ikea a furniture dealer case study

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IKEA: A Furniture Dealer

By: Quy Huy, Michael Jarrett, Lisa Duke

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

• Length: 17 page(s)
• Publication Date: Sep 28, 2011
• Discipline: Strategy
• Product #: IN1285-PDF-ENG

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Learning Objectives

The case can be used to teach the key elements of business strategy, including mission, scope, organizing logic, and sources of competitive advantage. It shows how the company organizes itself to create value for specific customer segments while maintaining a competitive cost structure. It also illustrates how organizational culture can be a source of competitive advantage.

Sep 28, 2011 (Revised: Jul 3, 2019)

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Grocery stores, Retail and consumer goods

IN1285-PDF-ENG

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IKEA: A Furniture Dealer

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Ikea: a furniture dealer description.

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

Case Description IKEA: A Furniture Dealer

Strategic managment tools used in case study analysis of ikea: a furniture dealer, step 1. problem identification in ikea: a furniture dealer case study, step 2. external environment analysis - pestel / pest / step analysis of ikea: a furniture dealer case study, step 3. industry specific / porter five forces analysis of ikea: a furniture dealer case study, step 4. evaluating alternatives / swot analysis of ikea: a furniture dealer case study, step 5. porter value chain analysis / vrio / vrin analysis ikea: a furniture dealer case study, step 6. recommendations ikea: a furniture dealer case study, step 7. basis of recommendations for ikea: a furniture dealer case study, quality & on time delivery.

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Case Analysis of IKEA: A Furniture Dealer

IKEA: A Furniture Dealer is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. IKEA: A Furniture Dealer is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. IKEA: A Furniture Dealer case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. IKEA: A Furniture Dealer will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

IKEA: A Furniture Dealer case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of IKEA: A Furniture Dealer, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The IKEA: A Furniture Dealer case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, IKEA: A Furniture Dealer case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – IKEA: A Furniture Dealer

Step 1 – Problem Identification of IKEA: A Furniture Dealer - Harvard Business School Case Study

The first step to solve HBR IKEA: A Furniture Dealer case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Ikea's Ikea is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Ikea's Ikea, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the IKEA: A Furniture Dealer. The external environment analysis of IKEA: A Furniture Dealer will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in IKEA: A Furniture Dealer case study. PESTEL analysis of " IKEA: A Furniture Dealer" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with IKEA: A Furniture Dealer macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for IKEA: A Furniture Dealer

To do comprehensive PESTEL analysis of case study – IKEA: A Furniture Dealer , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact IKEA: A Furniture Dealer

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ IKEA: A Furniture Dealer ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Ikea's Ikea is operating, firms are required to store customer data within the premises of the country. Ikea's Ikea needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. IKEA: A Furniture Dealer has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Ikea's Ikea in case study IKEA: A Furniture Dealer" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Ikea's Ikea in case study “ IKEA: A Furniture Dealer ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Ikea's Ikea in case study “ IKEA: A Furniture Dealer ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ IKEA: A Furniture Dealer ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Ikea's Ikea can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at IKEA: A Furniture Dealer case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Ikea's Ikea needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact IKEA: A Furniture Dealer

Social factors that impact ikea: a furniture dealer, technological factors that impact ikea: a furniture dealer, environmental factors that impact ikea: a furniture dealer, legal factors that impact ikea: a furniture dealer, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: ikea: a furniture dealer case study solution.

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Ikea: a furniture dealer change management analysis & solution, hbr change management solutions, strategy & execution case study | quy huy, michael jarrett, lisa duke, case study description.

This case describes IKEA's strategy, aiming to show how the Swedish company has developed and maintained its competitive advantage over decades while expanding its business worldwide.

Change Management, Competitive strategy, International business, Leadership, Organizational culture , Case Study Solution, Term Papers

Order a IKEA: A Furniture Dealer case study solution now

What is Change Management Definition & Process? Why transformation efforts fail? What are the Change Management Issues in IKEA: A Furniture Dealer case study?

According to John P. Kotter – Change Management efforts are the major initiatives an organization undertakes to either boost productivity, increase product quality, improve the organizational culture, or reverse the present downward spiral that the company is going through. Sooner or later every organization requires change management efforts because without reinventing itself organization tends to lose out in the competitive market environment. The competitors catch up with it in products and service delivery, disruptors take away the lucrative and niche market positioning, or management ends up sitting on its own laurels thus missing out on the new trends, opportunities and developments in the industry.

What are the John P. Kotter - 8 Steps of Change Management?

Eight Steps of Kotter's Change Management Execution are -

• 1. Establish a Sense of Urgency
• 2. Form a Powerful Guiding Coalition
• 3. Create a Vision
• 4. Communicate the Vision
• 5. Empower Others to Act on the Vision
• 6. Plan for and Create Short Term Wins
• 7. Consolidate Improvements and Produce More Change
• 8. Institutionalize New Approaches

Are Change Management efforts easy to implement? What are the challenges in implementing change management processes?

According to authorlist Change management efforts are absolutely essential for the surviving and thriving of the organization but they are also extremely difficult to implement. Some of the biggest obstacles in implementing change efforts are –

• Change efforts create an environment of uncertainty in the organization that impacts not only the productivity in the organization but also the level of trust in the organization.
• Change management is often a lengthy, time consuming, and resource consuming process. Managements try to avoid them because they reflect negatively on the short term financial balance sheet of the organization.
• Change efforts are often made by new leaders because they are chosen by board to do so. These leaders often have less trust among the workforce compare to the people with whom they were already working with over the years.
• Change efforts are often targeted at making fundamental aspects in the business – operations and culture. Change management disrupts are status quo thus face opposition from both within and outside the organization.
• Change management efforts are made when the organization is in dire need and have fewer resources. This creates silos protection mentality within the organization.

IKEA: A Furniture Dealer SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis

How you can apply Change Management Principles to IKEA: A Furniture Dealer case study?

Leaders can implement Change Management efforts in the organization by following the “Eight Steps Method of Change Management” by John P. Kotter.

Step 1 - Establish a sense of urgency

What are areas that require urgent change management efforts in the “ IKEA: A Furniture Dealer “ case study. Some of the areas that require urgent changes are – organizing sales force to meet competitive realities, building new organizational structure to enter new markets or explore new opportunities. The leader needs to convince the managers that the status quo is far more dangerous than the change efforts.

Step 2 - Form a powerful guiding coalition

As mentioned earlier in the paper, most change efforts are undertaken by new management which has far less trust in the bank compare to the people with whom the organization staff has worked for long period of time. New leaders need to tap in the talent of the existing managers and integrate them in the change management efforts . This will for a powerful guiding coalition that not only understands the urgency of the situation but also has the trust of the employees in the organization. If the team able to explain at the grass roots level what went wrong, why organization need change, and what will be the outcomes of the change efforts then there will be a far more positive sentiment about change efforts among the rank and file.

Step 3 - Create a vision

The most critical role of the leader who is leading the change efforts is – creating and communicating a vision that can have a broader buy-in among employees throughout the organization. The vision should not only talk about broader objectives but also about how every little change can add up to the improvement in the overall organization.

