Ikea

Submitted by petter78 on November 3, 2005

Category: Business

Words: 2617 | Pages: 11

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Introduction

IKEA states in their business idea: "We shall offer a wide range of home furnishing items of good design and function, at prices so low, that the majority of people can afford to buy them"(IKEA 2005). IKEA manage to keep costs low by their superior relationship with their suppliers were they buy low-cost components in huge quantities. Together with efficient warehousing and customer selling service it passes on to customers resulting in lower prices, anywhere from 25 - 50 % lower than its competitors. However, at the same time they manage to operate with 8 - 10 % profit margins, much higher than the industry average (Norman and Ramirez.1993).

We have made a short and simple SWOT analysis to get an overview their capabilities.

Strengths Weaknesses

High variety offering пÑ--Ð... right range of products

Higher margins than competitors

Economies of Scale

Logistics - inventory management

Long term relations with suppliers

The business culture

Organisational capabilities пÑ--Ð... adapting change

Market leader - Category killer

High service level - few stock outs