Comparison and Analysis between Seek Ltd and IKEA - Case Study Example

Individual Report Student Name: Student Number: Course Code: Institution: 12th October, 2016 Introduction The global economy is modeled such that there is a bigger diverse demand for products ranging from household goods to services. While there are a number of producers who are willing to meet this demand, the rate at which the demand is becoming diverse is so high that we can confidently state that there is an unlimited possibility in what customers want. The nature of market segmentation is that it keeps getting diverse so that each and every segment grows a new demand based on their needs. This means that opportunities abound for any company that is ready to satisfy these demands. Even more satisfying for customers is that fact that more and more companies are getting involved, so much so that the competition is bringing down prices of goods and services alike. The furniture industry has a great number of opportunities right across the world. Each and every country has a characteristic demand for certain goods, based on what is preferred within each of these countries. This means that companies that deal in furniture have an endless opportunity to deliver all over the world. However, there are challenges with various areas in this industry just like any other. Logistics and market research may be just but a few example of challenges that may need to be addressed since a good market research is the best way to find out what each segment needs, and how this need can be satiated. IKEA is a world renowned company that deals in making and delivering furniture to various customers in various countries across the globe. More often than not, and in the global scene, it uses various channels of distribution to reach respective customers. Originally founded in Sweden, it also supplies other appliances that are mostly used in the home setting, though can as well be used in other areas where they are needed. IKEA Having started off as a furniture sales outlet in Sweden around 1943, IKEA expanded to countries like Denmark and afterwards, other jurisdictions that appeared to favor its market. While it has ventured into many markets complete with physical outlets, it also has one of the best online presences worldwide for any business since its websites gets visited more times when compared to other similar businesses. With a mission statement that aims to “Create a better home for the many people”, IKEA has in many instances come to the rescue of people whose meagre income does not allow them to enjoy high quality furniture and home appliances at a reasonable price. For instance, in 2010, and just as the world was recovering from the economic downturn that began in 2007, IKEA (2010) offered products at a fairly cheap price so that even those who could not afford furniture associated with luxury could find something for themselves in the stores. Magnusson and Molin (2016) associate IKEA’s exponential growth to its goal of ever increasing its sales target to meet demands, and in the process, make a killing from economies of scale and volumes of sale rather than high prices for their goods. With a reach of nearly 50 countries and approximately 400 stores, IKEA is arguably the biggest furniture outlet in the world, coupled with a great online presence that is rivalled by very few companies even in other industries. The IKEA website receives more than 400 million visitors as of 2012. Around then, the outlets received over 700 million visitors according to Statista (2016). Currently, IKEA receives more than 600 million visitors on its website, and more than 750 million in the outlets. Comparison and Analysis between Seek Ltd and IKEA IKEA and Seek Ltd rely heavily on customers, just like all businesses, to achieve their mission and vision statement. However, there are peculiar angles to business that the two businesses may share. First off, there are comparisons that may be drawn on line of products, then there are those that arise from the modus operandi. These will be assessed. i. Line of Operation While it is the nature of businesses to command an online presence for various reasons, IKEA and Seek Ltd both have a strong online presence that is dominated by their customers worldwide. The online reach enjoyed by IKEA is commanded by a better patronage to its website than Seek Ltd. Be that as it may, we can confidently state that Seek Ltd is well on its way to being a commanding presence in the online world in its industry. The mere fact that Seek Ltd deals in a different line of business than IKEA does not in any way mean that it cannot reach the online presence that IKEA has. In terms of operation, again, IKEA has a broader and more unique supply chain model that involves customers completing the final product to have what they would like to purchase (Stadtler, p. 25, 2015). ii. Magnitude of Operations IKEA and Seek Ltd are both market leaders in their respective industries. While Seek Ltd is the biggest online portal for job seekers and is fast expanding to capture markets in other markets, IKEA is using a more structured and carefully crafted expansion method to buttress itself even further as the market leader since its rivals are not yet ready to be as widely operated as IKEA. While Seeker Ltd intends to start a fiercer campaign to capture an even bigger market in Africa, IKEA already has a fairly big market presence and can competitively fair well against businesses in a similar position. iii. Business Strategies IKEA is known for being a very adaptive business that can exist almost everywhere since its reach through online portal is wide. Equally, Seek Ltd has a wide reach. However, the acceptance of each business as presented by its supply model varies. For instance, IKEA allows customers to finish the product, while Seek Ltd offers a service that is complete. This means that each of these two entities have to deploy different strategies when operating in the market. IWAY is just but one of the strategies that IKEA uses on its suppliers to ensure that ethical practices are carried out by the businesses it associates itself with. IKEA (2016) demands that malpractices like child labor be avoided totally. Similarly, Seek Ltd. has a number of strategies it is using as a business. One of them includes expanding into other forms of businesses including the use of training and development of human resources as a means to attaining more customers. iv. Method of Delivery of Product Seek Ltd offers services while IKEA offers goods. These classes of products set them apart as entities dealing in different kinds of products. However, there are similarities in their operations that make them quite successful. Chopra and Meindl (2007) note