Executive summery

Coverage of summery of issues

Controlling standard and quality

Perhaps IKEA has reduced their products quality due cost leadership strategy they use.

Assemble of product

IKEA has some complaints about that. Because of customers dont know how to assemble
properly. It can be happened accidents due non systematic fixing.

High expansion
Due to large num of outlets that difficult to manage under the same manner.

Coverage of analysis

The last major part and point of sale is the IKEA Stores. The majority of stores are
franchised through Inter IKEA Systems B.V. by INGKA Holding Group and regardless
of the franchisee all IKEA stores pay 3% of sales to Inter IKEA Systems B.V. on an
annual basis. To gain a better understanding of IKEAs corporate structure Further IKEA
is a very dynamic and changing organization. This is very typical for a design oriented
retail business, like IKEA, where customer tastes change quickly. Although the home
furnishing industry is not as volatile as the fashion industry, IKEA has to respond quickly
to customer preferences. To promote innovation and creativity IKEAs management style
is characterized to a high level by teamwork and participation and less by security and
predictability. Summing up IKEAs characteristics and its management style there are
two concepts of corporate culture, which apply very well to IKEA: clan culture &
adaptability culture. As IKEA grows even more global and its employees become even
more diverse it is also questionable to which extent the organization will be able to
preserve its set of Swedish values from global influences or whether IKEAs values
become only a masquerade to demonstrate their Swedishness to the outside world, but
without direct influence internally. It is possible IKEA will undergo a culture change in
the future. The term culture change refers to changes in the values, attitudes,
expectations, beliefs, abilities and behavior of employees. Culture changes pertain to
changes in how employees think; these are changes in mind-set rather than in
technology, structure, or products.

But will IKEA remain IKEA with a culture change? Or will the change even be
necessary?
Coverage of Recommendation
1.) A culture change: As mentioned above, it is possible that IKEA will undergo a
culture change in the future. In case a culture change will be necessary the
recommendation would be to maintain the innovative and creative character of IKEA
on the product part, while adding a culture of stability and security on the corporate
part, and finally still maintaining the Swedish values of the organization, because that
is the core of IKEA. However, adapting a more global culture in general to be
suitable as an employer to the broad and diverse spectrum of IKEA employees,
should be the overall goal of the culture change.
2.) The price pressure, which IKEA is underlying, is another major challenge, because
competitors are plenty and the raw material market is volatile. At the same time
IKEA has to be careful in the ethical treatment of employees, that do not belong
directly to the organization but a part of its supply chain.
3.) Taking a look into the future it will possibly be necessary to implement a culture
change. Maintaining the innovative and creative part of the business, adding a more
stable and secure culture and holding on to the Swedish core values should be the
objective of this change. The culture change should be implemented by a middle-out
approach.
4.) Finally IKEA has to become an even more sustainable organization, since
sustainability almost became a core requirement. One way to accomplish that would
be a system to effectively recycle old (IKEA) products and make new furniture of
them.

Introduction
I this case study I have demonstrated internationally known home future retailer which is IKEA
the largest furniture retailer in the world. The purpose of this case study is to analyze to problems
they have as well as solutions, recommendation for that in addition also marketing strategies to
reach to customers which they are using and advantage and disadvantage of them.
About IKEA
IKEA is a multinational group of companies its industry is retails that designs and sells ready to
assemble furniture as well as another more 9500 products including home accessories. And also
147,000 employees work under this company around the world. Founded was this company
Sweden in 1943 by then-17-year-old Ingvar Kamprad, who was listed as one of the world's
richest people in 2013. Its interior design work is often associated with an ecofriendly simplicity. As of March 2016, Ikea owns and operates 384 stores in 48 countries. IKEA
's biggest market, followed by the United States, with 42 stores. It is a favorite among customers
searching for well designed products at low prices. IKEA stores sell ready to assemble furniture,
appliances, and household goods. Today the firm is the largest furniture retailer in the world,
with 139,000 employees operating in 48 countries. Germany is the firms largest market,
followed by the United States and France. Its large range of products includes furniture, food,
large items such as cabinetry, and smaller items such as kitchenware, dcor, and small plants.
IKEA also operates restaurants within their stores as a special trick. IKEA has become known for
its well-designed, low cost products, its eco-friendly initiatives, and its reputation for a great
work place. As a special feature Stores also contain a play area for children called Smland.
Parents can drop their children off in the play area for up to 1 hour free of charge as they go
shopping.
Short term Issues
Problem 01
The size and scale of its global business. This could make it hard to control standards and quality.
Some countries where IKEA products are made do not implement the legislation to control
working conditions. This could represent a weak link in IKEA's supply chain, affecting consumer
views of IKEA's products. Solution.
Solution
Perhaps expand new staff for managerial pathway that particularly talented managers for rich
coordinating with top management frequently and accurately. In addition maintain the good
supply chain as same as quality and services similar to another stores.
Problem 02
The high flow of visitors at one time leads to many problems resulted from lack of manpower
who can meet this high point.
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Solution
Enhance the traffic insight visitor flow system to ensure its check out and check in with staff for
reduce the customer waiting time for at the cashier.

