IKEA enters Spain

GRUPO 7: Carmen Cortijo, Adriana Echandi, Sofía Isaacs, Guillermo Ruiz,

Pedro Suarez, Mayra De La Cruz, Richard Phillips, Javier Eraso

IKEA ENTERS SPAIN

By analyzing the value chain, we get to know how each step introduces value to the final product offered by IKEA. This analysis will allow us to point out where opportunities for improvement are, and where do the IKEA´s competitive advantages lie.

SUPPORT ACTIVITIES:

• Firm infrastructure: IKEA bases their business throughout different facilities that makes the production process feasible: factory (where the product designed is produced), prototype laboratories (where a quality check is carried out), warehouse (where final products are kept) and distribution centers (that eases the delivery to the final consumer).

• Human resource management: one of the keys in IKEA´s success is not only hiring very well-prepared employees (such as Montserrat Maresch), but also in training them in order to make them develop their best version. Retaining talent is also a goal that IKEA tries to achieve by promotion strategies and high satisfaction levels of their employees.

• Technology development: plays a fundamental role in several stages of the production process. First is used in order to design the product aiming for simple furniture, able to be produced in mass, quickly and at a low cost. Moreover, technology is useful for quality control by checking the pressure the furniture can endure or how many bangs it can resist. In the factory using high IQ robots enables the company to pack 720 final products during 24 hours a day and every day of the year, in a way that allows reducing costs in storage and transportation.

• Procurement:  refers to the way of aquiring the materials from the suppliers. IKEA bases their relationships with suppliers on sustainability, and stability as the average length of the contracts with them, is 11 years. They are also always looking for new ones and they try to stablish relation with local suppliers.

PRIMARY ACTIVITIES: activities related directly with the production, maintenance, sale and after-sale service of a product

• Inbound logistics: refers to how materials are brought to IKEA in order to transform them into the final furniture sold to the consumer. IKEA disposes the large warehouses that enables the service IKEA offers.

• Operations: the process starts with the design of the product. The main goal is to be able to set the lowest price possible. After the design, the prototype is sent to the laboratory in order to check that it passes the quality standards of the company. Later on, the mass production of the products starts and eventually the final product is pack in flat packages so it is ready to be sold.

• Outbound logistics: tries to answer the question about what to do with the final products. IKEA has to solutions. The first one is to storage them in massive warehouses and the other is shipping them to the distribution centers. The outbound logistics plays a key role in terms of effectiveness and cost savings.

• Marketing and sales: IKEA has a simple motto “You do your part. We do our part. Together we save money”. Basically, engages the customers to take part in the process not only to make them feel part of the final product but also in order to cheapen costs for both the company and the final customer. As the product is not assembled, IKEA can save money by the packaging and the consumers, who have the task of assemble the furniture, save costs that in another way, IKEA had to incurred and at the end, charge it to the consumer.

• Service: IKEA not only offers low price furniture but also a wide range of services that improves the shopping experience. As we said, the furniture has to be assembled by the consumers on its own. Even this is not a complex task, IKEA offers also the possibility to the consumers of paying an extra fee for a delivery and assembly service. As buying home furniture requires usually a long time and might be frustrating, IKEA provides their clients with in-store restaurants (famous for their delicious meatballs), long opening hours, in-store play rooms for children and wheel chair for handicapped customers. That’s why in overall, IKEA offers a way of purchasing that is set up as a weekend plan.[pic 1]

...