Description

Week 5 Assignment

Your assignment this week is to review the IKEA Case Study below. While reviewing

it, consider it as background information for your upcoming presentation to the

IKEA Senior Management Team. More details on your upcoming PowerPoint

presentation to the management team are provided at the end of the case study

guidelines.

Deliver the Value: IKEA Case Study

IKEA is a Swedish-owned global business founded in 1943. The business generates

annual revenues of 27 billion euros and employs 139,000 people in 298 stores and

26 countries. The values and design philosophy of the founder continue to underpin

the brand. These values might be summed up as frugal, democratic, environmentally

aware, and design oriented. IKEA has become synonymous with Swedish lifestyle.

The stores are virtually identical across the globe and sell a range of globally

sourced flat-packed furniture products as well as a range of related furnishings for

the home—the stores offer customers a Swedish experience by incorporating

restaurants and a variety of customer services intended to simplify the shopping

process (e.g., childcare). What is interesting about IKEA is that customers have

become a significant part of the value creating process—customers play a key role

in terms of logistics and in production. By performing the assembly of the flat-

packed furniture, customers complete the final stages in the production process. In

terms of logistics, the customer “moves” goods from warehouse-style storage

through the checkout, and then transports the goods home. The trade-off for the

consumer is lower prices and immediate gratification—furniture is typically sold

using just in time (JIT) inventory management, which means that once a customer

has placed an order, the furniture then goes into production and is delivered to the

customer’s home some 3–4 months later.

IKEA’s senior management has in the past pursued an aggressive expansion policy,

but management is currently changing direction, adopting a slower rate of

expansion and investing in existing stores. The company plans to increase sales by

10% a year to 2020, thereby doubling annual sales revenues. Management is

concerned about how expansion in the BRIC countries, particularly India and China,

is pursued. There are fears about preserving the company’s culture in these huge

markets (Milne, 2013).

Sources:

. Financial Times.

What do you think? What would you do? What problems do you foresee and

how will this impact IKEA’s Swedish concept? Please recommend a marketing

solution that will help IKEA achieve growth in either India or China based on

your understanding of the place P and how delivering the value is evolving.

Please use the case study guidelines below to perform a brief analysis, identify the

problem, suggest alternative solutions, and make recommendations for the

implementation of the solution that you believe is the best fit.