IKEA and Fantastic Furniture - Research Paper Example

IKEA and Fantastic furniture Executive summary While IKEA was started in 1943, Fantastic furniture was established in 1991. Bothare furniture retail companies, which have experienced a great deal of success over the years the companies have been running. The companies provide home and office furniture, wooden, plastic and metallic. Though furniture business is expected to be the most successful business ever, owing to the ever-increasing demand for furniture by a growing population and a changed lifestyle, it has not been so. The key success factors desirable for such success is the provision of quality and value for customers’ money, understanding the market and targeting advertisements to perceived needs of the markets and provision of an outstanding customer service to the customers. Though IKEA and Fantastic furniture are similar in many ways, they differ in design of products where IKEA emphasizes on flexibility and portability of the furniture, thus, producing self-assembled furniture while Fantastic furniture mostly produces pre-assembled ones. Backward integration and increased productivity are recommended for the two companies, in order to be able to meet the projected increase in furniture demand. Table of Contents Background and Introduction IKEA is a privately owned international company that sells home products that can be assembled, such as home appliances and accessories, beds, and desks (Coker, 2005). The company was founded in 1943 by a 17-year-old Swedish, with the name of the company derived from his name and place of origin. The company ranks as the world’s largest retailer of furniture (Dennis, 2008). There are notable strengths that the company has been credited with. Its ability to control costs allows it to offer continuously lower prices for its products. The company is also known for its attention to operational details, allowing it to improve continuously the products it offers to its customers. These strengths have seen the company continuously advance, and expand to different countries in the world (Stroman, 2003). The company comprises of a group of companies that are centrally controlled by a Dutch corporation. The company provides its customers with 12,000 different products and is the third largest consumer of wood in the world (Ben, 2009). The company adopts environmentally friendly manufacturing process to ensure it preserves the environment. Fantastic furniture, on the other hand, was started in 1991 by two founders, Harding and Dejong. The company started as a stall that was selling plastic garden furniture, and later, the first of their store was opened at Birkenhead point (Johnson, 1983). In 1992, the company opened the first Fantastic Factory Lounge and in 1995, the Fantastic metal factory was established. The company owes its success to some strength it possessed from its inception. The company indulged in clever advertising, while at the same time improving its products and processes continuously. This way, the company has been able to expand its operations and grow to a large furniture retailer. The company’s growth rate was so high, that the founders were unable to manage this growth. Consequently, they invited other directors who had experiences in handling growth in a new business, effectively increasing the number of company’s director to five (Greenblat, 2010). In 1997, the company opened its first import department, which has been responsible for the sale and distribution of the company’s products to a tune of 50%. The company has expanded its operations to have many other branches in Australia, later transferring its Fantastic Lounge factory to a different location to accommodate the increased production capacity, in 2006. With its growth and expansion, the company acquired a mattress producing company to suffice the mattress requirement of the company in the same year (Ben, 2009). Literature review A furniture retail business should be the most successful business ever running. This is because every day someone needs furniture (Abe, 2012). A growth in population, an increase in the rate of employment, an increased income for individuals, and advancement in technology point to a need and new demand for furniture. However, though there are many furniture stores running, only a few of them succeeds. Therefore, there are key success factors that determine the success of a furniture retail business. Offering value and excellent services to customers counts as one of these factors (Ben, 2009). Customers always want to have value for their money. As such, providing them with quality furniture means that they are likely to come back for more or recommend their friends, family or organizations to come to the same store (Jefferson, 2001). The first step towards providing quality for customers is the understanding of the community, their desires, and aspirations, and then matching their needs with the furniture products offered. The understanding of the customers and their needs should guide how the Fantastic furniture retailer prices, merchandises and advertises the products (Abe, 2012). Understanding what the retailer is selling is yet another key success factor. Since customers will always desire to have style regardless of the status of the economy, understanding the style that the retailer is providing for the customer is crucial. As technology and lifestyles changes and advances, so does the desire for style and classy