A-Team

Final Presentation19.05.2008

Our team

Justyna Batko– Polonia, Warsaw University if Life Sciences

Alejandro Sanchez– Elda

Miquel Llorca– Picassent

Plan of presentation

Introduction Task 1- basic information Task 2- products and services Task 3- 10 OM decisions Task 4- forecast Task 5- e-commerce Summary

For someone who do not know what is

Is a privately-held, international home products retailer that sells flat pack furniture, accessories, bathrooms and kitchens at retail stores around the world.

The company, which pioneered flat-pack design furniture at affordable prices, is now the world's largest furniture manufacturer.

A-Team projectTask 1.

Basic information

1. VISION

2. BUSINESS SECTOR

Self-assembly furniture.

3. SIZE Employees: 118,000

Visitors:

Revenue:

4. LOCATION World map:

Country’s first store: - 1980 -> Spain: Gran Canaria (Las Palmas) - 1991 -> Poland: Platan

5. STRUCTURE

6. HISTORYBegining point

At the age of five Ingvar Kamprad starts selling matches to his nearby neighbours and by the time he is seven, he starts selling further afield, using his bicycle.

He finds that he can buy matches in bulk cheaply in Stockholm and re-sell them individually at a very low price but still make a good profit. From matches he expands to selling flower seeds, greeting cards, Christmas tree decorations, and later pencils and ball-point pens.

Concept beginning

Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products.

The name IKEA comes from the initials of Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the farm and village where he grew up.

1940s – 1950s

The roots of a furniture dealer. Ingvar Kamprad is entrepreneurial in developing IKEA into a furniture retailer. This period sees the exploration of furniture design, self assembly, advertising, the use of a catalogue and a showroom to reach the many people.

1960s – 1970s The IKEA concept starts to take shape. New IKEA

stores open and hero products are developed such as POÄNG and BILLY bookcase. It is a time where concept takes shape and is documented in Ingvar Kamprad's The Testament of a Furniture Dealer.

1980s IKEA expands dramatically into new markets such

as USA, Italy, France and the UK. More IKEA classics arrive such as KLIPPAN, LACK and MOMENT. IKEA begins to take the form of today's modern IKEA.

1990s IKEA grows even more. Children's IKEA is

introduced and the focus is on home furnishing solutions to meet the needs of families with children. The IKEA Group is formed and responsibility for people and the environment is seen as a prerequisite for doing good business.

2000s

IKEA expands into even more markets such as Japan and Russia. Everything for the bedroom and kitchen is explored and presented in co-ordinated furnishing solutions. This period also sees the successes of several partnerships regarding social and environmental projects.

A-Team projectTask 2.

Products and services

How the bussines runs?

The business idea is based on a partnership with the customer: – „we do our part, which starts with our designers working with

manufacturers to find smart ways to make furniture using existing production processes”

– „then our buyers look all over the world for good suppliers with the most suitable raw materials”

– „we buy in bulk, on a global scale, so that we can get the best deals, and you can get the lowest price”

Products

modern, flexible adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses

much of IKEA's furniture is designed to be assembled by the consumer

„democratic design” - the company applies an integrated approach to manufacturing and design

the company implements economies of scale, capturing material streams and creating manufacturing processes that hold costs and resource use down

The price tag first

The fundamental idea is to combine an extremely low price with beautiful design and high quality.

With the low price in mind, our designers began by reviewing the whole production process, including materials used, logistics, and labour and transport costs.

By working together with skilled manufacturers, IKEA designers find ways to get the most out of a raw material. We are constantly looking for smart solutions to meet our customers

needs.

Flat packing saves shipping cost

Our flat-packs and our customers' willingness to assemble products themselves enable us to reduce labour, shipping and storage costs.

IKEA designs furniture so that it can be packed unassembled. Ultimately, this means that we are able to offer our customers

products at low prices.

New product - HAMMOCK

Gentle swinging helps both your body and mind to relax.

Assembled size– Length: 220 cm– Width: 140 cm

  good to know

Max. load 250 kg when the hammock is hanging in a load-bearing construction.Suspension fittings and cord included.Seats 2.

care instructionsHand wash, warm (40°C).Do not bleach.Iron, high temperature.Do not dryclean.Do not tumble dry.

product description & measurementsFabric: 100% cottonRope: 100% polyesterRing: Steel, Galvanised

The house of quality

A-Team projectTask 3.

10 OM decissions

10 Operations Managemnt Decissions

Goods & service design Quality Process & capacity design Location selection Layout design Human resource and job design Supply-chain management Inventory Scheduling Maintenance

Goods and service design

It is simple and straightforward. Products are hard-wearing and easy to live with.

– They reflect and facilitate an easy, natural and unconstrained way of life.

