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Ikea Analysis Report

1979 words - 8 pages

IKEA Analysis Report
Many companies and corporations struggle daily to sustain a competitive advantage and build a strong values-based service. The core difficulty that these companies face is how to create value for their customers and stakeholders such as suppliers and coworkers. A values-based service company can be built and be effective, however, the framework has to be set to ensure success. IKEA group has implemented a framework for the international company and has succeeded in sustainability as a values-based service company.
Values-based service consists of attracting and retaining customers to make profits while creating value for customers (Edvardsson, 2006). Customers in ...view middle of the document...

IKEA has created a superior shopping experience by providing home furnishings at affordable prices (IKEA Group, 2013). Furthermore, IKEA and its market position appeals to consumer wants and needs while differentiating its role from competition. For example, consumers must assemble products on their own once purchased, however, this is clearly an element that IKEA’s customers are willing to accept as IKEA provides efficient value propositions elsewhere. To help minimize cost, IKEA designs, manufactures, transports, and sells it merchandise (IKEA Group, 2013). The company continues to lower prices for customers in spite of inflation and high raw material costs, which drives customer’s loyalty (IKEA Group, 2013). In an industry where prices are high and continue to inflate for quality furnishings, this undoubtedly motivates loyal customers and inspires new customers to shop with IKEA. “Low prices have enabled Ikea to hold a strong market presence which, in turn, gives the group considerable bargaining power and an advantage in terms of higher customer recall” (IKEA Group, 2013).
In addition, IKEA has also implemented environment sustainability initiatives that focus on five areas: offering a sustainable range of products, reducing carbon footprint, turning waste into resources, reducing water footprint, and social responsibility (IKEA Group, 2013). By IKEA focusing on environmental sustainability in these five area, it has facilitated the firm to create and strengthen its brand value. IKEA’s value chain is focused on quality, time and price (Edvardsson, 2006). IKEA is dedicated to manufacturing and supplying high quality products at a low price. The supply chain supports its value proposition as well which is based on the aspects of economic, social, and environmental sustainability (Edvardsson, 2006). IKEA announced the Sustainability Product Score Card in 2010 to help develop more sustainable products (IKEA Group, 2013). The SPS score card reflects the sustainability of products such as raw materials used and recycling potential at the end of its lifecycle (IKEA Group, 2013). As for social sustainability, the company has taken pride in the security of its co-workers, suppliers, and communities (IKEA Group, 2013). Customer’s perspective is a key factor in a value chain proposition and effect the overall reputation of the company. It is essential to build a relationship with consumers and have that reflected through the social value chain. “The genuine relationship of a family is focused on trust and that is what IKEA always tries to reproduce with its stakeholders” (Edvardsson, 2002).
Stakeholders and customers are a vital entity to IKEA and their value proposition. IKEA’s business model is directed at the majority of people and what they can afford. IKEA is a dedicated service-oriented company that aims for solutions to real life problems and assisting in making a better life for the majority of people (Edvardsson, 2011). This proves that...

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