| mgmt (20132) assessment1 novel value proposition & self – reflection |
mgmt (20132) assessment1 novel value proposition & self – reflection
EXECUTIVE SUMMERY
The study exclusively focusses on rise of sales, expansions of market, creating more innovative products of company ikea. This company is Sweden based company. moreover, the company is successful in its market in all developed countries like USA, and Europe however, when it comes to the ikea’s business in developing nations the company always struggles.
Company shows remarkable growth in developed country while the same company was unable to deal with new trends, different market, product price, and copy of product issue in developing nations. After catching up the new innovative and marketing strategies the company is able make a good business deal in this country and as well as that shows higher growth and more sales in that countries.
The study we have done is business model canvas to understand the relation between company’s product and customers, its marketing strategy and how it can provide the value proposition canvas using techniques of innovation, infrastructure and industry technique. And the conclusion of the study provides the innovation, endorsement as well as strategies issues that observe during the research of this company.
TABLE OF CONTENTS
Introduction ………………………………………. 03
Problem statement ………………………………… 03
Explanation of the problem ………………………. 04
solution of the problem ………………………….. 05
Explanation of solution …………………………… 06
Value proposition canvas ………………………… 07
Target market customers …………………………. 08
Customer assist …………………………………… 08
Challenges and risks of market …………………… 09
Tools and techniques of ikea ………………………. 09
Conclusion …………………………………………. 10
References …………………………………………. 11
INTRODUCTION
To begin with, the main purpose of this report is that the which type of different problems company is dealing with and what are the solutions of that and how to resolve this problems so company’s success road feel more smoother, ikea is a Swedish furniture-based company which sales the ready to assemble furniture goods as well as the home decoration products and kitchen appliances. Ikea is one of the leading companies in his furniture market. And for the customers it feels like a child’s play to use and assemble the furniture it is very easy and convenient for people to use it.
Another reason why people choose ikea is that it’s cheaper price. however, with the growing and changing world the demand of the customers is changing, and to fulfill their requirement ikea must face so much of challenges. (dahlvig, anders, 2012)
problem is while company think to expand their business to different countries to be more specific, in developing countries ikea always faces the problems in the market they always struggle in making more sales (kazmin, Amy, 2018)
So, there are lots of problems for the company but somehow company deal more perfectly with the problems every time.
PROBLEM STATEMENT
Ikea company is leading company in its market, company was doing great in developed countries, company was making large amount of profit, so they decided to expand their business in developing country also. so, after entering in the market of the developing countries company must always deal with the lots of problems to become the monarch of its market. Some problems are big enough and some considered to be small.
Struggling of sales in developing countries
Ikea was the ruler in its industry so if the company sales performing that great everyone would think to expand their market in different countries. But the problem is that every country has its different type of market and with the different market it comes the different type of demand and to fulfill that using of new strategies.
Copy of products from the rival companies
when the company is at the top position of the market and people always
prefer that company to buy goods. So, its obvious reactions from the opposition companies that they will copy their products from the ruler company for more sales. Ikea was dealing with the same problem lots of companies tried to copy ikea’s broachers as well as the patent of the products. (Louie, Elaine, 1988)
image 1. ( ikea’s sales in all over the globe )
EXPLANATION OF THE PEOBLEM
Moreover, there are lots of reason why ikea is struggling in developing countries. the business environment of the developing countries is totally different then then the developed countries. As well as the state of mind of the people and their thinking mentality is totally different in developing countries. And there are already plenty of competitor companies there who makes the road of ikea difficult. As well as, in these countries people always preferred to buy cheap things but with the touch of quality. And strategy issue and the trend of the furniture is also different. And the copy of products from the rival companies. The companies copy the broacher and the store design. As well as the furniture type and its design too. As per the research it takes 12 years to ikea to open its first shop in India. (Kazim, Amy, 2018) as well as while they were opening their first store Russia they had to deal with the corruption from the local bureaucrat. (osipovich, alexander, 2010) as well as ikea has its manufacturing unit is in Sweden where its most of the products are designed and manufactured and after they transported in different countries. so, for the developing countries the charge of the shipping is expensive and that impact the price of the product.
SOLUTION OF THE PROBLEM
Suitable solutions for this type of problems are
Before entering any countries, company should analyze and scrutinize the market of that country. And understand the trends, values and people’s mentality as well as how the market work and which company will be their big competitors of that market and lean how that company is successful in that country and company should adjust and developed their products as per the trend of the country.
Company’s marketing strategies should be more specific and straighter about their products because this is the only way people will recognize company’s product. And company should promote more products more often. Moreover, as per the market demand company must change or modify its products. And innovation is the key, company have to take the path of more innovative ideas and new design of the products and the r&d ( research & development )department of the company they have to think out of the box for the new easy convenient and unique products they have to understand their customers demand and what they look for furniture.