– They express form, and are colourful and cheerful. – And they appeal to the young at heart of all ages.

Quality

IKEA products have the label "Design and Quality, IKEA of Sweden" and are sold in IKEA stores.

KEA works to ensure that products and materials are adapted to minimise any negative impact on the environment, and are safe for customers from a health perspective.

IKEA products must be manufactured under acceptable working conditions by suppliers who take responsibility for the environment.

Process and capacity design

It starts with focusing on what's important. Will an expensive finish on the back of a shelf or under a table-top improve the function? Absolutely not. So IKEA designers do not do it, because a product is of no use to the customer if it is not affordable.

IKEA designers design every IKEA product starting with a functional need and a price. Then they use their vast knowledge of innovative, low-cost manufacturing processes to create functional products, often co-ordinated in style. Then large volumes are purchased to push prices down even further.

Location selection

The IKEA store is where the IKEA range is sold. It is also where the range comes to life.

Layout design

Inside the IKEA store, there are hundreds of inspirational displays– realistic room settings– real-life homes– product combinations that provide fresh ideas and know-

how on contemporary interior design

There are up to 10,000 different products offered in some IKEA stores.

There are many new products introduced throughout the year in the IKEA store.

Human resources and job design

118.000 co-workers spread across functions– purchasing– distribution– whole-sale– range– retail– support functions– the Swedwood Group

Supply-chain management

every product start with functional need and a price innovative, low-cost manufacturing processes to

create functional products, often co-ordinated in style designed to be transported in flat packs and

assembled at the customer's home this lowers the price by minimising transportation and

storage costs IKEA's code of conduct defines what suppliers can

expect from IKEA and specifies what IKEA requires from its suppliers.

Inventory IKEA has 45 trading service offices in 31 countries this allows company to be close to suppliers - about

1,350 in 50 countries They can monitor production, test new ideas,

negotiate prices and check quality while keeping an eye on social and working conditions.

Top five purchasing countries China 22%, Poland 16%, Italy 8%, Sweden 6% and Germany 6%

Scheduling

IKEA has 31 distribution centres in 16 countries. Using flat packs, transporting goods where possible by rail and sea, and utilising fuel-saving techniques allows company to be cost-effective and environmentally friendly.

IKEA provide production and design for one year production of one line of products is done

simultaneously with the research and design process of new products

Maintanance

they pay much attention to be in touch with customers and their needs

catalogue serves as a permanent invitation to the IKEA store– constant inspiration– serves as an invaluable source of product information– contains details on how to get to the nearest store and its

opening hours

A-Team projectTask 4.

Forecasting

Steps in forecasting

Determine the use of the forecast Select the items to be forecast Determine the time horizon of the forecast Select the forecasting model(s) Gather the data Make the forecast Validate and implement results

1. USE OF THE FORECAST

We use forecasting in order to predict which i going to be the impact of our new good in the global market.

Then forecasting can help us to know if this new good is going to be profitable or not.

2. ITEM

3. TIME HORIZON

SHORT-TERM:

- Marketing. MEDIUM-TERM:

- Increase our budget. LONG-TERM:

- Using this new good to expand our company in a new work field.

4. FORECASTING MODELS

Qualitative Methods: We use our experience to predict the market devolpment.

Quantitative Methods: When we have data, we can use mathematical techniques to predict the market development.

Quantitative Forecasting Methods

We have done a study of the last 8 years using these two methods:

- Moving average.

- Exponentical smoothing.

5. DATA

YEAR GAIN (million €)

2000 1100

2001 1000

2002 1150

2003 1200

2004 1250

2005 1280

2006 1300

2007 1400

6. FORECAST

7. RESULTS

FORECASTING

0200400600800

1000120014001600

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year

Mill

ion

euro

s

GAIN

MOVING AVERAGE(n=3)

EXPONENTIALSMOOTHING (a=0.5)

8. CONCLUTIONS

The most important conclution is that according to our results our company is not going to increase its benefits, but proably it will do it next years, because despite of forecasting give us lower values than real values, we achieve very high benefits.

A-Team projectTask 5.

Ecommerce

fully interactive room images– users can engage with the images and see

tips and ideas for a variety of products and everyday situations

“The trick was to develop a user interface that balances efficiency and discovery”

with an IKEA step-by-step guide shopping are easier

Payment Methods

Ask Anna

the automated customer service chat character driven by artificial intelligence

Anna has proven to be very effective in providing 24/7 support and advice to millions of IKEA customers worldwide, reducing support costs

Summary

wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them

Sources

www.ikea-group.ikea.com www.ikea.com www.wikipedia.org www.franchisor.ikea.com

"IKEA: Flat-pack accounting", The Economist, 2006-05-11

Questions?