Ikea Essay

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1. What are IKEA’s competitive priorities? a. Cost and Price “Make the Product or Deliver the Service Cheap” – IKEA is a low-cost producer. Purchasers of Ikea, for example, use their contacts with suppliers all over the world via Ikea Trading Offices, in finding those who can make their products at the best quality for the right place and the right time. - They also take in to account materials, colors and design. For example, their mug is made in green, yellow, blue or white as these pigments cost less than other shades - Design is also one of the key factors in decreasing cost. In the case of their mugs, they redesigned the product three times simply to maximize the number of mugs that can be stored in pallet. They were also able to lower their shipping cost of bulky items such as furniture by having it disassembled to maximize the use of space inside their shipping containers. b. Delivery Speed “Make the Product or Deliver the Service Quickly” - Ikea strives to deliver the number of goods to the right stores at the right time. They calculate the goods requirement and make sure that deliveries are efficient. c. Environmental Impact - Part of Ikea’s environmental considerations is making their mugs lead and cadmium free. Also they chose lighter colors because not only does it cut costs but its environmentally friendly. d. Customer Contribution - Customers contribute to the low prices at Ikea by selecting and collecting the products form the self-serve area, taking them home, and using the instructions enclosed to assemble them. 2. Describe IKEA’s process for developing a new product. Ikea begins by forming a team behind each product consisting of designers, product developers and puarchasers to get together to discuss design, materials and suitable supplier. Everyone contributes with their specialist

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