Medium Term Issues

Problem 01
IKEAs main competitive advantage is a low cost strategy. So in that case it is brilliant for the
south Indian countries. Especially who are the people living in developing countries that they
always focus only where is the cheapest products which they needed unless this kind of
customers dont worry about brand reputation. Because of thin wallet they have. As per the
IKEAs purpose those countries are potential market for their products. But unfortunately IKEA
is still planning to implement in India as well an extra south Asian countries except Hyderabad in
India. May be when IKEA will reach to them competitors would be already taken the tarket
market at there.
Solution
Implement the rapid expansion the market share in South Asian countries including all other
developing countries. Moreover its better develop cheapest products for these countries as local
specialized.

Long term Issues

Problem 01
Negative publicity.
The company has been criticized many times for issues like poor treatment of employees,
uncertain advertising practices or lobbying government authorities. Negative publicity decreases
brand reputation and customer loyalty.
Solution
Try to be like the best employee job satisfaction plan in Google, Samsung, Apple Inc. which they
use.

Problem 02
IKEA suffer from lack of innovation and faces possibility of offering a very similar
product base. This is due in part to the lack of fresh blood in the organization. IKEAs
policy is hiring the same type of people lead to inhibiting diversity and innovation to
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meet change in new markets. Perhaps why IKEA doesnt have enthusiastic for
innovation, for the reason that they already popular and succeeded.
Solution
IKEA should broaden its selection base of hiring people. Whist not changing the core
competencies required of key staff. a new emphasis should be placed on the hiring of
people from a mix of backgrounds and personalities. This will promote diversity, infusion
of new ideas and ensure the richness of the culture. Because as per the current situation of
business world there is no more survive to forward without rapid innovation. Why so no
barrel. Due that free entry completion is very high. Its better increase the expenditure for
R & D to create innovation with unique features.
Problem 03
Limitation
This diversity may however lead to lack of similarity and a distraction from the common
goals. There may be a waste of resources to get such a diverse group to agree to a
common group.
What are some of the things IKEA is doing right to reach consumers in different markets?
1. Solving the worst part of buying furniture.
Before IKEA existed, people saw furniture as an investment for the next 20 years. This resulted
in a lot of anxiety and indecision. They created products that were nicely designed, if not
particularly durable, that were intended to be used immediately, and disposed of when they wore
out or, more likely, when the user had moved on to a different taste level or purchasing strata.
Hitting the right demographic. The products are clean, with simple visual and fanciful names.
And also not expensive, but not too cheap.

IKEAs price point is perfect.

While prices are cheaper at deep discounters like Aldi, shoppers feel they are getting a
good value at IKEA.

Stores are a destination.

As e-commerce becomes more popular, shoppers need incentive to come into stores.

With its elaborate showroom and cafeteria, IKEA has become a unique destination for
shoppers.

While many retailers enter shopping centers hoping for traffic, IKEA is a separate store
that shoppers seek out with a specific goal in mind.
2 Low cost leadership strategies
IKEA has a unique business model that connects the needs of our customers with the
possibilities on the factory floor. With a deep knowledge about life at home the
challenges most of us have with limited space and wallets on one hand and big
dreams on the other, IKEA often develops its products directly on the factory floor.
The starting point for product developers and designers is always the price. Together
with their skilled suppliers, we make sure to get the most out of the possibilities in the
production plants. They adapt the sizes and constructions of our products so we can
produce, package and transport them in the most efficient way.
Product strategy

Wide range of products according to the need of consumers.

