IKEA Analysis Report (Operations management)1 Assignment

IKEA Analysis Report (Operations management)1 - Assignment Example For example, in last 60 years the company has penetrated in almost 35 countries by establishing more than 300 retail outlets with the help of joint ventures, foreign direct investment, merger-acquisition, franchising etc. Euromonitor International (2009) has reported that, IKEA has the capacity to earn more than â‚ ¬20 billion annually from its retail operation. When it comes to value delivery, the company delivers value to customers in the form of readymade furniture, functional home furnishing items and tailor made home furnishing solutions. Low price and Scandinavian stylish design can be treated as unique selling proposition (USP) for IKEA (IKEA PS, 2012). Value proposition of IKEA is not limited to its ability differentiate its product offering through innovation but also includes its ability to position itself as a unique brand among its target segment. For example, IKEA targets customers who are ready to engage with the brand and participate in the selling process. These cu stomers are ready to self transport and self assemble the furniture parts in order to get quality furniture products at affordable price. IKEA designs its product for customers after conducting detailed market research for understanding the needs and wants of customers. In some cases, the company establishes strategic partnership with local players in order to understand desired value proposition for local customers. For example, IKEA has established partnership with Ikano Group in order to penetrate in Malaysian and Singaporean furniture market (Ikano Group, 2008). The strategic partnership has helped the Swedish furniture retailer to deliver value to Malaysian and Singaporean which can satisfy their needs and wants. Value Chain Von Krogh & Cusumano (2001) and Nickerson & Zenger (2005) have stated that IKEA uses different sources in order to deliver value to customers. For example, the company has established more than 45 purchasing centers and trading offices in order to collect r esources from suppliers (Tarnovskaya, Ghauri & Elg, 2006). Suppliers of different parts of furniture has to sign a contract with IKEA which is states that, all suppliers are expect to adhere all the legal norms, environment act, ethical norms of their respective country while sourcing the supplies. For example, in Russia, supply managers of the IKEA check all the shops of potential entrepreneurs or suppliers in order to find the right suppliers (Tarnovskaya, Ghauri & Elg, 2006). Throughout the supply chain the Swedish furniture retailing giant tries to ensure that their suppliers behave in socially, environmentally and ethically responsible manner. For example, in Poland, IKEA has opened its purchasing offices and supplier base that are capable of sourcing supplies in 20% cheaper rates in comparison to their European counterparts while the IKEA has also forced its supplier base in Scandinavian region to reduce carbon emission in the supplying process. Overall, it can be surmised tha t IKEA is successful in maintaining the three verticals of value delivery process, 1- delivering affordable products to customers (economic), 2- delivering product which can satisfy the social and cultural dimension of customers and 3- decreasing carbon footprint throughout the value chain in order to offer environment friendly products to customers. Intangible Products Core values of IKEA can be classified as biggest intangible