spring Semester
2015
Stockholm University, School of Business
IKEA and Cost Leadership
Intense.
Multinational, specialised, multi-branch retail outlets and non-specialist furniture companies. E.g. Jysk, Argos and Alno

THREATS OF NEW ENTRY
Low.
There is a need for a signficant amount of financial investment to enter the industry.
Strong.
Competition
is intense and the
costumers have a
wide choice of
alternatives.

Low.
Lack of
products and
services that can
substitute IKEA's
product offerings,
apart from secondhand
furniture.

BARGAINING POWER OF SUPPLIERS
Low.
There are numerous of possible suppliers globally where IKEA accounts for a large portion of their revenues, owning parts of production plants e.g. Swedwood.

EXISTING
RIVALRY
AMONG
COMPETITORS
THREAT OF SUBSTITUTES
BARGAINING POWER OF BUYERS
Balanced Scorecard

Vision & Strategy
Customers
Internal Processes
Learning & Growth
Technology
Facilitates product development and cost savings
Financial
IKEA is to stay private!
Deliver "unique Swedish design". Continue with Global Strategy
Common Distribution and Buying Organisation

= Backward integration
= Continuous cost leadership
Strategy Clock
High
Price
Low
Low
High
Perceived product/ service benefit
Hybrid
IKEA VS. CHINA
Lessons Learned
The pricing strategy
No cost advantage
DYI
The market positioning
Western European interior design specialists
Targeting a
young
consumer group
There are limits to retail standardisation
- Certain services travel better than others
Organisational learning = key to success
The CAGE Framework
Cultural distance
Different languages
Different religions
Different values, social norms and consumer tastes
(e.g. Swedes generally have a more individualistic approach in comparison to Chinese)
Administrative and political distance
No colonial ties
Swedish fondness for consensus and
doing things
the Swedish way

In China, there is generally some state involvement, the real decision-makers do not attend meetings and everyone protects everyone’s face

Geographical distance
Physical distance high
Limitations to communication and transport infrastructure
IKEA recently opened manufacturing facility in China, therefore distance between Chinese stores and IKEA factories not an issue today, however the size of the country is very large

Economic distance
Difference in consumer income and general wealth distances
China is a booming economy with an emerging market
Prices in China are lower than in developed countries
Agenda
Cost Leadership
Input costs
Economies of scale
Experience
Design of the product and process
Aligned Culture
Ensure similar values across the globe
Avoid segmentation. Low costs for everyone
Internal Benchmarking
Identify best practice
Cost Leadership & Five Forces
Differentiation & Strategy Canvas
Hybrid & Balanced Scorecard
China & CAGE
Future Strategies
Current Business Model
Differentiation of IKEA
The strategic customer and Key competitors
Value-adding experience rather than traditional store
Low Price
No Frills
Fail
Fail
Fail
Differentiation
Focused Differentiation
Future Strategy
Scenario Analysis
Thank you for your attention!
"Small changes, a refreshing new life"
Green connected future
Initiative 3: offering global flat-renting scheme
Initiative 2: selling redecorated second hand furniture as alternative
Initiative 1: retrieve old furniture to store and receive discount/coupons for next purchase
Purchases without negative environmental impact
Strategy adapted to offering flexible and green solutions in terms of products, service and accommodation
Scenario analysis; demographic movements & environmental concern
The brand; unique profile and creating customer value
The combination of unique Scandinavian design, functionality and quality at a low price
The locations in suburban centres
Full transcript