furniture. Therefore, to succeed in this venture, the retailers should match their merchandise with the needs and changes taking place (Greenblat, 2010). An excellent customer service counts for the success of the Fantastic furniture retail business. The experience that the customers get from their interaction with the retail owner or staffs highly determines their possibility of referring other people or organizations close to them to the same retail store (Gray, 2011). Advertising counts a lot as a success factor. Thus, getting out of the Fantastic furniture retail’s way to select the best advertising mode that suits its budget is a critical success factors. The medium chosen should reach as many prospective and potential buyers as possible (Ben, 2009). Through advertising, understanding the needs of the customers, and targeting the adverts towards their needs is important. No misrepresentation should exist in the advertisement. However, advertising alone is not sufficient if the people lured to the retail premises do not find a reason to be there. Therefore, as much as advertising is important, matching the words applied in the adverts with the quality of the furniture provision is crucial (Abe, 2012). Comparison and contrasting store design and merchandise assortment for IKEA and Fantastic furniture Both IKEA and Fantastic furniture engage in the manufacture, retail, and import of furniture. Both of these companies deal with home furniture for bedroom, living room, and kitchen. The design and assortment for the two furniture retailers is closely similar. Another similarity between the furniture retailers is that they provide high quality furniture for their customers (Shakers, 1993). To both of these furniture retailer companies, quality is everything. Thus, they strive to keep developing and advancing their products, based on the change in technology and lifestyle of their customers, to meet effectively their needs. The two companies depend on advertisement as a basic channel through which customers are informed of their products. In contrast, IKEA specializes more in wood furniture, while Fantastic Furniture provides both wooden and metal furniture. The other difference is that most of the furniture sold by IKEA is self-assembled, while the furniture produced by Fantastic Furniture is pre-assembled. While IKEA applies integrated approach to manufacturing and design (Ben, 2009), based on its culture of mass consumption, Fantastic Furniture produces customized furniture, mostly targeted to the individual customers. While IKEA applies the economies of scale principle in its design and assortment to provide its customers with low cost but high quality furniture, Fantastic Furniture lures its customers based on quality of the furniture produced, without dwelling much on pricing. IKEA contrasts Fantastic Furniture in its provision of furniture and assortment, since it emphasizes more on the flexibility of the furniture provided to its customers, striving to make any of its products more flexible, movable and transportable (Coker, 2005). Recommendation and justification Backward integration is recommended for the two furniture retail companies. The companies should integrate backwards and engage in the production of wood necessary for furniture manufacturing through engaging in tree planting. To justify, owing to the large quantities of wood consumed by the companies, and owing to the current climatic changes, dependency on the imports of wood and furniture may pose a danger to the business of the companies, if new regulations for wood conservations in the countries of origin are enacted, prohibiting cutting down of tree for environmental reasons. Another recommendation for the two furniture retailer companies is that they should increase their manufacturing and production capacity for furniture. The justification for this is the fact that with the rate of population growth being experienced currently, and with the technological advances and change in peoples’ lifestyles, then the demand for furniture is going to increase. Therefore, there is a need for the companies to increase their production capacity to meet the predicted furniture demand. Conclusion IKEA and Fantastic furniture are furniture retail companies with a history of great success and achievements. Their strategies of running the furniture business has proved to stand the test of time, seeing them expand and grow their profitability over the entire life of their running. The provision of quality products to their customers, vigorous advertising and marketing, as well as good company management, are the success factors that has seen the companies advance this far. References Abe, A. (2012). How to Run a Successful Furniture Retail Store. About.com Guide. Ben, S. (2009). Furniture industry in Australia. Yale University Press. Coker, R. (2005). IKEA: Retail Business in Furniture. Paradigm Publishers. Dennis, W. (2008). Business success: The key success factors. Sydney Morning Herald. Gray, C. (2011). Haute and cool: Fine Furnishings. The Providence Journal. Greenblat, E. (2010). Ordinary going for Fantastic. Sydney Morning Herald. Jefferson, S. (2001). Challenges facing the furniture industry. A.G. Raymond & Company. Johnson, R (1983). Fantastic Furniture. Longman Publishers. Shakers, P. (1993). No Failure: A story of Business Success. Times Books. Stroman, D. (2003). The Outstanding customer service in Furniture retail. University Press of America. Read More