Strategy Ikea
IKEA wants to be affordable an accessible for as many people as possible, so they focus on the total market.
- A reverse design process: "Where almost all competitor brands go by the book and follow the conventional process of choosing a design theme, making a storyboard, procuring the materials, putting together the design and then pricing the item according to the cost incurred, IKEA does the exact opposite."
- Flat packaging: The products mostly fit in a flat box wat makes the transport and storage cost al lot cheaper and the customer assembles it at home.
- Bulk production: Because IKEA has the same product in each store, they produce in massive bulk orders. This way they can get discounts from the suppliers.
- Unique construction technique: ‘’They are always innovating new techniques and methods to maintain their low selling price while making sure that their customers have no complaints about the quality of the products.
- IKEA’s self-help stores: At IKEA you must collect your own order at the end. Also there are not a lot of employees in the score to give you advice but a lot of information is on the descriptions by the product. Both contribute to a store that does not need a lot of employees. This way they can save a lot of cost there.
On the website, it is explained how IKEA uses the technique of constructing their furniture by layering sheets of wood over a honeycomb base structure. Since the honeycomb core requires less wood, it costs less money for production. Thus, IKEA is able to maintain a low cost of products without compromising on quality.’’
Vision
The vision
of IKEA is to create a better day life for as many people as possible.
Looking at
the balance score card there are some changes with the new innovative 4D-printing.
The innovative will improve from the stander product usually made from wooden
planks to other materials that can build itself. For the customers it has
multiple benefits, a first the building time and skills required will be reduced.
And if the cost of 4D will get lower in the future the cost could be possible
be lower because transportation keep getting more expensive. Als less
transportation sis better for the environment.
If IKEA can
be a pioneer with this new way of making products this could lead to a big improvement
in revenue. That is because the market they are operating in is a age group
that is always looking for new innovative products. And the possibility to make
the assembly at home easier with ca be a barrier for customers to don’t by IKEA
products. However IKEA would need to invest in de development and finally the
machines to make it possible for their products.
The intern processes
would have to change. The 4D printing machines must be implemented in the current
factory processes. The transport itself won’t change a lot but the products can
be a lot smaller so cost of it will reduce.
Sources used in this post
IKEA Low-Cost Strategy - Startup Talky
Generic strategies - Business to you
More information about IKEA context: