Ikea Design & Pricing Essay

782 words - 4 pages

Case 2: IKEA DESIGN & PRICING

Submitted By: Team Samyeong

Arcedo, Lloyd L. ● Ladja, Johnraja-Zaid M. ● Mendoza, Sheila Mozenda C. ● Pangilinan, Jayson E.

I. Problem Statement
Given IKEA’s success in the global market, how can it ensure continued success in the business?

II. Case Analysis

What are IKEA's competitive priorities? Describe IKEA's process for developing a new product. Cost leadership and an exceptional supply chain management are IKEA’s major competitive advantage. With the principle of “low price with meaning” IKEA is able to incorporate cost minimization in every process of developing a product that are modern, functional and a true value for money.

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• Established long-term relationship with suppliers. Collaboration with the manufacturers and suppliers helps IKEA manage demand and expectations.
• Sourcing materials close to the supply chain and delivering products directly from the supplier to IKEA stores. This slashes handling costs, reduces road miles and lowers the carbon footprint.

Weaknesses
• Reliance on European and US market.
• IKEA store branches require extremely large areas which is very expensive to maintain.
• Designs of IKEA products are homogenous which may appeal only to certain markets.

Opportunities
• Growing demand for low priced products due to the current financial climate may result in consumers trading down from more expensive stores.
• Growing demand for greener products.
• Consumer preference of buying products online. Development of e-commerce sites can increase sales, improve customer service, and reduce the volume demand on local stores.
• Development of premium lines, whether within existing stores or through new high street fascias complementing the out-of-town stores.
• Untouched market in Asia and Canada.

Threats
• With economic concerns over rising living costs and depleting disposable income there is an overall threat to the performance of the business in European and American markets specifically.
• Pricing parity may exist.
• Different living conditions, diverse culture and society traditions, as well as different economic environment may hinder success of implemented IKEA strategies in certain countries despite...

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