IKEA assignment Essay Example | Topics and Well Written Essays - 1750 words

IKEA assignment - Essay Example The stores include restaurants and child care. Electric carts are provided for people who need them. IKEA’s products are trendy yet inexpensive relative to the market. The product line is very extensive. And IKEA prints and distributes more catalogues each year than the world produces Bibles (Roth). The company has found itself in a position of prominence because of the unique strategy it has developed since its inception as a small mail-order merchant in Sweden in 1943. Its founder, Ingvar Kamprad, was a man of vision who started developing this strategy from the very beginning. It took him only twelve years to develop his model. He put the final touches on it in 1965 when he opened a large store in suburban Stockholm that resembles today’s stores worldwide. A great deal of IKEA’s strategy is embedded in what it calls the IKEA Concept. According to the IKEA Web site, the IKEA Concept â€Å"is based on offering a wide range of well designed, functional home furn ishing products at prices so low that as many people as possible will be able to afford them.† The site also suggests that IKEA’s target market is the middle class, not the upper class that has always been able to buy trendy furniture. The Web site also discusses the way its products are designed, manufactured, and distributed. There is mention of how the products are assembled. In a sense, this is a fallacy because most IKEA furniture products are sold disassembled which is one of the reasons why they can be sold as cheaply as they are. Although Kamprad initially bought the furniture he sold, he soon changed his strategy by manufacturing the furniture himself. He designed his furniture to be functional and yet easy and inexpensive to build. The furniture was sold disassembled to save on manufacturing costs. And it was displayed in the store with detailed explanation tickets to alleviate the need for salesperson assistance, thus cutting down on the cost of labor (Owens) . A major competitive advantage that IKEA has is its control over the channels of production and distribution. It controls a network of 1800 suppliers in more than 50 countries (Normann and Ramirez). Because marketing channels are so critical on market acceptance and overall economic performance, creating a formal planning process for designing and selecting channels is imperative (Stern & El-Ansary: 222). Much of this control is spelled out in its code of conduct that it calls â€Å"The IKEA Way on Purchasing Home Furnishing Products.† This code was launched in 2000. It defines what suppliers can expect from IKEA and specifies what IKEA expects from its suppliers. It not only spells out its expectations in terms of legal requirements, working conditions, external environment, and forestry management, but also puts a great deal of emphasis on the active prevention of child labor (IKEA Web site). Partly for societal reasons and partly because it is just plain good business, IK EA has become very environmentally aware. For example, for decades the firm has worked to minimize the use of formaldehyde in its products. For 25 years, IKEA has applied the German formaldehyde legal requirement for all its products in all markets. The Germans have the strictest standard in the world. IKEA even applies this standard in countries where no limit exists. The German limit is such that even persons who are overly sensitive to formaldehyde should not experience any problems