Ikea Design and Pricing

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Date Submitted: 09/07/2011 08:41 AM

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Case: IKEA Design and Pricing

1. What are IKEA’s competitive priorities?

IKEA is an international known home furnishings retailer. Since being founded in 1943, by Ingvar Kamprad, an entrepreneur from Smâland, Sweden, the IKEA name has grown to more than 300 stores in more than 35 countries and is the world’s largest furniture retailer. Kamprad’s village was known for “working hard, living frugally and making the most out of limited resources” (IKEA website). This work ethic naturally helped shaped his furniture business. He believed in “using simple cost-cutting solutions that did not affect the quality of the product.” Through this work ethic the “IKEA Concept” was formed. IKEA’s vision is to “create a better everyday life for many people.” The IKEA Concepts makes it possible to provide low-priced home furnishings “that contribute to helping more people live a better life at home.” (IKEA Website). In order to do this, Kamprad had to find ways to reduce cost and “scrap and save in every way possible-except on ideas and quality.” (IKEA website)

2. Describe IDEA’s process for developing a new product.

The IKEA Concept is used to “guide the way IKEA products are designed, manufactured, transported, sold, and assembled.” (IKEA Website). All of these factors encompass IKEAs competitive priority of being a low cost leader while providing a wide range of quality products for a wide range of people regardless of “lifestyle and life stage…age group [or] type of household.” IKEA prides itself on providing these things through its greening initiatives and customer focus. IKEA’s core values of leadership by example, common sense and simplicity, daring to be different, and working together embody the culture (Urde). Finding the “right solution at the right costs” is not always done by “tackling the big issues...” but “finding new ways to solve small everyday problems…” (Urde). The company would not be successful if it did not work closely together with not only its...