that IKEA has a very robust plan that is pragmatic and takes into consideration changing needs in the market. On the other hand, Vachon and Klassen (2006) attribute this strategy to IKEA’s ability to go with the changing times like the need to conserve our environment. v. Leadership IKEA always chooses sustainability and ingenuity in bringing up ideas within, meaning the leadership cherishes devolution of powers to innovate to employees other than just the regular management staff tasked with crafting strategies for the company to beat competition. Edvardsson and Enquist (2011) place the abovementioned leadership attributed with IKEA as responsible for the rate at which the company is growing, leave alone generating revenues. Seek Ltd may be a little more tied with its innovation in leadership, so much so it has to differentiate its products further for it to realize a measurable growth in the industry. It is for this reason that Seek Ltd had to expand its scope of business to training and development of human resources besides the initial traditional offering of a platform for jobseekers. Lessons from the Comparison It is prudent to note that Seek Ltd and IKEA operate in different industries. Some of the things that tie their operations together include their heavy use of the internet to create a global reach for their customers. Besides this, they both run different lines of strategies to enable each realize their goals as stated in their mission and vision statement. Regardless, they are market leaders in their own right in their respective industries. For this reason, it is important to note that the two have a lot to teach up and coming businesses, including startups. For instance, a basic and very critical lesson for upcoming business is that online platforms are very crucial in capturing greater markets (Argenti & Barnes, p. 47, 2009). Trusov et. al. (2009) claim that online platforms are a very critical angle to achieving market, though word of mouth may work equally well as well. Be that as it may, IKEA and Seek Ltd offer a lesson in how to manage a business’ online presence so that it channels all the energies towards converting the market attracted to the site into actual business supporters who not only buy, but keep their loyalty glued to the business. Seek Ltd decision to venture into provision of training and development is a great example of how a business can differentiate its product in order to expand its market. Piller et. al. (2013) explain that this is a great strategy to ensure that the business venture is diversified so that business may be obtained from various quarters. When one angle of the business suffers, the other may be able to ensure continuity. Recommendations First off, businesses that have a strong online presence tend to have a greater market reach globally. However, this is not a surefire channel that may exempt it from carrying out continuous campaigns to popularize products in other forums like the mass media. For this reason, IKEA and Seek Ltd both need to offer a stronger presence in the mass media. Freeman et. al. (2015) allude to the fact that online presence may be augmented with material from mass media. For instance, IKEA has a YouTube channel from which it posts its mass media advertisements. Seek Ltd., on the other hand, may need a more vigorous campaign in the mass media, but this should be concentrated in areas where it has less reach like in Africa and South America. Secondly, Levieuge (2016) clears the air about the use of loans and other borrowed financial facilities to expand businesses. While it seems important to expand, it would be prudent to do so with such care that the business does not run into financial troubles. Seek Ltd, in this case, needs to adopt a more foolproof strategy that will rid it of the risk of going down should it fail to meet its financial obligations to its creditors. In addition, Woodside (2016) appreciates that management of loan facilities need to be approached through use of accepted practices. This means businesses should use loans and financial borrowings for their original purposes, and with tact so that businesses to not go in the red for misappropriation of funds. IKEA may manage to avoid such traps since it has generated enough revenue over the decades it has been in existence so that it may not need to borrow for it to carry out a successful expansion. Conclusion IKEA and Seek Ltd are business that deal in different lines of products. IKEA deals in unfinished furniture, while Seek Ltd offers a platform for jobseekers to find jobs and also a platform from which they may enrich their skills through training. The two businesses operate using supply chain models that are different too, but they both have a very strong online presence. This gives them an edge over many businesses in the respective industries since they get to command the market by sheer numbers. However, there are challenges that they both share and those that are unique to each. For instance, IKEA has a better management hence leadership structure due to being a player in its industry for a number of years. Regardless of this, Seek Ltd still performs pretty well for a business that has been around for fewer years. Seek Ltd and IKEA both need to adopt strategies that may help them maintain the chokehold they have on their respective industries. These may include differentiating more for Seek Ltd., and bringing a more focused mass media marketing strategy in untapped markets for both. Bibliography Argenti, P. A., & Barnes, C. M. (2009). Digital strategies for powerful corporate communications. New York, NY: McGraw-Hill. Chopra, S., & Meindl, P. (2007). Supply chain management. Strategy, planning & operation. In Das Summa Summarum des Management (pp. 265-275). Gabler. Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence, 22(5), 535-551. ElMaraghy, H., Schuh, G., ElMaraghy, W., Piller, F., Schönsleben, P., Tseng, M. and Bernard, A., 2013. Product variety management. CIRP Annals-Manufacturing Technology, 62(2), pp.629-652. Freeman, B., Potente, S., Rock, V. and McIver, J., 2015. Social media campaigns that make a difference: what can public health learn from the corporate sector and other social change marketers. Public Health Res Pract, 25(2), p.e2521517. IKEA, 2010. IKEA: Background – Company Context. Solidariskt Blanket. IKEA, 2016. IWAY, our Code of Conduct. IKEA. 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(2006). Green project partnership in the supply chain: the case of the package printing industry. Journal of Cleaner production, 14(6), 661-671. Woodside, A.G., 2016. The good practices manifesto: Overcoming bad practices pervasive in current research in business. Journal of Business Research, 69(2), pp.365-381. Read More