AR-KAI 13 - IKEA - BUSINESS - MODEL - CANVAS - Edited
AR-KAI 13 - IKEA - BUSINESS - MODEL - CANVAS - Edited
AR-KAI 13 - IKEA - BUSINESS - MODEL - CANVAS - Edited
Ikea has a very strong business model with highly targeted and vast consumer base all over the world
with a strong distribution channel network. The value proposition of the model is also very concrete
in comparison to the costing. The company is cost derived and targets the middle and lower section
of the economic sections.
This huge turn up of individuals towards Ikea is due to the strong interrelationship between the
constituents of Business Model and Critical Success Factor of Company is that it provides a one-stop
solution for all the furniture needs, its fast in service and in affordable prices.
Its ground and digital sufficiencies have led it to cover a major part of the furniture market. Ikea have
to face some risk in future, Ikea has to deal with the niche targeting of consumers. A very narrow and
cost sensitive base of a consumer is also a risk factor. Current consumer database can turn to another
source for the sake of costing and quality.
1. INTRODUCTION..............................................................................................................................3
2. BUSINESS MODEL..........................................................................................................................4
A.5. CHANNELS...........................................................................................................................5
B. INTERRELATIONSHIP...............................................................................................................7
D. DOWNSIDE RISKS.....................................................................................................................8
3. CONCLUSION..................................................................................................................................9
4. RECOMMENDATION.....................................................................................................................9
REFERENCING..................................................................................................................................11
DEMOGRAPHI FINDING
C
SEX MALE AND FEMALE
AGE 18-35 YEARS
INCOME MIDDLE AND LOW
MARITAL SINGLE OR JUST MARRIED
STATUS
EDUCATION UNIVERSITY OR ABOVE
LIVING STATUS RENTED OR SMALL HOME
REGION DEVELOPED OR FAST DEVELOPING CITIES
LIFE ATTITUDE INDEPENDENT, ACTIVE, STYLISH, IMPULSIVE
OCCUPATION FRESHER MEN, GRADUATES OR SMALL BUSINESS
OWNER
GoGets is one of the key delivery partners for providing vans and trucks for the delivery of flat
parcels of Ikea to the doorstep of the consumer. GoGets primarily operates in the region of urban
Australia.
Designing and manufacturing new and compatible modular furniture for homes, offices and
restaurants. Storing and
Providing services of online orders, offline availability of stores, marketing, repair services,
transport, assembly, post purchasing.
Branding, marketing, Advertising, production
A.5. CHANNELS
Channel refers to the distribution channels of the origination through which it operates the sales and
delivery. Ikea has 5 major channels of distribution through which it regulates sales and distribution
Ikea superstores
Ikea catalogues
Ikea family Email Subscriptions
Ikea store website and
Ikea mobile application store on Android and IOS devices
B. INTERRELATIONSHIP
Ikea prints more than 210 million catalogues per year to approach new consumers worldwide. In
2017 Ikea noted a consumer base of 817 million people around the globe. In 2017, Ikea printed more
than 215 million catalogues and reported a footfall of 137 million people in the stores and 2.1 billion
visits at the online store of Ikea (Ikea, 2018). This huge turn up of individuals towards Ikea is due to
the strong interrelationship between the constituents of Business Model.
The value proposition of Ikea of providing the Ikea Experience in affordable price drives the
consumer towards the cheap, easy and trusted option of Ikea (Schneider and Bermudez, 2018). The
affordability of the product along with the superior quality and the luxury of modification provide a
boost to the sales.
The availability of both physical and digital channel for the distribution and sales makes it very
convenient for the targeted consumer to approach the organisation. Regular availability of stock and
ease of ordering the product is also a major point for sales. The channels are very tightly connected
with the key activities of the company and hence it improves the operations.
Key partnership with the non-competitive brands adds up to the value proposition of the company.
The Philips television with the Ikea furniture is a huge product success from the point of Ikea. Sales
increased with considerable figures.
Another critical factor of success for Ikea is the appeal of young and nuclear families to Ikea. The
products of Ikea are easy to replace with pre-existing furniture of the same size as it is used (Vinay et
al., 2017). The final factor of CFS is that it provides a one-stop solution for all the furniture needs, its
fast in service and in affordable prices.
The cost leadership driven approach of Ikea may also hurt its operating and functioning. Increase in
the cost of raw material like wood is very likely in future and that will provide Ikea with only two
options either to increase the costing or compromise with the quality of the product (Chen, 2017).
A very narrow and cost sensitive base of consumer is also a risk factor. Current consumer database
can turn to another source for the sake of costing and quality.
I would use the same strategy for a premium class segment to explore a more loyal consumer base
that is driven by design and quality rather than cost.
For better growth rate Ikea should also tap into the underdeveloped and developing countries (Cao et
al., 2018). This will boost the growth rate of Ikea along with the fast-growing economy of the
developing nations.
4. RECOMMENDATION
Introduce a premium range of products and target premium consumers
Increase the digital reach and improve the user interface of the digital platform for better user
experience
Enter the developing markets of developing and underdeveloped countries
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