Ikea Essay

601 Words3 Pages
What are the core competencies and end products of IKEA? How are they linked with each other? IKEA is capable to design its products in-house; therefore they can reduce their costs because outsourcing their product designing is much cheaper. Despite that they’re designing its product itself, people find it still attractive enough to buy IKEA’s products. Also their furniture and packaging is designed in such a way that it’s easily transportable (‘flat packaging’1) for both customer and IKEA. The assemble-it-yourself furniture, together with the flat packages, reduced space requirements in logistic operations, which lowered the costs either.2 To maintain their low-cost strategy they have to manage an international low-cost supplier network. By 2004, IKEA’s network of international low-cost suppliers had grown to the point where it had 43 trading service offices in 33 countries.3 By well thought allocation of their warehouses and stores they managed to reduce costs even further. So we can conclude IKEA is capable of sustaining its low costs, by managing, establish and designing its supplier network in such a way that IKEA achieves lowest costs in logistics. Even though they’re capable to establish a low-cost supplier network, IKEA is also capable of designing its furniture in such a way that it “fits the IKEA concept of form, function and price”4, “for example the OGLA chair which initially was made of wood but eventually is made out of hollow composite, to make the chair affordable to most people”5 Also IKEA was capable of recombining their skills to serve the needs of entire families. To create child-friendly products IKEA consulted two psychologists, which in combination with their design expertise responds to children’s needs.6 It’s clear that IKEA’s core competencies are based on a low-cost

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