The IKEA Case
1. What are the core competencies and end products of IKEA? How are they linked with each other?
The main competence IKEA has been maintaining is the low-cost aspect which is predominantly observable within different areas of the firm. IKEA provides low-cost products, which emerge from low-cost supply chains and flat packaging, which were convenient for transport and storage. Another important aspect contributing to the low-cost ideology is designing furniture made from inexpensive material, as for instance compensite instead of massive wooden panels. Combining the low cost aspect with producing furniture that targets a large number of clusters within the population, IKEA continuously increased its sales. As a result IKEA has always been selling products without neglecting the functional- and design-issue.
2. How did IKEA diversify?
Offering a huge product variety in combination with a geographical expansion at high degree, IKEA was able to differ from other competiting companies in order to increase its surperior market status within the furniture business. In addition to that IKEA started research on child products to find out what the actual needs of children with regard to their products and furniture were. As aforementioned, IKEA had an advantage as against competitors, following the cost-leadership-strategy, which aims to achieve the lowest costs within an industry
3. How did IKEA expand internationally? How has the firm maintained a focus on core competencies while simultaneously adapting to local needs in host countries?
Starting to expand to Norway in 1963, IKEA made use of the same products and operational procedures as used in the origin country, Sweden. At first, IKEA was not responding to local preferences, for example in the US, so that customers got unsatisfied by IKEA’s design that did not match their needs and wants. Because of the rapid expansion, administrative costs were quickly increasing...
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