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Question:

Discuss about the Business Report Ikea Company.
 
 

Answer:

Introduction and Company Information

The IKEA company was started in 1943 and started selling furniture in 1956. By 2007, the company had already opened up different stores for its products in the various countries. The IKEA Company is based in Netherland and creates products regarding furniture and home appliances to make life at home better. Offering a full range of products with affordable prices and a better life for people is the vision of the company. This is a company that earns its money even before they spend it because of the make use of their resources and hence able to make future investments.

IKEA offers quality products to people at fair prices, and they believe that, when people grow due to using the company's products, the company itself grows too. It has many locations globally that supply the furniture and home appliances to different parts of the world (Drzazga, 2014). The company has also included the selling of houses and flats so as to reduce prices for the first time buyers. The IKEA products and furniture usually designed in Sweden but mostly manufactured in developed countries so as to cut costs whereby the final assembly is done by the consumers (Edvardsson & Enquist, 2011).

Some of the IKEA competitors include; the Babyage that sells innovative products to make babies live richer and parents live easier. SHOP.CA sells online millions of goods across the world which include clothing, electronics, furniture, home appliances, jewelry, toys, video games, musical instruments and many other products. Move Loot is another competitor which is the easiest way to buy and sell online which include pick-up and delivery (Rask, 2014). The IKEA has different management styles which it applies in their operations such as autocracy style, democracy, laisse- fair, and lastly paternalistic management style.

 

Innovation: Electronic shopping

The world is changing globally because of the current technology, IKEA company has been facing different challenges in the busy world because some markets, especially in USA stores, are located mainly in urban areas, and this has made the shopping to be difficult because people have busy schedules and the stores are not within their reach. Electronic shopping is an innovation that the company is looking forward to developing even though they opted for Facebook and Twitter but it did not work, and hence they saw the opportunity to implement the e- shopping which is a digital marketing (Drzazga, 2014).

Electronic shopping is whereby people can buy and sell goods and services from a seller over the internet. People usually find the product or the service by searching in the website which displays its items online and then orders for delivery.

Earlier this year, the IKEA company was announced to launch an online shop for the customers in the Czech Republic whereby local consumers can be able to order the products online (Hassan, Sistani, & Raju, 2014)

Benefits of Online Shopping to IKEA

The electronic shopping is important because it allows for peace of mind because there are secure payments that are done online. People can track their order and then select the necessary date for collection of their items. After the online shopping, the shoppers will have access to the online shopping experience. Also, online shopping leads to opening of many stores and outlets and pick up points for the online orders which are made accessible to customers at different destinations.

 

Business model canvas

This is a business model innovation that is used to describe the current business or future business model. This model contains questions that act as guidelines for the designing process of the business model (Massa, 2013).

The IKEA business model canvas is made up of harvesters, manufacturing firms, transport firms, delivery companies and the outfitting firms. Their aim is to design modular furniture, manufacture modular furniture, advertise and market and offer after sale services to its customers. They offer affordable and cheap home products to their clients; it's easy to assemble and transport the furniture and their experience to their clients on childcare on site, dining options and also the whole family experience. To their family, IKEA offers exclusive discounts, and for loyalty, the storage is in low costs assembling, and delivery is for free. The customer segments include the cost-conscious consumers, college students, and small businesses. The key resources are infrastructure regarding megastores, actual furniture, trucks, lifting equipment, tools and skilled personnel regarding labor.

The channels for transportation are superstores, catalogs, family email subscriptions and IKEA stores website. The cost structure includes the raw material costs, manufacturing costs, advertising costs, labor costs and transportation costs. The revenue streams are the furniture sales, food sales at the restaurant, service fees through delivery and assemble and accessories sale through yarn, tools and towing equipment.

The goal of the IKEA business model is to create value within the industry of home furnishing (Euchner & Ganguly, 2014). In the past decade, people could not afford the best quality furniture because of their budget and the company saw this need and created a variety of furniture with different sizes, culture and also prices. The company usually focus on the customer by shortening the distance between the creation of the product and its selling point. And this often lowers the costs of the products. The company does this by looking at the customers' needs, and this gives the information about the consumer and by doing this, they use this information to design the furniture that the client needs considering the space requirement. Different customers face different challenges regarding income, and this makes the company use low prices that the people can afford according to their incomes. The company looks at the tastes and preferences of the consumers so as to design the products that suit those preferences.  By doing this, better materials are used and useful techniques used.

The model usually believes in the personal touch as compared to the name of the company which was named after its founder, the village and the farm where he lived. The value of the enterprise is to have the customers assemble their furniture at home. The furniture is packaged in the way that is easier to transport with instructions on how to put them in place.

The IKEA model requires time to time updates meaning that the furniture is changed from time to time. It takes the information that they receive from their customers, identifies any need arising and then makes changes to the design where necessary. Common sense and hard work is emphasized in this model and gives people a chance to change a house into a real home. Even though the resources of the people are limited, the IKEA business model continues to pay dividends to the people.

 

Business Case Components

Problems solved by the innovation

The service by the name click and collect, many people have been able to select the items of interest online, pay through the credit cards and then have their orders shipped to their areas. The IKEA customers have demanded to make online buying, and the company is happy because it has met peoples' desires. Online payments have been made even though in the first week after it was launched, people needed to pick their goods from the stores (Hassan, Sistani, & Raju, 2014). People are now able to get their orders delivered up to their door with an additional cost which depends on the cost of goods to be delivered and the IKEA branch bought from.