Industry, innovation and the infrastructure
this the basic but more useful way for the company. Ikea should grow more manufacturing industry so that they do not have to exports their goods every time from the Sweden. And that makes their products cheaper in developing countries.
Company should have to put more efforts on innovation how to make different from other companies and the products should be sustainable, lightweight, cheaper and in terms of the quality it should be strong enough and can fulfill customers requirement (kinnander,ola, 2011) in addition to this, company should go for the replacement of the wood in some products for more stronger and sustainable and cheaper products.
Image 2 (ikea profit compare to 1973-1996-2019)
EXPLANATION OF SOLUTION
The foundation of the business is serious estimating – and making alluring furniture effortlessly requires a great deal of inventiveness. IKEA highly esteems the effective utilization of crude materials, applying specialized advancement and best plan. (marketing, 2011) Ikea have been facing so many problems while expanding their business in international market. And specially the problems were accrued in a developing country. If the company put more focus on its marketing strategies then company could reach to the more numbers of people and that leads to more number of sales, as well as, the company should focus on its innovation product teams because with the growing and updating market people need more quality and lightweight material so company should focus on changing its traditional products as per the company’s market need. Furthermore, if ikea construct more number of a manufacturing plant outside Sweden in different region that lead the company to save export cost and that will make the products cheaper because company always add its transportation cost to the final product cost and that makes the product more costlier.
Every country has its different market so you cannot make profit with the same strategy in different country. So before entering any country ikea should analyze the market and that will benefit the company in many ways.
By knowing the how market works company can be prepare for that
By understanding peoples demand company can modify their products according to them and that will lead to more sales.
By analyzing their rival company and how their works company can be preparing for the tough market.
By making new innovative products and change wood with the different material that will make the product unique and because of that rival company can not copy this type of things easily and if they try to the product will be not good as the original one.so that makes an impact of the buyers mind and that will lead more sale.
By increasing manufacturing unit in different region that will help the company grow because once the plant started it will reduce the time of export of the material and as well as reduce the cost too. And by doing that overall price of the product will be decreased and that will lead company to more sale. And more swift production.
VALUE PROPOSITION CANVAS
To begin with this canvas provides a brief information for ikea company’s industry, infrastructure and innovation segment. And it describes the relation between company’s products and customers.
It will make the more sales in the developing countries
New innovative cheap products
The new products will make customers life easier and anyone can easily assemble that and use it
Copy products available in the market
Customers wants new innovative products with the trending market
innovative and cheap products it will fulfill customers demand
Products
Customer
CUSTOMER
wants new and innovative products
Customer want to buy cheap products
The only fear is that there are copy products available in the market from the rival companies
PRODUCT
This diagram demonstrates the value proposition canvas product describe its benefit, features and the experience so the main benefit for the company is that it will make more sales and expands the business in developing countries
The feature of the product is that the more innovation and the cheaper will fulfil the customers demand
The product will be beneficial for the customers that it will make customers life more easy
TARGET MARKET CUSTOMER
So, the company’s motive is that to making innovative, affordable, cheap and quality easy to assemble products for people. And the main target customer for that are low to middle class earning family who can easily buy and afford their innovative products. (Lewis, Connie, 2008)
CUSTOMER ASSIST
Clients information is an alluring and powerful wellspring of thoughts for proposition imaginative items just as changes in existing items. Contemporary firms perceive the need to co-make item with the support of clients. (Grazyna koniorczyk, 2015)
There are few reasons why people choose ikea over other companies because ikea gives cheap products and in their store they put a demo of their products so people can come in and see the actual size and shape and the material they have used in the products this is the best point that brings the customer for the ikea as well as ikea provides a total descriptive broacher of their products so people and understand easily. (hulten, bertil, 2012)
Image 3 (ikea’s customer loyalty graph)
CHALANGES AND RISKS OF MARKET
The new challenges company have to faces is that they have examine and understand the new different market and they have to make adjustment in their products as per the market demand and they have to make a new innovative and cheap products as well as they to replace the wood with the new products.
Moreover, they must select a new place for their different manufacturing
sites, and they must shift their all department there. These are the new
challenges company must face.
And with the growing business they have to recruit new people and that is
one of the tricky challenges.
Risks that company to go through is that new market is difficult to understand and if they are making innovative new products will public accept that? As well as they have focus on making new innovative products with the replacement of some new materials.
TOOLS AND TECHNIQUES OF IKEA
Market segmentation
: according to technique in the market there are different type of customers
The one who want to buy cheap products
People who want to buy innovative and trending products.