Step 4 - Communicating the vision

Leaders need to use every vehicle to communicate the desired outcomes of the change efforts and how each employee impacted by it can contribute to achieve the desired change. Secondly the communication efforts need to answer a simple question for employees – “What it is in for the them”. If the vision doesn’t provide answer to this question then the change efforts are bound to fail because it won’t have buy-in from the required stakeholders of the organization.

Step 5 -Empower other to act on the vision

Once the vision is set and communicated, change management leadership should empower people at every level to take decisions regarding the change efforts. The empowerment should follow two key principles – it shouldn’t be too structured that it takes away improvisation capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely defined that people at the execution level can take it away from the desired vision and objectives.

IKEA: A Furniture Dealer PESTEL / PEST / STEP & Porter Five Forces Analysis

Step 6 - Plan for and create short term wins

Initially the change efforts will bring more disruption then positive change because it is transforming the status quo. For example new training to increase productivity initially will lead to decrease in level of current productivity because workers are learning new skills and way of doing things. It can demotivate the employees regarding change efforts. To overcome such scenarios the change management leadership should focus on short term wins within the long term transformation. They should carefully craft short term goals, reward employees for achieving short term wins, and provide a comprehensive understanding of how these short term wins fit into the overall vision and objectives of the change management efforts.

Step 7 - Consolidate improvements and produce more change

Short term wins lead to renewed enthusiasm among the employees to implement change efforts. Management should go ahead to put a framework where the improvements made so far are consolidated and more change efforts can be built on the top of the present change efforts.

Step 8 - Institutionalize new approaches

Once the improvements are consolidated, leadership needs to take steps to institutionalize the processes and changes that are made. It needs to stress how the change efforts have delivered success in the desired manner. It should highlight the connection between corporate success and new behaviour. Finally organization management needs to create organizational structure, leadership, and performance plans consistent with the new approach.

Is change management a process or event?

What many leaders and managers at the Ikea's Ikea fails to recognize is that – Change Management is a deliberate and detail oriented process rather than an event where the management declares that the changes it needs to make in the organization to thrive. Change management not only impact the operational processes of the organization but also the cultural and integral values of the organization.

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IKEA: A Furniture Dealer Harvard Case Solution & Analysis

Home >> Management Case Studies >> IKEA: A Furniture Dealer

IKEA: A Furniture Dealer Case Solution

This case explains IKEA's method, intending to demonstrate how the Swedish business has actually established and kept its challenging benefit over years while broadening its organisation world wide.

Pedagogical Goals:

The case might be utilized to guide the crucial elements of company method , consisting of objective, capacity, arranging reasoning, and sources of competitive benefit. It demonstrates how the business arranges itself to produce worth for particular client sections while keeping a competitive expense structure. It likewise shows how organizational culture may be a source of challenging benefit.

This is just an excerpt. This case is about Strategy

published: 28 Sep 2011

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Marketing Mix of IKEA: A Furniture Dealer – Definition & Explanation

Neil Borden of Harvard Business School first used the term “Marketing Mix” to explain the set of activities that a firm uses to execute its marketing strategies. According to Neil Border, organizations blend the various elements of marketing mix into a marketing strategy that helps the organization to compete and developed a differentiated positioning in the market place.

The 12 core elements of Neil Borden Marketing Mix are -

Consolidation of 12 elements of marketing activities into 4ps of marketing mix.

Jerome McCarthy consolidated the 12 elements of marketing mix and other critical component into a simplified framework – 4Ps of Marketing Mix.

What are the 4P’s of Marketing Mix

The 4Ps of Marketing Mix are - 1. Product – The products Ikea's Ikea is making or are in the pipeline to capture potential markets. 2. Price – Pricing strategy that Ikea's Ikea is pursuing in various customer segments it is operating in. 3. Place (Channels of Distribution ) – Distribution mix of Ikea's Ikea has taken a new dimension with the emergence of Online Retailing & domination of players such as Amazon. 4. Promotion (Communication Strategy of Ikea's Ikea) – The emergence of social media and online advertising has changed the landscape of Ikea's Ikea communication mix and communication strategy.

Products – 4Ps in IKEA: A Furniture Dealer Case

In marketing strategy, product is not viewed as a tangible product, but the source of value to be delivered to the customers. Value to the customers of Ikea's Ikea can be delivered in numerous ways such as – word of mouth references, point of sale equity, installation and repair services, physical product , financing plans to purchase the products, convenience of availability , priming and pre purchase education provided by sales staff, quality assuring brand name etc. These numerous ways to understand product concept provide marketing managers of Ikea's Ikea an opportunity to differentiate its overall value proposition from that of the competitors.

4 Stages of Product Management as part of Marketing Process

Identification of Opportunity – Market research and customer research is done to identify the needs of the customers that Ikea's Ikea can cater to with its present and acquired resources.

Design and Testing – Product is designed based on the value proposition that customers are seeking and one that Ikea's Ikea can deliver. The key consideration regarding product design and testing are – customer value proposition, regulatory requirements, Ikea's Ikea skills and resources, opportunities for differentiated positioning, and profitability.

Ikea's Ikea Product Launch – It includes decision regarding pricing, communication strategy, distribution channel management, and building infrastructure to provide post purchase services.

Product Life Cycle Management of Ikea's Ikea products – Once the product is launched the company needs to manage the life cycle of the product through its various stages such as – introduction, growth phase, cash cow stage, and finally decline stage.

Product Line Planning Decision

There are three major product line planning decisions that Ikea's Ikea can take – Product Line Breadth decision, Product Line Length decision, and Product Line Depth decisions. Some of the considerations that marketing managers at companyname need to take while making product line decisions are –

1. Does the product launch or product extension launch satisfy potential customer needs and wants in a way that can deliver profits to the firm.

2. Will the product will be viewed completely different from the existing products of the firm and how much is the risk of cannibalization of the present brands by a new brand.

3. How the new product brand launch will impact the overall brand equity of the Ikea's Ikea present brands and products. For example often launching a no frill product may end up impacting the image of the company as an innovator in the field. This is one of the reason why Apple stopped selling its plastic phones as it negatively impacted the image of the company as a deliverer of superior hardware products.

Product Line Breadth Decision for Ikea's Ikea

As the position of Ikea's Ikea in its industry well established it can expand to the adjacent segments where the customers are using complimentary products from other brands to get the maximum value out of the products.

Product Line Length of Ikea's Ikea

The decision regarding product line has to be balanced between complexity of the present products and service required, and available niche space available in the market place. From my perspective at present Ikea's Ikea should stick with the present merchandise mix rather than launching new products to expand the product line.

Product Line Depth of Ikea's Ikea

These are decisions regarding how many different Stock Keeping Units (SKU) of a given product. For example Apple has its iPhone in various colors even though the hardware and software is the same.

Product - Broad Recommendations

1. Ikea's Ikea can think of ways - how features and value can be added to existing brands that help them in consolidating and increasing their market position.

2. Ikea's Ikea can introduce a new brand in the existing product line or it can strive to establish a whole new product line.

3. Ikea's Ikea can try to reposition the products from the existing brands within one line.

4. Ikea's Ikea can stop selling the products that are either not profitable or not creating enough differentiation from the existing products.

