Value Chain of Ikea

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Kotler and Keller (2012 p,2012) define IKEA as a one-stop sanctuary for coolness and the quintessential cult brand. As a result IKEA influences prominent levels of interest and devotion from its customers (Kotler & Keller 2012 p201). A company’s core competencies are the factors of its success and are in constant need of identification, development and consolidation (Dyck & Neubert 2010, p 265). The success of IKEA can be ascribed to its extensive familiarity in the furniture retail market, its product differentiation and cost leadership (Schiffman, Paladino, D’Alessandro & Bednall 2011, p620). The company must exploit and deploy primary and support activities to achieve sustainable and differential advantage in the marketplace. To create value to the customers IKEA base their business values on a number of key competencies such as differentiation and cost reduction product or low manufacturing costs. Primary activities such as inbound logistics, outbound logistics, operations, service and marketing and sales enable low manufacturing costs which is then supported by procurement, technology and development to differentiate IKEA products from its competitors. In order for IKEA to remain competitive in the market place they must adapt and respond proficiently to environmental factors namely buyers, suppliers, rivalry, competitors and substitutes (Dess, Lumpkin &Eisner 2010, p81). IKEA makes effective use of service activities by means of displays, catalogues and websites to cultivate and serve customers in a cost effective way making it difficult for competitors to emulate similar products or services (Gutsafsson & Johnson 2003, p38). Self-service and self-selection by customers allow IKEA to sell good quality furniture at the lowest possible prices and focus on creating knowledgeable employees and providing childcare, restaurants, product return and additional
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