IKEAPage12

Module:-Sales and distribution

Topic:-Case study analysis on Ikea

Submitted to,Dr. Rohit singh

Submitted by,Preet shah (0220117)Bba 3rd year (5th sem)

Date:- 8th october 2013

Table of ContentsEXECUTIVE SUMMARY3ABOUT IKEA4HISTORY4SALES EFFORT& DISTRIBUTION5Sales strategy: low price strategy5Larger volumes give more sales5DISTRIBUTION5From supplier to store5IKEAS RELATIONSHIP WITH SUPPLIERS6SALES FORCE MANAGEMENT7Recruitment Process7Job Description8SELECTION8COMPENSATION9TRAINING PROGRAM9SALES CONTROL10CRITICAL ANALYSIS11REFERENCING12

EXECUTIVE SUMMARY

This report is on worlds largest home furnishing retailer company IKEA which makes and sales the furnishing products to their customers. This report tells about the selling strategy of the company. How they sale their product and what is the relationship with their customers as well as the suppliers. The main aspect of this report is, how they manage their sales force taking from the recruiting the employees till trained them. After allocating the responsibilities to their employees how the company has a control on their sales force. This report is basically a type of case study in which we have examined a case of IKEA.

ABOUT IKEAIKEA is a privately-held, global residence items retailer that sells toned wrap up furniture, accessories, and bathroom and kitchen items in their retail stores worldwide. This company, which in turn pioneered flat-pack style furniture at affordable prices, has become the worlds largest furniture retailer. IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden which is owned by a Dutch registered base managed by the Kamprad family.IKEAs vision is to: Create a better everyday life for the many peopleThis company which was structured throughout smaland, Sweden, redirects their items via their stores. At present company are having 340 stores in 40 countries, most of them in Europe, North America, Asia, and Australia.

HISTORYThe particular IKEA principle begun as soon as Ingvar Kamprad, business person on the Smaland province with the southern area of Sweden, experienced a modern idea. In Smaland, although the soil is thin and poor, folks have a reputation with regard to spend so much time, existing frugally and making the most out of limited resources. And when Ingvar commenced his furniture business in the late 1940s his innovative idea seemed to provide household redecorating merchandise connected with good function and design at really cheap prices. While compared to help the opponents by applying basic cost-cutting option which does not have an effect on the quality of these products. The name IKEA originated from the initials of Ingvar Kamprad, I and K, plus as well as the very first letter connected with Elmtaryd and Agunnaryd, which are the names of the farm and village where he spent his childhood.

SALES EFFORT& DISTRIBUTIONSales strategy: low price strategy.Low prices are necessary if IKEA is to realize its vision of fabricating a better everyday life for the many people. The companys business commercial low price with meaning captured this responsibility for featuring of stylish, expertly developed products that would not make customers feel inexpensive. IKEA always believe in qualitative product at a lower price. Larger volumes give more salesBig quantities undoubtedly are a considerable factor at the rear of the low prices. When IKEA lowered their prices, more people could purchase their goods. One of the example includes the earthed (grounded) extension cable that used to cost 69 Swedish kronor (about 7.50). And at that time they were selling about 40,000 of these cables a year. We questioned ourselves what would happen if we priced this product at just 19 Swedish kronor (2). How many would we be able to sell then? We lowered the retail price, and after a year we were selling one million of those cables in Sweden alone. The fact that IKEA gets the identical range in their outlets all over the world aids you to develop substantial quantities.DISTRIBUTIONFrom supplier to store Pertaining to IKEA, syndication can be an important part of fabricating home furnishing articles at prices which are as low as possible. Approximately 9,500 IKEA goods are manufactured by vendors and transported to IKEA outlets worldwide frequently by using one of many companys middle warehouses as well as syndication facilities. At IKEA, the process of distribution is all about making the route from the manufacturer to the customer as short as possible.Hallmarks associated with IKEA syndication tends to be: A global distribution network Large volumes Flat packages Low costIKEAS RELATIONSHIP WITH SUPPLIERS