Products available for different sections of the society.

Most IKEA products are stylish that makes the company unique

IKEA designs its own furniture

Diversity product line and product depth

Promotion strategy

High profitable advertisement campaign

Spending 70% of annual marketing budget in printing catalogue

Upon entry to IKEA store shoppers are guided property

Online shopping

IKEA providing home delivery service to its customers

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After sale service to the customers

Online advertisements

Marketing Development strategy

Target new segments and enter new markets with existing products. The potential benefits of
international expansion are increased market share, revenues, profit and buyer awareness.
4 ps of IKEA
Products
Design, Variety and range
of furniture

Price

Outdoor, children, kitchen,

low

office, Mirrors, beds and

mattress,

chairs,

Place

promotion

outskirts of large Women, youth, children,

cities, large stores

family,fashionable people,

storage,

people who love modern

decoration, lighting, sofas,

and innovative stuff, low

tables, ]

income families

Value great products terms of IKEA using

Conveniences

Functionality

Price

Quality

Clever solutions

Great value to the customers

Promotional Mix

Media tactics

Public relations tactics

Direct mail tactics

In store displays

Store layout
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Role of IKEA s advertising

Social ( UNICEF)

Environmental ( sustainability)

Economic ( Low price, value employees)

What else could it be doing?

Staffing
Improve quality of services
Monitoring control
Community based rehabilitation
Community development programs
Health care services
Expansion pans
IKEA
Monitoring
IKEA CSR department
Avoid same mistakes
Become part of any community we enter

IKEA essentially changed the way people shop for furniture. Discuss pros and consof this
strategy
Pros:
IKEAs low cost concept keeps it ahead of its competitors
IKEA has successfully combined low cost with good quality.
IKEAs ability to find ways to alter designs to save on manufacturing costs
A key feature of IKEAs furniture is self-assembly
IKEAs ability to adapt its product design strategies according to the market
Family Oriented
Affordable to everyone
Because of the wide variety of items displayed and the layout of the shop designed in a one-way
format results in customers seeing everything available. They might therefore end up buying
even something that they hadnt thought about.
Convenience for the customer because everything is boxed and they do their own assembling. It
makes it easy to transport (on buying and when people move)
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Also saving shelf space for other IKEA products and reducing transport costs for the consumer
hence resulting in the lower prices
Using unconventional names for their products that people can easily remember (belief is that
people remember names better than they do codes)
Cons
Cost leading Strategy
Lack of product innovation
Changing social trend can hinder the growth of sales of IKEA
The size and scale of IKEA sometimes affects the quality standards of their products and
therefore negatively affect the view that customers have of them. A such customers will have to
pay more attention to the products they are buying
The format of the shop (everything is on floor) can be too overwhelming for the customers such
that they may not even know where to start from
Not maximizing on the growing technology available for marketing and advertising, so
consumers might end up going elsewhere
The fact that that people have to assemble their own items can be problematic for people who
are not good at fixing or assembling items

Recommendations
Expensive e - commerce shipping
1. Promote a temporary discount on shopping rates
Promote a temporary discount on shipping rates
Sign up for loyalty programe and get free shopping
Measuring effectiveness
If the promotion is successful , it will generate additional online sales
Complex product names
2. Change product names to fit the market
Take from globalization to localization
Easier to start buzz about product
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 Measure effectiveness of recommendation using conjoint an

VIII.

Conclusion

The price pressure, which IKEA is underlying, is another major challenge, because competitors
are plenty and the raw material market is volatile. At the same time IKEA has to be careful in the
ethical treatment of employees, that do not belong directly to the organization but a part of its
supply chain.
Finally IKEA has to become an even more sustainable organization, since sustainability almost
became a core requirement. One way to accomplish that would be a system to effectively recycle
old (IKEA) products and make new furniture of them.
References :
Harvard business References

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