IKEA

THE LIFE IMPROVEMENT STORE

Presented By
Syed Maktoom Hassan
Ambreen Sami
Hafiza Khizra
Muhammad Umair Majeed
Abdul Qadir Sayani

INTRODUCTION
IKEA was founded by Ingvar Kamprad a native of Sweden in
1943, when the founder, at the age of 17 was given money
by his father in return for doing well in his studies.
The company initially sold basic items such as pens, picture
frames, table runners, wallets, jewelry, nylons stockings and
watches, at a low price.
The main business are manufacture and selling of a wide
range of home furnishing products at an affordable price
The company has 230 stores, with operations carried out in
over 42 countries with well over 70 000 employees.

VISION
The vision at IKEA is to
create a better everyday life for
the many people

IKEA STRATEGY
Ikea's forward-thinking strategy made it
the top furniture seller in the world.
Key Points of their Strategy are:
Solving the worst part of buying furniture.
Hitting the right demographic. (Resonate with
young people)
Not expensive, but not too cheap.
Stores are a destination.

INTERNATIONAL
Increased market size:
They are entering to new
STRATEGY

geographical markets with their Swedish designed

furniture.

Greater returns on major capital investments: On

initial expansion, IKEA earned greater return from other
countries than their home country. Therefore they
explored different markets. Currently they have identified
US, China and Russia as their main markets which
generate better returns.

Economies of scale: This can be exploited by expanding

into markets that contain homogeneous consumer tastes
and do not require much adaptation, by using

VALUE CHAIN ANALYSIS

PRIMARY ACTIVITIES

A C T I V I T Y I M P L E M E N TAT I O N BY I K E A

Inbound
Logistics

Outboun
d
Logistics
Operatio
ns

Distribution of products to the stores from 42

distribution centers.
10,000 item product line manufactured by over
1,000 suppliers.
Preferred method for customer to transport their
products themselves.
Operations in more than 40 countries, 208
companies operated stores in 26 countries while
remaining stores operated by franchisees
IKEA does not manufacture its own products

VALUE CHAIN ANALYSIS

PRIMARY ACTIVITIES
ACTIVITY

I M P L E M E N TAT I O N BY I K E A

Marketin
g and
Sales

Targeted at families with lower income, students

and singles
Low prices.
Family-friendly store environment.
Information provided through catalogues and
displays.
Self-help service.
Support Activities
Low number of sales assistants in stores

Services

VALUE CHAIN ANALYSIS

SECONDARY ACTIVITIES
ACTIVITY
Firm
Infrastructure
Human
Resource
Management
Technology
Development

Procurement

I M P L E M E N TAT I O N BY I K E A
Hierarchical organizational structure.
Large scale stores in size.
High level of commitment to HR practices
Effective staff training and development programs
Research and development activities initiated in
Sweden.
Extensive use of information technologies in various
business processes and research and development.
No need for raw materials as IKEA does not produce
own brand products
Long strategic relationships with all suppliers

SWOT
A strong global
brand which attracts key consumer
Analysis
groups.
Strength
s

Weaknes
ses

A wide range of well designed, functional products

at low prices
Cost Consciousness
IKEA measures its strengths using Key Performance
Indicators.

Controlling standard and quality

Need for low cost product
Need to keep communication with customers and
stakeholders about environmental activities

SWOT
Analysis

Opportuniti
es

Further expansion into developing

economies
Growing online sales
Expansion to growing grocery market

Weaknesse
s

Intensifying competition
Growth of average consumer income

PORTER FIVE FORCES:

Threat of New
Entrants
Low
Saturation in
market
High
investment
cost

Bargaining
power of
suppliers
High
Factories
around the
globe.
Maintain long
term
relationships.

Bargaining
power of
buyers
High
Wide choice
Imported
Furniture

PORTER FIVE FORCES:

Threat of
substitute
products

Rivalry among
competing
firms

Low
No other products
substitute Furniture.
Constant Demand

High
Highly competitive
industry.
Presence in China and
Japan to sustain
competitive advantage.

COMPETITIVE
EDGEof Scale Standardization
Entering in Economies
In Economies of Scope Furniture and Restaurant Share
Facilities
Economic Design Inbound and Outbound Logistics
Great Network of Supply More than 1300 suppliers in 55
countries
Large Warehouse Showroom in Sub-Urban centers
Customers included in the value chain minimum staff
Strength of Brand Image and Name, Global Marketing
Strategy
Distinctiveness in design, promoting designers concepts,
eco design

CONCLUSION
IKEAs vision has contributed in improving lives for
the many people in practicing sustainable
environment.
IKEA plays a vital role in ensuring its products are
sustainable and takes the leadership role to
educate its suppliers to understand how and why
sustainable production is vital.
These factors are the key differentiators that has
made IKEAs different from its competitors. IKEA is
one of the trustworthy company that is responsible
for their product and its impact on the