Benefits of the innovation

The e-shopping has helped people to have access to a variety of items as the goods are arranged in such a way that the company needs to see what people want to buy. The IKEAs catalog is necessary because it shapes consumers' behavior as people use it to see all the products and get any information or ideas from home and hence use it to make online orders (Euchner & Ganguly, 2014). People use the augmented reality application to place their furniture at home, see how it looks and how it fits the space available.

Strategic plans and responses

In Swedish, IKEA will launch its electronic shopping business in Shanghai and start selling its products online by the end of August. All the furniture, home appliances, and accessories will be sold online except food and green plants. With this new shopping, people will be able to login to the IKEA website and then buy items through the portal, but both the online and offline products will have same prices and categories. By shopping online, the customers will be able to decide whether the goods will be delivered to their door or pick them from the stores. It also enables people to choose from a variety of products that are available (UDDENFELDT, 2014). The prices of transport and pick up are all the same for the people who order from the shop regardless of the weight of the items. IKEA company uses the electronic shopping so as to have a unique experience for its customers which is associated with the ability to feel and touch the products. The technological changes have contributed to the launch of electronic shopping, and it has created a better everyday life for so many people. The aim of the company is to build on their expansion story and expand their online presence so as to have a good relationship with their customers all over the world with a shopping experience. Due to this launch, IKEA has conducted services allowing for purchases to take place with set delivery dates that fit customers' needs and convenience whereby secure payments are made through the credit cards.

 

Project options analysis

The company has also launched an e-commerce shopping in Saudi Arabia whereby customers just click purchase items, and they are delivered to their doorsteps. The e-commerce is currently being practiced in selected areas, but soon it will cover the whole region of Saudi Arabia. A marketing manager of Saudi Arabia says that it has been the fastest growing e-commerce market in the Middle East and North Africa.

By 2018, the company is planning to launch a modernized full-fledged e-commerce business because they see the ‘click and collect’ service as being temporary.

IKEA has also launched a home delivery and online shopping in Australia where customers will be able to order online and then collect in store or receive a home delivery.

Recommendations

For this reason, IKEA should encourage people to buy flat packed furniture online. Online shopping includes many services like picking and delivery and also assembling hence making shopping from home possible and convenient (Hassan, Sistani, & Raju, 2014). Further, the management of the company should market the e-shopping innovation at both global and domestic level to gain as many customers as possible. Also, the company should establish competitive strategies to withstand the competitive pressure posed by competitors in the market; this will help the company gain a competitive edge against its rivals. Lastly, the human resource management of IKEA should recruit only the qualified personnel who have the right skills of providing excellent online shopping services to the customers.

Conclusion

Technology impacts significantly on the success and performance of a firm. Most companies have invested broadly in sophisticated technologies in the provision of services and products. Electronic shopping benefits both the customers and the companies using the technique. Doing electronic shopping is the best with the changing of the technology because it saves time as people just order for items they need and they are brought within their reach with prearranged delivery and assembly services. Therefore, companies should employ the right resources and invest heavily in online shopping for this will help them get competitive and position themselves firmly in the market.

 

References

Aversa, P., Haefliger, S., Rossi, A., & Baden-Fuller, C. (2015). From business model to business modeling: Modularity and manipulation. In Business models and modeling (pp. 151-185).      Emerald Group Publishing Limited.

Baier, D., Rese, A., & Schreiber, S. (2015). Analyzing Online Reviews to Measure Augmented    Reality Acceptance at the Point of Sale: The Case of IKEA. In Successful Technological   Integration for Competitive Advantage in Retail Settings (pp. 168-189). IGI Global.

De Marchi, V., Di Maria, E., & Ponte, S. (2013). The greening of global value chains: Insights from the furniture industry. Competition & Change, 17(4), 299-31

Drzazga, M. (2014). New Media in Marketing Communication in Multichannel Retailing. Studia Ekonomiczne, (205), 23-33.

Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: lessons  from IKEA and other service frontiers. Total Quality Management & Business          Excellence, 22(5), 535-551.

 Euchner, J., & Ganguly, A. (2014). Business model innovation in practice. Research Technology Management, 57(6), 33-39.

Gassmann, O., Frankenberger, K., & Csik, M. (2014). Revolutionizing the business model. In Management of the fuzzy front end of innovation (pp. 89-97). Springer International Publishing.

Hassan, S. M., Sistani, A. J., & Raju, R. S. (2014). Top Online Shopping E-companies and their Strength and Weakness (SWOT). Research Journal of Recent Sciences. ISSN, 2277, 2502.

Jonsson, A., & Foss, N. J. (2011). International expansion through flexible replication: Learning from the internationalization experience of IKEA. Journal of International Business Studies, 42(9), 1079-1102.

Massa, L., & Tucci, C. L. (2013). Business model innovation. The Oxford Handbook of Innovation Management, 420-441.

Oboyanskiy, A., & Shuvalova, M. (2017). A concept of applications in the electronic commerce market. Journal of Economics and Social Sciences, (9), 8.

Rask, M. (2014). Internationalization through business model innovation: In search of relevant design dimensions and elements. Journal of International Entrepreneurship, 12(2), 146- 161

Rese, A., Schreiber, S., & Baier, D. (2014). Technology acceptance modeling of augmented reality at the point of sale: Can surveys be replaced by an analysis of online      reviews?. Journal of Retailing and Consumer Services, 21(5), 869-876.

UDDENFELDT, J. (2014). How furniture shopping could change through Omni-channel retailing and the use of technology-based innovations.

Urgal, B., Quintás, M. A., & Arévalo-Tomé, R. (2013). Knowledge resources and innovation performance: the mediation of innovation capability moderated by management commitment. Technology Analysis & Strategic Management, 25(5), 543-565.8.

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