Pricing – 4Ps of Marketing IKEA: A Furniture Dealer

Pricing is a highly complex activity and we will cover only a very limited aspect of what goes into pricing decisions. To a large extend pricing depends upon the other 3Ps of marketing – product, place and promotion. Conceptually perceived value is the maximum price a customer is willing to pay for Ikea's Ikea product in the given competitive context.

Cost Base Pricing

Under cost based pricing strategy – Ikea's Ikea can work out what it takes to produce the product and put a markup based on profit it wants earn. In a highly competitive strategy with dynamic pricing the strategy may not be feasible. For example Uber running losses in billions can provide lower prices and sustain compare to individual taxi service provider who is not backed by private equity and long term strategy.

Value Base Pricing

Value Base Pricing is a pricing strategy which is based on customer perception of value. It inculcates put the number on both tangible and intangible benefits with a clear understanding of elasticity of demand and competitive pressures.

Market Penetration Pricing

Ikea's Ikea can employ this pricing strategy where it launch a new product either at loss or at very low margin to get a foothold in the segment.

Market Skimming Pricing

For certain well established brands, Ikea's Ikea can increase the prices as customers can pay higher price.

Good Value Pricing

Offering right mix of product features, quality, and service combination at fair price. For example offering a limited frill option - customers can have initial product experience at an accessible price. GoPro use this strategy extensively.

Competition Based Pricing

The pricing strategy is based on the competition in the market. Under this strategy Ikea's Ikea focus is to match the prices of the competitors and focus on reducing the cost of operations to increase profitability.

Pricing Recommendation

Based on the evidences at hand – we can choose the following pricing strategy High Brand Awareness – The brand of Ikea's Ikea is well respected in the market so it can fetch a slight premium over the other competitive brands. Innovative Product – With advanced features the product is perceived as innovative in the current market context. A slight premium price will not only emphasize the features of the products but also stops other players entering into the present segment. A high premium price may attract new entrants and thus lower the profitability.

Place – Distribution Channels - 4Ps in IKEA: A Furniture Dealer Case

Place or Distribution Channel is a set of processes through which Ikea's Ikea delivers its products to the customers. Distribution & Marketing channels fulfill various purposes such as – easy availability of the products to end consumers , reducing purchase lot size thus enabling opportunities for individual customers to buy products, logistics, enabling product customization options at the point of sales, after sales services and installation services, providing customers information about the products , providing product quality assurance,and providing extensive product assortment using product line – breadth, length, and depth.

Designing Channels of Distribution for Ikea's Ikea

There are two major Channel of Distribution related decision criteria –

1. Channel Design

Ikea's Ikea needs to choose whether it wants to implement a distribution system which is – Direct, Indirect, or Both. The channel design decision involves - understanding of customer value proposition, current customer convenience points, length breadth and depth of Ikea's Ikea product line, and competitors’ distribution systems.

Direct Distribution System – Ikea's Ikea putting its own direct distribution channel and reach directly to the customers. It can be through opening its own stores or just selling all the products online. Indirect Distribution System – Ikea's Ikea including channel partners such as wholesalers, retailers, logistics companies, and distribution agents. Hybrid Distribution System – Ikea's Ikea should implement a hybrid model where the critical aspect of distribution system are managed by Ikea's Ikea, and secondary functions such as logistics, warehousing, store management etc are delegated to various channel partners.

2. Channel Management

Channel management is about managing various power centers within the delivery system and managing them based on bargaining power of each player in the value chain. The channel management from marketing perspective can be done considering three critical aspects –

Per Unit Cost of Stocking – If the cost is high then Ikea's Ikea needs channel partners which can pool in resources. Otherwise Ikea's Ikea can do the operations on its own.

Customer Willingness to Search & Travel to Purchase Good – If the customer willingness is high then company has a strong brand awareness and brand loyalty. Ikea's Ikea can design favorable channel policies vis a vis channel partners.

Market Development Requirement – One of the most prominent functions of channel is market development. If Ikea's Ikea needs higher market development efforts then it is sensible to include channel partners who have know how and skills to expand into new markets.

Promotion - Marketing Communication

Promotion Mix or Integrated Marketing Communication strategy is a mix of various promotion tools that are at disposal of Ikea's Ikea. They are – Advertising, Sales Promotion, Personal Selling, Public Relations, and Direct Marketing. Ikea's Ikea can use all these five communication tools to persuasively communicate to customer – existence of the product, price of the product, differentiating features of the product, places where people can buy the products, and finally how consumers can effectively use the products or services.

6M Model of Marketing Communication Strategy for Casename

With the increase importance of online advertising and social media role in product promotion, 6M Model of marketing communication has become a critical marketing tool in hands of marketing manager and promotion strategist to measure marketing efforts impact. The 6M of Marketing Communication Strategy Model are – Market – The target segment – current or potential, at which the marketing communication efforts are aimed at. Mission – What are the goals and Key Performance Indicators of the marketing communication strategy. Message – What are the specific aspects – brand awareness, product features etc, that Ikea's Ikea wants to communicate to its target customers. Media – Which are the most effective media vehicle that Ikea's Ikea can use to convey its message to its target market. Money – Like all other organizations, Ikea's Ikea has limited marketing resources so it has to figure out how it needs to spend to get the best outcome based on specified objectives. Measurement – How is the promotion campaign impact is measured. It can vary from brand to brand within the organization. For example – new product campaign can be measured on spreading brand awareness, while existing product marketing campaign can be measured on repeat purchase or product recall.

Email Marketing for Ikea's Ikea

Email Marketing is form a direct marketing approach that Ikea's Ikea can take to directly reach out to its potential customers. Email Marketing can help the Ikea's Ikea to reach out high probability prospects based on the data collected by the company using its kiosks, trade marketing, and customer survey.

Search Engine Marketing

Another popular form of advertising vehicle that has emerged in the last decade and half is search engine marketing where advertisements are shown to the customers based on their search history and browsing history. Like email advertising this can result in relevant advertising to high potential prospective customers who are already interested into products and looking for information regarding it.

5C Marketing Analysis of IKEA: A Furniture Dealer

4p marketing analysis of ikea: a furniture dealer, porter five forces analysis and solution of ikea: a furniture dealer, porter value chain analysis and solution of ikea: a furniture dealer, case memo & recommendation memo of ikea: a furniture dealer, blue ocean analysis and solution of ikea: a furniture dealer, marketing strategy and analysis ikea: a furniture dealer, vrio /vrin analysis & solution of ikea: a furniture dealer, pestel / step / pest analysis of ikea: a furniture dealer, case study solution of ikea: a furniture dealer, swot analysis and solution of ikea: a furniture dealer, references & further readings.

Quy Huy, Michael Jarrett, Lisa Duke (2018) , "IKEA: A Furniture Dealer Harvard Business Review Case Study. Published by HBR Publications.

Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications.

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IKEA: A Furniture Dealer Case Solution & Answer

Home » Case Study Analysis Solutions » IKEA: A Furniture Dealer

IKEA: A Furniture Dealer Case Solution

This case is about Strategy

published: 28 Sep 2011

This case explains IKEA’s technique, intending to demonstrate how the Swedish business has actually established and kept its aggressive benefit over years while broadening its company world wide.

