Operations and Supply Chain Management - IKEA Invades America - Case Study Example

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The researcher of this essay aims to analyze IKEA - one of the models in international businesses. It is a perfect example of how a business can adopt a strategy and built a successful business based on what gives it a strategic edge against the rest of the market…
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Operations and Supply Chain Management - IKEA Invades America
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Download file to see previous pages IKEA’s strategy is of cost leadership. Low-cost strategy is important in making sure that IKEA is able to deliver high-quality goods at low cost. The firm looks to provide the most affordable, yet high-quality furniture to its customers. Since its inception in 1943, the firm has always sought to provide low-cost furniture to its customers. This can be seen in its original business model. According to Moon (2004), IKEA was started not as a furniture retailing company, but as a business selling household goods at discount prices. Even as the firm realigned itself into a furniture retailer, the low-cost strategy was not abandoned and it was kept at the heart of the strategy. To manage this low-cost strategy, IKEA has always tried to manage its cost by, for instance, taking advantage of economies of scale. This can be seen in the size of all its stores which are always big in order to lower the operational cost slow per unit of sale. As Pauwel, K. et al (2004), keeping the operational costs low is a major way to maintain cost leadership strategy. This has remained as the center of IKEA’s competitive strategy over the years. Being able to deliver high-quality furniture to customers who are seeking good furniture but who are sensitive to high prices is what IKEA centers its strategy on. The firm features a children’s playground in all its shops which means that its target customers are people with young families. This means that the firm mainly targets people of medium age who still have small children, as opposed to targeting the older people or the young people who are not yet married. As Hunt and Annet (2004) say, market segmentation is a major source of competitiveness if the firm is able to serve the market segment well.
The supply chain of IKEA depends on cost management. To manage the cost, IKEA has depended on two major factors in its supply chain.  ...Download file to see next pagesRead More
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