Do you think that IKEA has been successful to utilize Porter’s Five force analysis?

To match up the artist Carl and Karin Larsson combined classical influences with warmer Swedish folk

styles .They created a model of Swedish home furnishing design that today enjoys world-wide renown. In

the 1950s the styles of modernism and functionalism developed at the same time as Sweden established a

society founded on social equality .The IKEA product range –The IKEA product range- modern but not

trendy, functional yet attractive, human-centered and child friendly – carries on these various Swedish

home furnishing traditions.

The IKEA Concept, like lots founder, was born in Samaland. This is a part of Southern Sweden where the

soil is thin and poor. The people are famous for working hard, living on small means and using their

heads to make the best possible use of the limited resources they have. This way of doing things is at the

heart of the IKEA approach to keeping prices low.

IKEA was founded when Sweden was fast becoming an example of the caring society, where rich and

poor alike were well looked after. This is also a theme that fits well with the IKEA vision. In order to give

the many people a better everyday life, IKEA asks the customer to work as a partner. The product range is

child-friendly and covers the need of the whole family, young and old. So together we can a better

everyday life for everyone.

In addition to working about around 1,800 different suppliers across the world, IKEA produces many of

its own products through sawmills and factories in the IKEA industrial group, Swedwood.

Swedwood also has a duty to transfer knowledge to other suppliers, for example by educating them in

issues such as efficiency, quality and environmental work.

Swedwood has 35 industrial units in 11 countries. Purchasing: IKEA has 42 Trading Service Offices (TSO’s) in 33 countries. Proximity to their suppliers

is the key to rational, long term cooperation. That’s why TSO co-workers visit suppliers regularly to

monitor production, test new ideas, negotiate prices and carry out quality audits and inspection.

Distribution: The route from supplier to customer must be as direct, cost- effective and environmentally

friendly as possible. Flat packs are important aspects of this work: eliminating wasted space means we

can transport and store goods more efficiently. Since efficient distribution plays a key role in the work of

creating the low price, goods routing and logistics are a focus for constant development.

The business Idea: The IKEA business idea is to offer a wide range of home furnishings with good design

and function at prices so low that as many people as possible will be able to afford them. And still have

many left! The company targets the customer who is looking for value and is willing to do a little bit of

work serving themselves, transporting the items home and assembling the furniture for a better price. The

typical IKEA customer is young low to middle income family.

The Competition Advantage: The competition advantage strategy of IKEA’s product is reflected through

IKEA’s success in the real industry. It can be attributed to its vast experience in the retail market, product

differentiation, and cost leadership.

IKEA Product Differentiation: A wide product range The IKEA product range is wide and versatile in

several ways. First, it’s versatile in function. Because IKEA think customer, shouldn’t have to run from

one small specialty shop to another to furnish their home, IKEA gather plants, living room furnishings,

toys , frying pans, whole kitchens i.e.; everything which in a functional way helps to build a home – in

one place , at IKEA stores.

Second, it’s wide in style. The romantic at heart will find choices just as many as the minimalist at IKEA.

But There is only one thing IKEA don’t have, and that is, the far- out or the over-decorated. They only

have what helps build a home that has room for good living.

Third, by being coordinated, the range is wide in function and style at the same time. No matter which

style you prefer, there’s an armchair that goes with the bookcase that goes with the new extending table

that goes with the armchair. So their range is wide in a variety of ways.

Cost Leadership: A wide range with good form and function is only half the story. Affordability has a part

to play – the largest part. A wide range with good form and function is only half the story. Affordability

has a part to play- the largest part. And the joy of being able to own it without having to forsake

everything else. And the customers help, too, by choosing the furniture, getting it at the warehouse,

transporting it home and assembling it themselves , to keep the price low.

Questions

1. Do you think that IKEA has been successful to utilize Porter’s Five force analysis?

Give reasons.

2. Where do you think can IKEA improve?

Case let 6

For ITC Ltd., 2007-2008 continued to be year of quiet growth. Just more launches in its relatively new

segment of non-cigarettes fast moving consumer goods, and solid growth. As in the past few years, ITC’s

non-cigarettes businesses continued to grow at a scorching pace, accounting for a bigger share of overall

revenues. “The non-cigarette portfolio grew by 37.6% during 2006-2007 and accounted during that year

for 52.3% of the company’s net turnover.” An ITC spokesman said. In fact, over the first three quarters of

2007-08, ITC’s non-cigarette FMCG businesses have grown by 48% on the same period last year,

“Indicating that its plans for increasing market share and standing are succeeding.”

The branded packaged foods business continued to expand rapidly, with the focus on snacks range Bingo.

The biscuit category continued its growth momentum with the ‘Sun feast’ range of biscuits launching

‘Coconut’ and ‘Nice’ variants and the addition of ‘ Sunfeast BenneVita Flaxseed’ biscuits. Aashirwad atta

and kitchen ingredients retained their top slots at the national level, with the spices category adding an

organic range. In the confectionery category which grew by 38% in the third quarter, ITC cited AC

Nielsen data it claims market leader status in throat lozenges. Instant mixes and pasta powdered the sales

of its ready to eat foods under the kitchens of India and Aashirwad brands.

In Lifestyle apparel, ITC launched Miss Players fashion wear for young women to compliment its range

for men.

Overall, the biscuit category grew by 58% during the last quarter, ready to eat foods under the kitchens of

India and Aashirwad brands by 63% and the lifestyle business by 26%.

For the Industry, the most significant initiative to watch the ITC foray into premium personal care

products with its Fiama Di Wills range of shampoos , conditioners, shower gels, and soaps. In the popular

segment, ITC has launched a range of soaps and shampoos under the brand name Superia.

Ravi Naware, Chief executive of ITC’s food business was quoted recently as saying that the business will

make a positive contribution to ITC’s bottom line in the next two to three years.

In hotels, ITC’s Fortune Park brand was making the news during the year, with a rapid rollout of first

class business hotels.

In the agri-business segment, the e-choupal network is trying out a pilot in retailing fresh fruits and

vegetables. The e-choupals have already specialized in feeding ITC high quality wheat and potato, among

other commodities grown by farmers with help from e-choupal.

Questions:

Q1. Do you think the progress of ITC Ltd. is realistic?

Q2. After analyzing the above case, do you think every company should aim at cost leadership with high

quality product?

Case let 7

Overview of our Client’s Strategy

Our client had an online store. They were spending $15,000 each month on pay per click

advertising. This resulted in about $225,000 per month in sales. They didn’t know which clicks

were leading to sales because they didn’t track the clicks. There rankings in the natural listings was

minimal because they hadn’t done keywords research on what visitors were using to try to find a

site like there’s. They weren’t able to quantity results because their we statistics program only

showed very general traffic information. They were also doing an irregular email newsletter even

though they had more than 32,000 e-mails in their database.

Analysis of the situation

In the natural listings we suspected they were being penalized by the search enines for duplicate

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