Pedagogical Goals:

The case could be utilized to instruct the crucial elements of company technique, consisting of objective, capacity, arranging reasoning, and sources of competitive benefit. It demonstrates how the business arranges itself to develop worth for particular consumer sections while preserving a competitive expense structure. It likewise highlights how organizational culture could be a source of challenging benefit.

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IKEA Case Study| History of IKEA| IKEA Business Model

lapaasindia

August 31, 2019

Recent Blogs

Ikea Case Study- (Business Model)

2 Minute Summary

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943. Everybody knows that Ikea offers the products at a very lower price than any retail shop. Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries. the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India. the company is a non-profit. IKEA employs about 135,000 people. Because of tax rules for non-profits, IKEA pays about 33 times fewer taxes than their for-profit competitors. The Ikea trademark and the concept is owned by another private company named Inter Ikea Systems. It acquired TaskRabbit on Sep 28, 2017. IKEA has many mobile apps. But the most popular app is IKEA STORE. The app is having almost 9,60,333 monthly downloads. IKEA is the lead investor in 4 companies. Full Detail in Blog.

Everybody knows that Ikea offers the products at a very lower price than any retail shop.

In this blog, we’ll talk about Ikea Case Study(Business Model) as the Swedish furniture company opened its first retail store in India.

Like Walmart acquired Flipkart and entered the Indian Market. Ikea can destroy the Whole Furniture Market in India.

Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries.

According to CNN , the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India.

But have you ever wondered? How does Ikea work?

What is the meaning of IKEA?

How IKEA works?

How IKEA business model earns ?

You must have many questions regarding IKEA, like What is the meaning of IKEA?

What is IKEA?

How IKEA earns?

This will be the most detailed case study on IKEA.

I will be answering all of your questions.

Let’s START WITH

WHAT IS IKEA?

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

IKEA is a globally renowned furniture retailer that sells ready-to-assemble furniture, kitchenware and home accessories.

 The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

After five years into the business, IKEA brought in the furniture. Since then furniture has been the mainstream for the business.

IKEA furniture is now a well-known multinational brand.

IKEA MEANING

You must be wondering that what is the story behind the unique name the brand has.

The name IKEA isn’t just a fun.. it stands for – Ingvar Kamprad Elmtaryd Agunnaryd.

Short-form is cooler to pronounce right? But it actually has a deeper meaning.

The first two letters of IKEA i.e. I and K are the initials of the name of the founder Ingvar Kamprad.

While ‘E’ comes from the name of the farm he grew up on – Elmtaryd.

And the last letter ‘A’ comes from the Swedish village, Agunnaryd,

where the farm was located.

HOW IKEA EARNS? – IKEA BUSINESS MODEL

They follow Price-leadership model. Low prices are the main concern stone of the IKEA vision, business idea and concept.

In the world of IKEA furnishings, the products are named after Swedish towns like Aneboda, Akurum and Anordna.

But the costumers worry less about the names and care more about how much they cost.

Ikea furniture is a beacon for bargain hunters. Its whole business model evolves around selling their product at the lowest price possible.

IKEA business model revolves around their vision which is – offering a very wide range of well-designed, functional home furnishing products at so low prices that as many people as possible will be able to afford them.

Anybody can make a high-quality product for a high price, or a poor-quality product for a low price.

IKEA follows a different approach, they have developed methods that are both cost-efficient and innovative. Before designing the product… they decide the price tag.

Their designers begin with designing of the product after keeping the price in mind. The IKEA Group has 31 distribution centres in 16 different countries, supplying goods to IKEA stores. It has about 45 trading service offices in 31 countries.

They have very close relationships with their 1,350 suppliers in 50 countries.

IKEA’S SMART SECRET

Is IKEA – a Non- profit organization. ?

You must be having a lot of questions by now, like if IKEA is a non

profit organization then –

How do they manage their running cost?

Where all the money goes away?

Where does all this money earned is utilised?

You will get all your answer right away as you continue reading.

I would say a big YES,

IKEA has a little known secret: the company is a non-profit

They grew with a vision that states ‘to create a better everyday life for as many people as possible. And on a mission to offer a wide range of home furnishing products at a price so low that as many people will be able to afford them.’

Besides the vision and mission, the main motive of showing itself a non profit organization could seem as business-driven.

IKEA employs about 135,000 people. Because of tax rules for non- profits, IKEA pays about 33 times fewer taxes than their for-profit competitors.

There is one more big hole in this whole IKEA non-profit organization.

Money is not trapped inside Ikea’s foundation.

The Ikea trademark and the concept is owned by another private a company named Inter Ikea Systems.

So, to operate Ikea stores and use the brand name, the non-profit Ikea have to make payments each year to the private company – Inter Ikea Systems.

This clearly means money is paid directly from IKEA profits to the owners of this private company to license the trademark.

The beneficiaries or we can say owners of this private company are not publicly recorded, but it’s not hard to speculate that the Kamprad family is on the receiving end of this loophole.

HISTORY – STARTING AND GROWTH OF IKEA

Let’s talk about the exciting history timeline of IKEA.

From the of how it is started to the story of how it evolved exponentially.

It all started in 1926 when founder Ingvar Kamprad is born in Småland

in southern Sweden.

The 1940s-1950s

In the year 1948 – Furniture was introduced into the IKEA range.

Local manufacturers produced the furniture for IKEA in the forests close

to Ingvar Kamprad's home.

In the year 1956 – IKEA came up with the idea of designing furniture for

flat packs. It started focusing on self-assembling furniture models.

In the year 1980s – IKEA expands dramatically into new markets such

as the USA, Italy, France and the UK.

In the year 1984,

Ikea family was introduced a new club for the customers was launched.

Today, Ikea family is in 16 countries (over 167 stores) and has about 15

million members.

FINANCIAL FACTS AND FIGURES

Categories – Consumer Electronics, Furniture, Retail, Shopping, Smart Home.

Headquarters –   European Union (EU)

Founded Date –   1943

Founders – Ingvar Kamprad

No. of Employees – 10001 +

Legal Name –  IKEA BV

Digital links

Website –  www.ikea.com/

Facebook- www.facebook.com/IKEAIndia

LinkedIn – www.linkedin.com/company/ikea-group/

Twitter – https://twitter.com/IKEAUSA

Till now IKEA has only 1 acquisition.

It acquired  TaskRabbit  on Sep 28, 2017

Mobile app and its downloads

IKEA has many mobile apps. But the most popular app is IKEA STORE.

The app is having almost 9,60,333 monthly downloads.

Website and its monthly traffic IKEA is ranked 166 among websites globally.

And having almost 146,040,680 monthly visitors.

