IKEA Operation Essay
IKEA’s mission is to offer a wide range of home furnishing items of good design and function, excellent quality at affordable price (IKEA 2011). IKEA distinguishes itself from the competitors with the way it unique layout design. The display was setup in a flow manner which allow consumer to view all product before leaving the store which also fully utilize the floor space. The showroom allows consumers to view the full operational product without customer having to visualize in their own room.
IKEA adopts the self-service concept in their stores and information counter was located at every distance and resource such as measuring tape, catalogues are available for free of charge. IKEA stores are designed for a family oriented experience gather with customer services and provide facilities such as a restaurant, supervised play area which breakthrough the tradition view of adult activities. IKEA design products are innovative and gone beyond the basic functionality. It constantly seeks value to its products with strict quality. Product is designed to be sold in flat pack and easy assembly with simple instruction.
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However self assemble makes backfire if not carefully plan, IKEA successfully translate this tradition to norm. Individual main seem as a fun way of getting family work together. IKEA is situated in urban area which land is cheap, unlike retailer who prefer in the city. IKEA is able to bring costs down with its high-volume production and the unique flat pack allows saving of floor space. The flat pack is also visualize aid for IKEA when product is running low, employee could easily identify. The company promotes products to be modular, allowing different variations of the same basic product to be customised to produce greater variety.
This allows IKEA to provide greater variety for its products without holding large amounts of stock. IKEA is different to the rest of its competitor due to the daring and innovative ideal. Breaking through the tradition furniture concept of expensive, heavy and bulky. The next different was retailer would place similar products together and such displayed will represent only a portion of what is available. The delivery of products to the consumer may take several weeks such as a simple desk. IKEA is to provide goods at a reasonable price to consumer.
However, in providing products at a lower price than expected, then profit is affected. This would be a possible threat on IKEA growth in the future. IKEA low-cost operation strategy will lose the high niche market consumer who can really spend the money. IKEA main income are from selling of furniture however plays area and restaurant concepts maybe an addition running cost. This opportunity costs could be more value added by translating to lower priced goods or marketing. Entry for new competitor may be low for mega mart, such as Wal-Mart or Carrefour whose has the capability to imitate IKEA concept.
Nation political and regulation change regularly which may potentially affect the IKEA business. Example would be blocking of site like facebook in China due to censorship and expansion in Russia which IKEA face red tape. As China is the upcoming economic power. IKEA has been hit with heavy import taxes in China. IKEA faces strict quotas and has difficulties importing food to its Swedish restaurant. IKEA do not have high technology capability, such as ecommerce or online booking. Consumer may drive all the way and realize that it is out of stock.