High level product specification:
selling the innovative and cheap products to customer by providing in store broacher.
Develop a product plan:
the plan includes all the things about new products about its innovation, material, working guide and price
Estimate the total addressable market :
key assumptions include the total investing money in the new project and what are the customers for the product.
Swot analysis:
Strength
Weakness
New innovative products
Company’s good reputation
Cheap price
Strong thinking of r&d department
Limited manufacturing units
Opportunities
Threats
New market
new investment in innovative products
innovative idea of replacing materials
Hugh competition in the market
Copy products
CONCLUTION :
To conclude, ikea has the strong potential to be the monarch of its market in developing countries also, with the new strategies and the new techniques. After opening their first shop in china and India it will help them to expand their business in more different countries and give them a valuable experience. (kazmin, Amy, 2018) moreover, strong support from their loyal customers will help them to making more sales. However, before entering in the new market they must understand its customers demand and the different market of that country. After entering in India and china company expected to expand their business in other developing countries as well.
REFERENCES
Dahlvig, A. (2012). The Ikea edge: Building global growth and social good at the world’s most iconic home store (McGraw-Hill’s eBook library. Business. Leadership and management). New York: McGraw Hill Professional.
Louie, Elaine. (1988). CURRENTS; IKEA Sues a Competitor Over Design of Its Stores. (Home Desk). The New York Times, p. The New York Times, June 16, 1988.
Reynolds, J. (1988). IKEA. Retail and Distribution Management, 16(3), 32-34.
Kazmin, A. (2018). Ikea unpacks first store in India after 12-year struggle. FT.com, p. FT.com, Aug 9, 2018.
Osipovich, Alexander. (2010). Bed, bath & bribes IKEA’s struggle to do business in Putin’s Russia. (IN OTHER WORDS) (Vladimir Putin). Foreign Policy, (181), 159.
Ngai, S., & Falkheimer, J. (2017). How IKEA turned a crisis into an opportunity. Public Relations Review, 43(1), 246-248.
Novicevic, M., Morf, D., Evans, M., Sanders, L., Sun, W., & Cecil, C. (2012). Adapting Competencies for Emerging Markets: The Case of IKEA’s Entry Into China. Journal of Applied Management and Entrepreneurship, 17(2), 4-22.
Chaudhuri, S. (2015). IKEA can’t stop obsessing about its packaging: Retailer increasingly designs furniture with shipping costs in mind from the start. Wall Street Journal. Europe, p. Wall Street Journal. Europe, June 18, 2015, Vol.0(0).
Kinnander, O. (2011). Ikea’s Challenge to the Wooden Shipping Pallet. Bloomberg Businessweek, p. 1.
IKEA improves accuracy in supply chain with track and trace solution from Zetes. (2008). International Journal of Retail & Distribution Management, 36(3), 3.
Lewis, E. (2007). Great Ikea! : A brand for all the people (2nd ed., Great brand stories). London, U.K.: Marshall Cavendish Business.
Kling, K., & Goteman, I. (2003). IKEA CEO Anders Dahlvig on international growth and IKEA’s unique corporate culture and brand identity. The Academy of Management Executive, 17(1), 31-37.
Daunfeldt, Sven Olov, Mihaescu, Oana, Nilsson, Helena, & Rudholm, Niklas. (2019). Spillover effects when IKEA enters: Do incumbent retailers win or lose? Papers In Regional Science (Print), 98(6), 2295-2313.
Ikea: The retail brand synonymous with affordable style has maintained its appeal by sticking to its roots. (2011). Marketing, 20.
Lewis, Connie. (2008). Marketer takes Ikea outdoors for a sensory sales experience: Displays around county send retailer’s message to the target audience. San Diego Business Journal, 29(20), 20.
Grażyna Koniorczyk. (2015). Customer Knowledge in (Co)Creation of Product. A Case Study of IKEA. Journal of Economics and Management, (22), 107-120.
Hultén, B. (2012). Sensory cues and shoppers’ touching behaviour: The case of IKEA. International Journal of Retail & Distribution Management, 40(4), 273-289.
DOI:
10.1108/09590551211211774
Elg, Ulf, Deligonul, Seyda Z., Ghauri, Pervez N., Danis, Wade, & Tarnovskaya, Veronika. (2012). Market-driving strategy implementation through global supplier relationships. Industrial Marketing Management, 41(6), 919-928.
Germany : Wirecard provides IKEA Southeast Asia with payment eco-system for online business. (2017). MENA Report, p. MENA Report, Oct 17, 2017.
Research and Markets; IKEA: Ten Consecutive Years of Revenue Growth – IKEA to Invest 3bn during 2012. (2012). China Weekly News, p. 283.
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