Investments

IKEA is the lead investor in 4 companies. Those are –

XL HYBRIDS – IKEA announced its investment in this company on

October 12, 2017

MAT SMART – IKEA announced its investment in Massmart on Jan

TRAEMAND – IKEA announced its investment in Traemand on Dec

LIVSPACE – IKEA announced its investment in Livspace on Dec 19,

MANAGEMENT AND THE CORE TEAM

CEO – Jesper Brodin

CFO – Alistair Davidson

FOUNDER – Ingvar Kamprad

HEAD OF CORPORATE FINANCE & TAX – Krister Mattsson

HEAD OF DIGITAL – Christian Moehring

HEAD OF E-COMMERCE, SOUTHEAST ASIA – Koen Besteman

HEAD OF UK MARKETING PROCUREMENT – Maria Malpartida

HEAD OF INNOVATION – Jens Heitland

8 IKEA Marketing Strategy

Many people confuse marketing with promotion. People believe that marketing is something you do to sell your product. But, this is not completely true. Marketing begins even before the production stage, as designing a product based on the demand and needs of the customers is also a part of marketing. This is what IKEA Believes in. Everything in IKEA is from a customer’s point of view. Let’s dive deep into learning different strategies of IKEA.

1. Amazing Customer Experience

Have you tried shopping from IKEA? If not, then I would strongly recommend you to try IKEA next time you need a piece of furniture.SHopping at an IKEA store is a different experience than shopping from any other furniture store. Whenever adults go out shopping with their kids, both the kids and parents face issues.

IKEA has got an amazing solution for this where none of them would feel any type of burden and in fact, both of them would like to spend more time at the IKEA store. Yes, I am talking about the free childcare facility provided by the IKEA stores. You can just leave your child safely with them and enjoy hustle free shopping and the child will also spend some quality time playing and making new friends.

Another amazing thing is that instead of standing and having a long discussion about which product to buy and calculating your cost, you can have a seat ad enjoy your paneer butter masala meal while discussing the furniture.

These little things not only add a value to the customers shopping experience but also give them a reason to visit again and even suggest others to visit the store.

2. Brand Identity

In such a competitive environment, is it very important to stand out or be unique and creative to survive? You have to build your brand in such a way that customers prefer you over other companies.IKEA is very strongly working with this. Its goal is to become the leader of every home.

IKEA focuses more on the product and the customers which a lot of companies fail to do. If you create what your customers want then you can build a good brand identity. Your every action should be a signal of your brand.IKEA uses this technique in its advertising. If you have been following IKEA for a while then you will not have to think a lot you can recognise directly that this is an IKEA ad.

3. Content Marketing

With the growing digital environment, the content has become an important element of the digital industry. Content is used by most of the companies to promote their product digitally. From a picture art to a long written blog anything can be used as content in digital marketing.

One of the best strategies you can use in this digital era is to interact with your customers directly.IKEA uses all types of contents to reach out to their customers. From images, videos to textual content IKEA has it all. To reach your customers digitally, it is very important to identify your potential audience, basically defining who your customers are. Then the most important step is defining how your potential customers can find you?IS is through your social media handles or is it through your website or a combination of all these. And then you need to target them both organically and by paid promotion techniques.

4. Social Media

Social media is something which cannot be avoided. Everyone nowadays uses social media, thanks to the internet revolution and jio revolution in India. Your presence on every social media platform is must, it doesn’t matter if you are an old company or a new one. Social media allows you to be in constant touch with your customers. You can use various strategies across your social media platforms that can help you create trust and a good brand image in front of your customers and also develop new customers.

There are a few strategies which you can follow.

• If you follow a consistent posting schedule, then you can have a good content interaction as regular posts can make your customers think about you.
• You can also use promotional strategies provided by social media companies to reach a new audience and attract them by telling them about your new products and offers.
• Another important feature of social media that you can use is to understand your audience. Understanding your audience is important because they are the ultimate consumers and having clarity about the consumers makes it possible for a brand to plan its products and marketing accordingly.

5. Innovation

IKEA is very famous for new designs and products. It keeps on constantly adding a new design or a new to product to its collection. This allows customers to visit the store even if they do not want to buy anything so that they can check the latest trends and products. If you check their social media handles, you will find a lot of different types of content that displays new and innovative products. This is a very good strategy as your customers stay updated with your products. Even if they do not add the products to their cark at the moment, they still add it to their wishlist. Which indirectly gets converted into sales. Thus, innovation in products and making innovation reach your customers is very important.

6. Creative Marketing Campaigns

IKEA is very creative when it comes to marketing. Their posts are so engaging that you want to click on it and see them that what is there. The example given below demonstrates how one will swipe right to see what they have for you. Isn’t it creative? If you observe, they have made good use of the present condition in a creative way. Similarly, a humorous and creative content strategy can help you get more engagements.

7. Amazing Use of Technology

Living in the 21st century, you can make amazing use of technology to provide a great experience to your customers. Augmented reality and virtual reality are some great examples of technology can you can use especially in such industries.IKEA makes use of both these augmented realities and the virtual reality

What is Augmented Reality?

This is the most amazing use of technology that IKEA could have done. With this, you can use your mobile phone to see how a piece of particular furniture would look at your home. You can also use this to decide at which corner of the house that particular furniture would look good. This is like a trial technology where you can try the products virtually at the comfort of your home without actually buying it. It is similar to something used by Lenskart.

What is Virtual Reality?

Yet another amazing use of technology. Where most of the people are busy using virtual reality for gaming purposes, IKEA has its smart use. Through virtual reality technology, IKEA allows its customers to feel the look of the furniture. For example, say you want to buy a modular kitchen, you can try the kitchen before actually buying it in a virtual reality headset. The most amazing part is that you can try cooking and get real experience.

8. Payments Methods

Consumers have become a lot more advanced than before. Customers need comfort. Since the evolution of the digital era, there are a lot of different methods of payment. Every consumer has different payment options. It becomes important to have all the options available so that the customers get a hustle free shopping experience. As already, IKEA is a price dominant company, best price with all modes of payments is like a cherry on the cake.

Unknown Facts About IKEA

• Ikea is the third-largest wood consumer on the planet. Being the leading furniture company it should not be shocking.
• IKEA is claimed to print more copies of its annual catalogue each year than the bible.
• IKEA has very good food sales. Being known for its furniture has a very good taste when it comes to their restaurant. This can be a great contribution to their revenue as they have an approximate sale of 2 billion annually.
• As in 2014, they have 716 million visitors to their store. This is a very huge number.
•  The first IKEA restaurant was launched in 1956 to feed its customers that would feel hungry after spending the whole day shopping.

SWOT Analysis of IKEA

* Its vision – ‘to create a better everyday life for many people’

* Economies of scale

* Lowest Price

* Countless designs

* Bad press

* Low quality

* Difficulty to control standards across locations.

OPPORTUNITY

* Solutions for a sustainable life at home

* Developing social responsibility

* The recession slows down consumer spending

* More competitors entering the low price household and furnishings

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

IKEA KEY VALUES

They are very strict about their values.

They firmly believe that every individual has something valuable to

Let’s look at some of there core values –

1. Cost – Consciousness

Their first priority is to make their product affordable to as many

people as possible. They challenge themselves constantly to make

the product more affordable without compromising on quality.

2. Renew and Improve

They always challenge themselves to try something new and to find a

a better way out.

3. Caring for People and Planet

They believe in caring for people as well as for the environment.

They act as a force for a positive change.

IKEA IN INDIA

In 2006, Ikea first displayed an interest in the Indian market but back then

the Indian laws allowed only 51 per cent foreign ownership.

