Description
Week 5 Assignment
Your assignment this week is to review the IKEA Case Study below. While reviewing
it, consider it as background information for your upcoming presentation to the
IKEA Senior Management Team. More details on your upcoming PowerPoint
presentation to the management team are provided at the end of the case study
guidelines.
Deliver the Value: IKEA Case Study
IKEA is a Swedish-owned global business founded in 1943. The business generates
annual revenues of 27 billion euros and employs 139,000 people in 298 stores and
26 countries. The values and design philosophy of the founder continue to underpin
the brand. These values might be summed up as frugal, democratic, environmentally
aware, and design oriented. IKEA has become synonymous with Swedish lifestyle.
The stores are virtually identical across the globe and sell a range of globally
sourced flat-packed furniture products as well as a range of related furnishings for
the home—the stores offer customers a Swedish experience by incorporating
restaurants and a variety of customer services intended to simplify the shopping
process (e.g., childcare). What is interesting about IKEA is that customers have
become a significant part of the value creating process—customers play a key role
in terms of logistics and in production. By performing the assembly of the flat-
packed furniture, customers complete the final stages in the production process. In
terms of logistics, the customer “moves” goods from warehouse-style storage
through the checkout, and then transports the goods home. The trade-off for the
consumer is lower prices and immediate gratification—furniture is typically sold
using just in time (JIT) inventory management, which means that once a customer
has placed an order, the furniture then goes into production and is delivered to the
customer’s home some 3–4 months later.
IKEA’s senior management has in the past pursued an aggressive expansion policy,
but management is currently changing direction, adopting a slower rate of
expansion and investing in existing stores. The company plans to increase sales by
10% a year to 2020, thereby doubling annual sales revenues. Management is
concerned about how expansion in the BRIC countries, particularly India and China,
is pursued. There are fears about preserving the company’s culture in these huge
markets (Milne, 2013).
Sources:
. Financial Times.
What do you think? What would you do? What problems do you foresee and
how will this impact IKEA’s Swedish concept? Please recommend a marketing
solution that will help IKEA achieve growth in either India or China based on
your understanding of the place P and how delivering the value is evolving.
Please use the case study guidelines below to perform a brief analysis, identify the
problem, suggest alternative solutions, and make recommendations for the
implementation of the solution that you believe is the best fit.