Ikea Case Study

1. What factors account for the success of IKEA?

IKEA’s success factors can be measured by the various philosophies that are integrated into the company. IKEA tries to seek out a way to balance the cost-effective labor against the company’s product quality standards. One way IKEA saves money is on production. IKEA is always looking for opportunities to establish relationships with suppliers in developing countries. IKEA also requires that all furniture needs to be designed to ship disassembled, plus all products need to be transported flat. Also by focusing on design gives IKEA more control over the products it sells.

2. What do you think of the company’s product strategy and product range? Do you agree with the matrix approach described in Figure B of the case?

I think IKEA’s current product strategy is unique, when it refers to their products. Since IKEA uses a broad range of products, this is another factor that leads to their success. When evaluating the extent of IKEA’s product range when it comes to price categories, IKEA incorporates the Product/Price Matrix, shown in Figure B. By utilizing the Matrix this enables IKEA to research all possibilities within their market, by product type, and price, and this can be performed simultaneously. For IKEA this is a very ingenious move on their part since they offer a product in primarily every category, and at different price ranges. Another and probably the best aspect of the matrix is that the matrix gives IKEA the ability to identify any weak points in the company’s product lineup. If a weak point is discovered in the matrix, then the opportunities for the market are identified. In my opinion, this would be the best possible strategy for IKEA’s products and evaluating the ranges of these products.

3. Despite its success, there are many downsides to shopping at IKEA. What are some of these downsides? IKEA’s Vision Statement (in Figure C of the case) describes how the company seeks to build a partnership with...