With the government of India relaxing the norms for foreign direct

investment (FDI) in single-brand retail, IKEA announced in October

their intention to open stores in India.

IKEA opened its first store in India on Aug 9, 2018.

It took IKEA 12 long years to enter the Indian market.

The first store in India was opened in Hyderabad.

Hyderabad, the southern Indian city gave it a roaring welcome.

So far, more than 3 million customers have visited IKEA Hyderabad

store and about 8 million have visited IKEA’s India website

In the year 2016, Ikea purchased land in Mumbai and said that it planned

to open stores in Bengaluru and Delhi too.

After Hyderabad, in 2019 IKEA has launched its first online store in

Mumbai is offering more than 7,500 products.

It will provide delivery to most of the locations in Mumbai and will have

a delivery time of four to seven days, subject to availability and distance.

In India, IKEA currently has more than 55+ suppliers.

Also, have more than 45,000 direct employees and 400,000 people in the

extended supply chain.

Now, the company plans to have more than 25 stores in India by 2025.

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IKEA A Furniture Dealer Case Study Solution

Posted by John Berg on Feb-16-2018

Introduction

IKEA A Furniture Dealer Case Study is included in the Harvard Business Review Case Study. Therefore, it is necessary to touch HBR fundamentals before starting the IKEA A Furniture Dealer case analysis. HBR will help you assess which piece of information is relevant. Harvard Business review will also help you solve your case. Thus, HBR fundamentals assist in easily comprehending the case study description and brainstorming the IKEA A Furniture Dealer case analysis. Also, a major benefit of HBR is that it widens your approach. HBR also brings new ideas into the picture which would help you in your IKEA A Furniture Dealer case analysis.

To write an effective Harvard Business Case Solution, a deep IKEA A Furniture Dealer case analysis is essential. A proper analysis requires deep investigative reading. You should have a strong grasp of the concepts discussed and be able to identify the central problem in the given HBR case study. It is very important to read the HBR case study thoroughly as at times identifying the key problem becomes challenging. Thus by underlining every single detail which you think relevant, you will be quickly able to solve the HBR case study as is addressed in Harvard Business Case Solution.

Problem Identification

The first step in solving the HBR Case Study is to identify the problem. A problem can be regarded as a difference between the actual situation and the desired situation. This means that to identify a problem, you must know where it is intended to be. To do a IKEA A Furniture Dealer case study analysis and a financial analysis, you need to have a clear understanding of where the problem currently is about the perceived problem.

For effective and efficient problem identification,

• A multi-source and multi-method approach should be adopted.
• The problem identified should be thoroughly reviewed and evaluated before continuing with the case study solution.
• The problem should be backed by sufficient evidence to make sure a wrong problem isn't being worked upon.

Problem identification, if done well, will form a strong foundation for your IKEA A Furniture Dealer Case Study. Effective problem identification is clear, objective, and specific. An ambiguous problem will result in vague solutions being discovered. It is also well-informed and timely. It should be noted that the right amount of time should be spent on this part. Spending too much time will leave lesser time for the rest of the process.

IKEA A Furniture Dealer Case Analysis

Once you have completed the first step which was problem identification, you move on to developing a case study answers. This is the second step which will include evaluation and analysis of the given company. For this step, tools like SWOT analysis, Porter's five forces analysis for IKEA A Furniture Dealer, etc. can be used. Porter’s five forces analysis for IKEA A Furniture Dealer analyses a company’s substitutes, buyer and supplier power, rivalry, etc.

To do an effective HBR case study analysis, you need to explore the following areas:

1. Company history:

The IKEA A Furniture Dealer case study consists of the history of the company given at the start. Reading it thoroughly will provide you with an understanding of the company's aims and objectives. You will keep these in mind as any Harvard Business Case Solutions you provide will need to be aligned with these.

2. Company growth trends:

This will help you obtain an understanding of the company's current stage in the business cycle and will give you an idea of what the scope of the solution should be.

3. Company culture:

Work culture in a company tells a lot about the workforce itself. You can understand this by going through the instances involving employees that the HBR case study provides. This will be helpful in understanding if the proposed case study solution will be accepted by the workforce and whether it will consist of the prevailing culture in the company.

IKEA A Furniture Dealer Financial Analysis

The third step of solving the IKEA A Furniture Dealer Case Study is IKEA A Furniture Dealer Financial Analysis. You can go about it in a similar way as is done for a finance and accounting case study. For solving any IKEA A Furniture Dealer case, Financial Analysis is of extreme importance. You should place extra focus on conducting IKEA A Furniture Dealer financial analysis as it is an integral part of the IKEA A Furniture Dealer Case Study Solution. It will help you evaluate the position of IKEA A Furniture Dealer regarding stability, profitability and liquidity accurately. On the basis of this, you will be able to recommend an appropriate plan of action. To conduct a IKEA A Furniture Dealer financial analysis in excel,

• Past year financial statements need to be extracted.
• Liquidity and profitability ratios to be calculated from the current financial statements.
• Ratios are compared with the past year IKEA A Furniture Dealer calculations
• Company’s financial position is evaluated.

Another way how you can do the IKEA A Furniture Dealer financial analysis is through financial modelling. Financial Analysis through financial modelling is done by:

• Using the current financial statement to produce forecasted financial statements.
• A set of assumptions are made to grow revenue and expenses.
• Value of the company is derived.

Financial Analysis is critical in many aspects:

• Decision Making and Strategy Devising to achieve targeted goals- to determine the future course of action.
• Getting credit from suppliers depending on the leverage position- creditors will be confident to supply on credit if less company debt.
• Influence on Investment Decisions- buying and selling of stock by investors.

Thus, it is a snapshot of the company and helps analysts assess whether the company's performance has improved or deteriorated. It also gives an insight about its expected performance in future- whether it will be going concern or not. IKEA A Furniture Dealer Financial analysis can, therefore, give you a broader image of the company.

IKEA A Furniture Dealer NPV

IKEA A Furniture Dealer's calculations of ratios only are not sufficient to gauge the company performance for investment decisions. Instead, investment appraisal methods should also be considered. IKEA A Furniture Dealer NPV calculation is a very important one as NPV helps determine whether the investment will lead to a positive value or a negative value. It is the best tool for decision making.

There are many benefits of using NPV:

• It takes into account the future value of money, thereby giving reliable results.
• It considers the cost of capital in its calculations.
• It gives the return in dollar terms simplifying decision making.

The formula that you will use to calculate IKEA A Furniture Dealer NPV will be as follows:

Present Value of Future Cash Flows minus Initial Investment

Present Value of Future cash flows will be calculated as follows:

PV of CF= CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + …CFn/(1+r)^n

where CF = cash flows r = cost of capital n = total number of years.

Cash flows can be uniform or multiple. You can discount them by IKEA A Furniture Dealer WACC as the discount rate to arrive at the present value figure. You can then use the resulting figure to make your investment decision. The decision criteria would be as follows:

• If Present Value of Cash Flows is greater than Initial Investment, you can accept the project.
• If Present Value of Cash Flows is less than Initial Investment, you can reject the project.