In 2006 IKEA experienced 46 trading practices offices in 32 countries. Among the company top five purchasing countries are China (18%), Poland (12%), Sweden (8%), Italy (7%) and Germany (6%) The business also has 28 submission centers in 16 countries supplying to help IKEA stores. In addition to having a large base of supplies across the world, the company furthermore deals with its merchandise from Swedwood, an industrial group owned by IKEA. Greater amounts indicate reduce rates. Plus the aim is perfect for the previously low prices to turn out to be perhaps lower however. For making this particular feasible, IKEA signs long-term contracts with its suppliers. This enables those to help make necessary investments in addition to guarantee the availability of unprocessed trash more than a long period of time. In certain situations, IKEA may also support suppliers by providing financial assistance. This creates unique business opportunities, enabling IKEA to continue to offer a wide range of well-designed, useful home furnishing products at low prices so that many people can afford.The rationale regarding IKEAs relationships with suppliers is based on the companys idea of producing good deal solution within a socially accountable and beneficial means, sustainable to the environment. Most IKEA products are created in accordance with a specially designed Code of Conduct The IKEA Way on Purchasing Home Furnishing Products (IWAY), which in turn provides a basis of the companys relationships with its global suppliers.

SALES FORCE MANAGEMENT

Recruitment ProcessValue Driven this encompasses for, leadership, cost, community and enthusiasm, uniqueness, humility and willpower. IKEA is a value driven company which adopts simplicity, teamwork, communicative directness and urgency Core values of IKEA are cost consciousness, dynamism, and flexibility and employee empowerment Recruitment of around 300 people for one of IKEAs Australia units A very cost effective campaign, which directly harnessed its customer base Candidate must possess at least a Bachelor's Degree in Human Resource Management/Business Administration or equivalent. At least 3 year(s) of working experience in human resource function, preferably specializing in Recruitment and Selection. A resourceful and creative person with good interpersonal communication skills with all levels in the organization. Good analytical and conceptual skills. Service oriented, pro-active and results focused. Able to evaluate multiple highly detailed tasks, determine priorities and organize work for maximum delivery result Team player and have strong command of English Language Able to work independently Knowledge in any payroll system is an advantage Required language(s): English and Bahasa Applicants should be Malaysian citizens or hold relevant residence status. This campaign generated around ~5000 responses and worked out successfully for IKEA

Job DescriptionProliferation sales by developing effective vending skills and tools to placate customer needs and to brace IKEAs position as the superlative home furnishing mass.The main aim at IKEA is to disseminate the product benefits and information with its customers. Also, it strives for providing a positive shopping experience to its customers by providing convincing sales standards.The ultimate goal is to stay bolted to the Inventory control processes followed at IKEA and to utilize the available information to educate everyone in terms of product, service and customer selling techniques.IKEA takes into account the culture and the environment that prevails at the workplace, embracing the workforce and also its consumers. At the end, IKEA strives to assume responsibility for every project ant task that is carried out under its roof.The following states the skill requirement to be recruited at IKEA Proactive and courteous customer approach Good communication skills Willingness to share your knowledge and learning Problem-solving skills Interest in home furnishings Computer aptitude Experience/Education: 0-3 years experience and a HS Diploma or GED Ability to lift 50 lbs. (25 kg)

SELECTIONThe main criteria for selection at IKEA are that of value fit since they provides a co-worker as a mentor for new co-worker for some time. The candidates have to go through a rigorous three stage GD program after which the candidates are selected and then send for training for six months.

