christopherr_m3_a2 (2)

8/13/2019 ChristopherR_M3_A2 (2)

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Robert Christopher

Argosy University


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IKEA is one of the largest retailers it has

over 200 stores in more than 30 countries.

The stores are large in order to stock a wideand deep range of products

The reason why IKEA stores are so large is

that they house realistic rooms and real lifehome settings to inspire customers(Edvardson and Enquist 2011)

Marketing


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Factors that influence a customers decision tovisit IKEA:

low prices and wide ranging product assortment the opportunities to combine their shopping experience with socialactivities both with people accompanying them to the store as wellas other customers

customers plan visit to IKEA weather the visit is short or long it is easy for both potential and existing customers to acquire

information on IKEA and its products through their website orextensively distributed catalogue

that the unique delivery concept self-service at check-out and self-assembly IKEA can manage to keep their delivery-time down forits customers.

Marketing


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Factors that affected customers in the retail environment while shoppingat IKEA: the design of the IKEA store is very time consuming because different

sections of the store is not well defined with products many times notlocated where customers expect them to be. the fact that no store can be compared to IKEA in terms of the size of

the store their wide assortment of products and the visits beingconsidered as something that calls for advance planning,

the satisfying experiences customers have at IKEA and therefore tendto re-visit

even though they would have a bad experience at IKEA customers saythey would e-visit the store because they feel that there are no otherretailers that can be compared to IKEA

the willingness of customers to IKEA to others.

Marketing


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Value-based management

comprises of value logic andlogic of value. Value logic is theeconomic component and thelogic of values is the socialcomponent.

Value Chain


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Value Chain

Value Logic

economic calculations, focuson economic utility

commercial/financial focus,quality/time/price

focus on the

structural/process aspects ofthe formal organization

focus on business/serviceproduction processes

Logic of values

ethical/social calculations,focus on ethical/social benefits,social/human focus,ideals/trust

focus on values/meanings ascultural expressions

focus on culturalprocesses/making senseout ofa situation


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Value-based management is based on a stakeholderperspective of leadership, responsibility and ethics

incorporated with the concept of a triple bottom line.Three aspects of sustainability form a triple bottom lineeconomic, social and environmental.

Value Chain


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Examples of triple bottom line culture The three dimensions of democratic design are form,

functionality and low price. No other furniture manufacturer

featured these all these three elements. IKEA asks designers to design to decrease prices not increase

them. IKEAs prices are designed according to what the majority can

afford. Designers work on the factory floor with production staff to

produce furnishings that satisfy the other two dimensions.In this example democratic design was driven by a combination ofsocial values (reaching out to the majority of people) and economicvalues (low price in relation to good functional quality)The MilanDesign Fair

Value Chain


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Examples of triple bottom line culture

IKEAs LACK range was initially a door produced by amanufacture in Poland.

door was placed horizontally on framework to become a table.

was cut into pieces to produce shelves.

subdivided in to coffee tables.

pieces were place horizontally and vertically to become bookshelves.

this board-on-frame construction used only 30 percent of theenergy and materials required to produce tables.

could be packed flat, was light, and saved space in transport.

Value Chain


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IKEA works with its suppliers to achieve cost savings andhelp them create optimal conditions to produce efficiency

The IKEA Way (IWAY) on Purchasing HomeFurniture ProductsStep 1

no force or bonded labor, no child labor

no wood from intact natural forests or high

conservation value forests suppliers delivering IKEA products that are solid

wood, veneer, plywood and layer-glued wood mustcomplete a Forest Tracing System document.

Value Chain


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Step 2

suppliers must satisfy the IWAY requirements relating tothe outside environment, social and working conditions and

for the suppliers of wood products forestry.Step 3 suppliers must obtain a certification defined by IKEA itself.

The IKEA certification requires suppliers to be able tomaintain IWAY standards at their factories and set up goalsand plans for how to improve their conditions further

within the three critical areas mentioned above.Step 4 suppliers have to be certified in the three critical areas to

IKEAs official standards in each area. IKEA may help inobtaining these certifications.

Value Chain


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Intangible products and benefits of IKEA

for the first 20 years did everything the opposite of

how things were traditionally done in the furnitureretail world. This produced a competitive advantageand a distinct difference from everybody else. Thencopied the concept worldwide

do not own the means of production themselves they

just have a normal purchasing agreement this waysuppliers face total competition so that whensomeone is more competitive IKEA can move theirproduction to them.

Intangible Products


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Intangible products and benefits of IKEA IKEA has an organizational culture based on informality, cost

consciousness, and a very humble and down to earth approach IKEA sees diversity as a tool to create a more challenging

business atmosphere and that expands the recruitment base.

Also he says that leadership at IKEA reflects their values theIKEA culture and there is a connection between the values andthe image the person gives.

they do not try to move a person into a specific type ofleadership.

the framework is the core values, and we allow a lot of freedomdepending on who you are and what your specific skills are.

Intangible Products


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The concept of rent is used to describe a worldwhere companies who control a certain set of

resources are able to insulate themselves fromcompetition by taking advantage of or bycreating barriers to the entry of competitors.

Technology Rents

Human Rents

Marketing Rents

Intangible Products


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IKEA is classified as an economic social actor. Itinterfaces and interacts with a set of externaland institutional interlocutors, or stakeholdersin an ethical, social and political environmentwhich influence the organizations structure

and process through a system of corporategovernance.

Customers


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In the social environment which they belong IKEAinteracts not only through a system of monetary and

financial exchanges but also through physical, humanand communication flows that produce knowledge,trust and reputation

Customers


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The responsibility of IKEA to make profits cannot beseparated from that of protecting the health and safety

of their employees, satisfying the wants and need oftheir customers and protecting the surrounding socialand environmental context. The company as a socialagent must base its growth on ethical behavior.

Customers


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Four performance measures that incorporate IKEAseconomic, environmental, and social values:

1. Percent of variation from the budget2. Percent of pollution produced by suppliers

3. Number of mangers active in community activities

4. Return on investment (ROI)

Performance Measures


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In order to develop a workforce that will live thesevalues IKEA will ask potential employeesenvironmental and socially undertone questions ininterviews to get an idea of their environmental andsocial values before hiring them. Training will beheld on cost cutting practices for mangers so theymay go and teach it to their respective departments.IKEA will reduce the number of iterations of

strategic planning by trying out a plan regionallybefore it is adopted for global use. This will savemoney in the long run if a product doesnt sell itcan be quickly discontinued.

Performance Measures


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Andersen, M., Skjoett-Larsen, T. (2009) Corporate social

responsibility in global supply chains Supply Chain

Management: An International Journal Vol 14No. 22006 75-85

Edvardsson, B.,Enquist, B. (2006) Value-based servicebrands: narratives from IKEAManaging ServiceQuality Vol 16No.3 2006

Edvardsson, B.,Enquist, B. (2011) The service excellenceand innovation model: lessons from IKEA and otherservice frontiers Total Quality Management Vol. 22No. 5 2011, 535-551

References


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Isaksson, R., Sujianovic, M. (2006) The IKEA Experience: A

case study on how different factors in the retailenvironment affect customer experience

Kaplinsky, R. (2004) Sustaining income growth in aglobalizing world: the search for the nth rent

Kling, K., Goteman, I. (2003) IKEA CEO Anders Dahlivig oninternational growth and IKEAs unique corporateculture and brand identityAcademy of ManagementExecutive Vol. 17No. 1 2003

Patrizia, G. Social performance enhances financialperformance benefits from corporate social responsibility(CSR)

References

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