Thus, calculation of IKEA A Furniture Dealer NPV will give you an insight into the value generated if you invest in IKEA A Furniture Dealer. It is a very reliable tool to assess the feasibility of an investment as it helps determine whether the cash flows generated will help yield a positive return or not.

However, it would be better if you take various aspects under consideration. Thus, apart from IKEA A Furniture Dealer’s NPV, you should also consider other capital budgeting techniques like IKEA A Furniture Dealer’s IRR to evaluate and fine-tune your investment decisions.

IKEA A Furniture Dealer DCF

Once you are done with calculating the IKEA A Furniture Dealer NPV for your finance and accounting case study, you can proceed to the next step, which involves calculating the IKEA A Furniture Dealer DCF. Discounted cash flow (DCF) is a IKEA A Furniture Dealer valuation method used to estimate the value of an investment based on its future cash flows. For a better presentation of your finance case solution, it is recommended to use IKEA A Furniture Dealer excel for the DCF analysis.

To calculate the IKEA A Furniture Dealer DCF analysis, the following steps are required:

• Calculate the expected future cash inflows and outflows.
• Set-off inflows and outflows to obtain the net cash flows.
• Find the present value of expected future net cash flows using a discount rate, which is usually the weighted-average cost of capital (WACC).
• If the value calculated through IKEA A Furniture Dealer DCF is higher than the current cost of the investment, the opportunity should be considered
• If the current cost of the investment is higher than the value calculated through DCF, the opportunity should be rejected

IKEA A Furniture Dealer DCF can also be calculated using the following formula:

DCF= CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + …CFn/(1+r)^n

In the formula:

• CF= Cash flows
• R= discount rate (WACC)

IKEA A Furniture Dealer WACC

When making different IKEA A Furniture Dealer's calculations, IKEA A Furniture Dealer WACC calculation is of great significance. WACC calculation is done by the capital composition of the company. The formula will be as follows:

Weighted Average Cost of Capital = % of Debt * Cost of Debt * (1- tax rate) + % of equity * Cost of Equity

You can compute the debt and equity percentage from the balance sheet figures. For the cost of equity, you can use the CAPM model. Cost of debt is usually given. However, if it isn't mentioned, you can calculate it through market weighted average debt. IKEA A Furniture Dealer’s WACC will indicate the rate the company should earn to pay its capital suppliers. IKEA A Furniture Dealer WACC can be analysed in two ways:

• From the company's perspective, it can be analysed as the cost to be paid to the capital providers also known as Cost of Capital
• From an investor' perspective, if the expected return on the investment exceeds IKEA A Furniture Dealer WACC, the investor will go ahead with the investment as a positive value would be generated.

IKEA A Furniture Dealer IRR

After calculating the IKEA A Furniture Dealer WACC, it is necessary to calculate the IKEA A Furniture Dealer IRR as well, as WACC alone does not say much about the company’s overall situation. IKEA A Furniture Dealer IRR will add meaning to the finance solution that you are working on. The internal rate of return is a tool used in investment appraisal to calculate the profitability of prospective investments. IRR calculations are dependent on the same formula as IKEA A Furniture Dealer NPV.

There are two ways to calculate the IKEA A Furniture Dealer IRR.

• By using a IKEA A Furniture Dealer Excel Spreadsheet: There are in-built formulae for calculating IRR.

IRR= R + [NPVa / (NPVa - NPVb) x (Rb - Ra)]

In this formula:

• Ra= lower discount rate chosen
• Rb= higher discount rate chosen
• NPVa= NPV at Ra
• NPVb= NPV at Rb

IKEA A Furniture Dealer IRR impacts your finance case solution in the following ways:

• If IRR>WACC, accept the alternative
• If IRR<WACC, reject the alternative

IKEA A Furniture Dealer Excel Spreadsheet

All your IKEA A Furniture Dealer calculations should be done in a IKEA A Furniture Dealer xls Spreadsheet. A IKEA A Furniture Dealer excel spreadsheet is the best way to present your finance case solution. The IKEA A Furniture Dealer Calculations should be presented in IKEA A Furniture Dealer excel in such a way that the analysis and results can be distinguished to the viewers. The point of IKEA A Furniture Dealer excel is to present large amounts of data in clear and consumable ways. Presenting your data is also going to make sure that you don't have misinterpretations of the data.

To make your IKEA A Furniture Dealer calculations sheet more meaningful, you should:

• Think about the order of the IKEA A Furniture Dealer xls worksheets in your finance case solution
• Use more IKEA A Furniture Dealer xls worksheets and tables as will divide the data that you are looking at in sections.
• Choose clarity overlooks
• Keep your timeline consistent
• Organise the information flow
• Clarify your sources

The following tips and bits should be kept in mind while preparing your finance case solution in a IKEA A Furniture Dealer xls spreadsheet:

• Avoid using fixed numbers in formulae
• Avoid hiding data
• Useless and meaningful colours, such as highlighting negative numbers in red
• Label column and rows
• Correct your alignment
• Keep formulae readable
• Strategically freeze header column and row

IKEA A Furniture Dealer Ratio analysis

After you have your IKEA A Furniture Dealer calculations in a IKEA A Furniture Dealer xls spreadsheet, you can move on to the next step which is ratio analysis. Ratio analysis is an analysis of information in the form of figures contained in the financial statements of a company. It will help you evaluate various aspects of a company's operating and financial performance which can be done in IKEA A Furniture Dealer Excel.

To conduct a ratio analysis that covers all financial aspects, divide the analysis as follows:

• Liquidity Ratios: Liquidity ratios gauge a company's ability to pay off its short-term debt. These include the current ratio, quick ratio, and working capital ratio.
• Solvency ratios: Solvency ratios match a company's debt levels with its assets, equity, and earnings. These include the debt-equity ratio, debt-assets ratio, and interest coverage ratio.
• Profitability Ratios: These show how effectively a company can generate profits through its operations. Profit margin, return on assets, return on equity, return on capital employed, and gross margin ratio is examples of profitability ratios.
• Efficiency ratios: Efficiency ratios analyse how efficiently a company uses its assets and liabilities to boost sales and increase profits.
• Coverage Ratios: These ratios measure a company's ability to make the interest payments and other obligations associated with its debts. Examples include times interest earned ratio and debt-service coverage ratio.
• Market Prospect Ratios: These include dividend yield, P/E ratio, earnings per share, and dividend payout ratio.

IKEA A Furniture Dealer Valuation

IKEA A Furniture Dealer Valuation is a very fundamental requirement if you want to work out your Harvard Business Case Solution. IKEA A Furniture Dealer Valuation includes a critical analysis of the company's capital structure – the composition of debt and equity in it, and the fair value of its assets. Common approaches to IKEA A Furniture Dealer valuation include

• DDM is an appropriate method if dividends are being paid to shareholders and the dividends paid are in line with the earnings of the company.
• FCFF is used when the company has a combination of debt and equity financing.
• FCFE, on the other hand, shows the cash flow available to equity holders only.

These three methods explained above are very commonly used to calculate the value of the firm. Investment decisions are undertaken by the value derived.

IKEA A Furniture Dealer calculations for projected cash flows and growth rates are taken under consideration to come up with the value of firm and value of equity. These figures are used to determine the net worth of the business. Net worth is a very important concept when solving any finance and accounting case study as it gives a deep insight into the company's potential to perform in future.