COMPENSATION IKEA has developed global, mandatory guidelines for compensation and benefits Each country must offer the same benefit structure for all co-workers in the country Benefits are to be based on core IKEA values as well as local laws and market conditions

TRAINING PROGRAMIKEA offers within retail a new Trainee Program to become Team Leader and for this fantastic development journey we are looking for future leadership talents. Lead a small group of people and you are fully responsible for your own business area from the very beginning. The employees responsibilities are increased and widened time to time and also they are subjected to transfer programs wherein their location is switched. Be supported and coached by experienced managers pass a well-founded training program with a strong link to the job. A wide range of web-based training activities for all aspects of IKEA operations. Take an active part in the trainee program to become Team Leader spend the main part of your Logistics and Communication and Interior design will be integrated. The employees are exposed not only to practical room sessions but also to conventional classroom programs where the employees are provided with theoretical knowledge. Co-workers who have become dexterous in their current job are motivated to seek new challenges.

SALES CONTROLIKEAs culture is strongly influenced by its history and ancestry of Smaland as well as the labor culture existing within Sweden, which includes cost consciousness, entrepreneurship and equality. The founder, Ingvar Kamprad, seems to be an important symbol and his character has influenced, and still influences, the corporate culture. The culture is shown and reinforced by the clothes they wear, the way they work and their compensation system.Here everything is controlled by their philosophy so here it has very important role in which we have three ways in culture control. Culture control; search for people with certain anticipated values of the people they employ or tell the employees what is expected and how they should act whether they agree or not. However they do not seem to try to convince or force employees into sharing their beliefs and culture, the recruitment and selection of employees becomes important.The administrative controls are such controls as organization structure, governance structure and policies and measures. Every store of IKEA has almost similar organizations and governance structure as IKEA Backebol. The organizational structure support communication and control through certain channels. Communications of guidelines and targets are spread to different levels of the organization through the organization structure as well the governance structure, such as regular meetings.

CRITICAL ANALYSIS

IKEA mainly serves in UK and US market so there is an opportunity to go worldwide by coming into developing countries like South East countries and Middle East countries. IKEAs selling strategy which is low price and larger volume is completely suitable in developing economy. In this way they become a market leader in the furnishing industry with a highest sales volume. They are strongly influenced by their culture and they strongly believe that their sales force should also follow the same. It may not be feasible because IKEA serves in different-different countries, in addition to this every country has different culture so we cannot force our sales force to believe in the same culture. IKEA should focus in their training program. They should give training in their home country which is Switzerland for at least one year. Through this training they automatically believe in the companys culture. This training program will help them in managing the team and responsibility. Through this training sales force improve their leadership skills. IKEA has a control on their sales through their protocols and values which is the strong point for company. IKEA should look after the designs and product line. They should improve their product line through new product offerings. Somewhere they are lacking with their designs and features so company should have an impressing design with low-cost which is the vision of the company too. IKEA has a strong foot in their supply chain and managing the sales force and control in the sales.

REFERENCING

1. IKEA Strategic case study & analysis. 2013.IKEA Strategic case study & analysis. [ONLINE] Available at:http://www.slideshare.net/OsamaAlbarrak/ikea-strategic-case-study. [Accessed 06 October 2013].2. Innovative HR Practices at IKEA. 2013.Innovative HR Practices at IKEA. [ONLINE] Available at:http://www.slideshare.net/adi5500/innovative-hr-practices-at-ikea. [Accessed 06 October 2013].3. IKEA Sales Co-Worker Job Description. 2013.IKEA Sales Co-Worker Job Description. [ONLINE] Available at:http://www.ikeafans.com/new-member-guide-alias/ikea-for-beginners/472-ikea-sales-co-worker-job-description.html. [Accessed 06 October 2013].4. . 2013.. [ONLINE] Available at:https://gupea.ub.gu.se/bitstream/2077/23217/1/gupea_2077_23217_1.pdf. [Accessed 06 October 2013].5. . 2013.. [ONLINE] Available at:https://gupea.ub.gu.se/bitstream/2077/23217/1/gupea_2077_23217_1.pdf. [Accessed 06 October 2013].