Ikea Case Analysis

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Situation analysis Mission To offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them. (http://www.ikea.com/ms/en_CA/about_ikea/the_ikea_way/our_business_idea/a_better_everyday_life.html) Strategy IKEA has developed a low cost strategy that begins with developing furniture with the price tag in mind. However, IKEA also uses a differentiation strategy to focus on quality products at the low cost. They focus on the use of product design and shipping efficiency in order to capture the market that is looking for both quality products and affordable prices. Goals - 0go - Look all over the world for good suppliers with the most suitable raw materials. - Buy in bulk, on a global scale, so that they get the best deals, and customers can get the lowest price. - Develop a partnership idea with customers. “Using the IKEA catalogue and visiting the store, you choose your furniture and pick it up at the self-serve warehouse…This means we don't charge you for things you can easily do on your own. So together, we save money for a better everyday life.” (http://www.ikea.com/ms/en_CA/about_ikea/the_ikea_way/our_business_idea/a_better_everyday_life.html) Stages of Product Design IKEA produces products through a concurrent engineering (Stevenson, 2011, pg 125) model that brings engineering design, manufacturing engineers and staff from manufacturing, purchasing and marketing in a cross-functional team that works simultaneously to bring the product design to production. The total product design at IKEA can be characterized through 5 phases (Stevenson, 2011, pg 117) 1. Idea Generation (scoping): 2. Building the Business case: 3. Development of product and process: 4. Testing and validation: 5. Launch: Strengths Price: Through the product development phase IKEA

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