Alternative Solutions

After doing your case study analysis, you move to the next step, which is identifying alternative solutions. These will be other possibilities of Harvard Business case solutions that you can choose from. For this, you must look at the IKEA A Furniture Dealer case analysis in different ways and find a new perspective that you haven't thought of before.

Once you have listed or mapped alternatives, be open to their possibilities. Work on those that:

• need additional information
• are new solutions
• can be combined or eliminated

After listing possible options, evaluate them without prejudice, and check if enough resources are available for implementation and if the company workforce would accept it.

For ease of deciding the best IKEA A Furniture Dealer case solution, you can rate them on numerous aspects, such as:

• Feasibility
• Suitability
• Flexibility

Implementation

Once you have read the IKEA A Furniture Dealer HBR case study and have started working your way towards IKEA A Furniture Dealer Case Solution, you need to be clear about different financial concepts. Your Mondavi case answers should reflect your understanding of the IKEA A Furniture Dealer Case Study.

You should be clear about the advantages, disadvantages and method of each financial analysis technique. Knowing formulas is also very essential or else you will mess up with your analysis. Therefore, you need to be mindful of the financial analysis method you are implementing to write your IKEA A Furniture Dealer case study solution. It should closely align with the business structure and the financials as mentioned in the IKEA A Furniture Dealer case memo.

You can also refer to IKEA A Furniture Dealer Harvard case to have a better understanding and a clearer picture so that you implement the best strategy. There are a number of benefits if you keep a wide range of financial analysis tools at your fingertips.

• Your IKEA A Furniture Dealer HBR Case Solution would be quite accurate
• You will have an option to choose from different methods, thus helping you choose the best strategy.

Recommendation and Action Plan

Once you have successfully worked out your financial analysis using the most appropriate method and come up with IKEA A Furniture Dealer HBR Case Solution, you need to give the final finishing by adding a recommendation and an action plan to be followed. The recommendation can be based on the current financial analysis. When making a recommendation,

• You need to make sure that it is not generic and it will help in increasing company value
• It is in line with the case study analysis you have conducted
• The IKEA A Furniture Dealer calculations you have done support what you are recommending
• It should be clear, concise and free of complexities

Also, adding an action plan for your recommendation further strengthens your IKEA A Furniture Dealer HBR case study argument. Thus, your action plan should be consistent with the recommendation you are giving to support your IKEA A Furniture Dealer financial analysis. It is essential to have all these three things correlated to have a better coherence in your argument presented in your case study analysis and solution which will be a part of IKEA A Furniture Dealer Case Answer.

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IKEA’s Success Can’t Be Attributed to One Charismatic Leader

• Michael Jarrett

Hindsight is too tidy.

Ingvar Kamprad, the late IKEA founder, leaves behind him an impressive legacy. But often business success stories are attributed to a single, charismatic leader, when the truth is much more complicated. Sometimes, strategic leadership is about coming up with a great plan and then executing it seamlessly. But often, it’s about reacting intelligently – to an unanticipated challenge, or to a serendipitous comment. In successful firms like IKEA, focusing heavily on the legacy of a founder can obscure these truths, and result in a story that looks a little too tidy with the benefit of hindsight.

During my conversations with CEOs, it always comes to a point where they say: “I want to leave a legacy.” Any CEO would be satisfied with the business legacy left by Ingvar Kamprad, the IKEA founder who died last weekend . The store he founded, with its iconic blue and yellow logo and functional, minimalist furniture, is the largest furniture retailer in the world. Latest figures show it has 190,000 employees, 411 stores in 49 countries, and a revenue of 36 billion euros. Famous for its Allen wrench-assembled flat-pack furniture, Swedish meatballs, and the maze-like shopping routes through its showrooms, it hit upon a winning formula. It provided a differentiated offering that disrupted the industry at the time: affordable, build-it-yourself home furnishings sold in massive stores built on cheap, out-of-town real estate. But how did it hit on this winning strategy?

• MJ Michael Jarrett is a Senior Affiliate Professor in organizational behavior at INSEAD. Previously, Michael was a full-time faculty member at Cranfield School of Management, taught at London Business School, and consulted to companies on change management.
• QH Quy Huy is the Solvay Chaired Professor of Technological Innovation at INSEAD and Academic Director of the INSEAD China Initiative.

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• Moscow is Russia’s capital and its political center. Moscow and the Central region with 10 million inhabitants are the country’s most populated and developed area.
• The Moscow region has lots of wonderful churches and also boasts Russia’s famous birch tree landscape. The group of ancient Russian towns that surround the city in a circular pattern is known as the Golden Ring.
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• Rostov is the oldest town in North-Eastern Russia and was founded in 862. It is mostly renowned for its splendid architecture.
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• Vladimir used to be the most important town of the Rus’. Today it is home to over 325,000 people and also serves as the administrative center of the area.

Moscow is the center of this region. It was founded in 1147 on Borovitsky hill and is mentioned for the first time in the Ipat'evskaya chronicle. In this long and fascinating chronicle, there is a story in which Yuri Dolgoruky (Yuri the long-armed) invites Duke Svyatoslav to "Come to me … in Moskov…" The modern name Moscow finally stuck only in the 14th century. In the first half of 13th century Moscow gradually became the cultural and political center of the Russian people, however in the winter of 1237-1238 it was sacked and ruined by Mongol-Tatar tribes. Those damn Mongol-Tartars were always messing things up! Luckily, it soon recovered and became a center of a separate principality. In 1326, the residence of the leaders of the Russian Orthodox Church was moved from Vladimir to Moscow. At this time, the city became the political and spiritual center of Rus (a Nordic word meaning "the Russian Nation"). In 1712, Peter the Great moved the capital to St. Petersburg, where it remained for two centuries (good for Peter - St. Petersburg is in fact a much nicer place than Moscow!). In March of 1918, Lenin moved the capital back to Moscow.

Moscow is situated on the delta of the Moskva river. Today, its population is approximately 10 million. The city is the residence of President Putin (but he is actually from St. Petersburg) and the Russian Government. Moscow and the Central region is currently the most developed area in the entire country. Moscow has an international airport and the majority of train journeys in Russia start from train stations in the city center.

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The region is situated in the center of the European part of Russia. This region is very Russian. It has all the marks of Russian Orthodoxy and the Russian character, even the language (dialect) differs from, let's say, the St. Petersburg area. Extremely beautiful, large, old, white churches are scattered throughout the land and the countryside abounds with Russia's legendary birch trees - the land is really inspiring! The climate is temperate continental. The average temperature in January is -10°C and in July +17°C. The Moscow region is a land of ancient towns and monasteries, century-old artistic traditions and buzzes with creative activity.

An interesting place to visit is the Novy Jerusalem Resurrection Monastery, which is situated in the town Istra. The Monastery was founded by the reformer of the Russian Orthodox Church, Patriarch Nikon (1605-1681) in 1658. Nikon's idea was to reconstruct the image of the Holy Land with the exact copy of the Church of the Holy Sepulcher on the bank of the Istra River near Moscow. The well-known architectural complex is included on the UNESCO list as a landmark of world culture.

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