BSBA 2A / Operations Management
KARRYL FAITH L. MISSION
IKEA CASE STUDY: STRATEGIC IMPROVEMENTS FOR A SUSTAINABLE
AND INNOVATIVE FUTURE
IKEA Home Furnishings is one of the biggest retailers in the furniture sector operating in
various parts of the world, such as Europe, North America, Asia, Australia among other markets.
They have become famous because of their culture of providing elegant, stylish and affordable
products which founder Ingvar Kamprad established back in 1943 after revolutionizing furniture
market through introduction of flat-pack in Sweden. The market is indeed vast since by 2019, the
company had established more than 300 retail stores in 37 countries around the world.
As much as the vision of selling affordable products is intact, to maximize the sale of furniture
products, sustainable practices have to be employed along with continuous innovative product
development and operational strategies. CO2 emission reduction, the use of eco-friendly materials,
and efficient supply chain optimization are some of the environmental practices that the
organization focuses on to ensure a high level of sustainability.
IKEA has faced competition during its expansion and growing penetration due to change in
consumer preferences and the multiplied the need for digital intervention. Furthermore, rapid
changes in sustainability and logistics are also electrical automata that IKEA has to follow. This
case study investigates the strategies and proposals to ameliorate IKEA ’ s operations, clientele
satisfaction and ensure sustainability in its growth in the international furniture retail market.
On Distribution:
IKEA must improve on increasing its distribution effectiveness by arrears the shift in global
habits of consumers and their increasing needs but at the same time making an effort to cut costs on
distribution.
IKEA should target to open up centralized distribution centers in specific locations that would
become its target markets. These hubs will allow to the company to consolidate the total cost
of transport across a number of locations and ensure all orders are delivered on time thereby
speeding up the order processing. The site selection should be dependent on the closeness to
the target market and availability of transport facilities like ports, railways, and highways.
IKEA warehouse processes would stand to benefit from greater automation and robotics in
their operations, it can in turn increase efficiencies and minimize human errors. Automated
systems can complete tasks such as order picking, packing, and stock-taking far more
efficiently than a human could, thus allowing orders to be fulfilled much faster than before.
This investment would help to save on the number of workers hired and guarantee productivity
reliability.
On Marketing:
IKEA’s annual catalogue is one of the most important marketing weapons it has,
though it spends around 70 per cent of its budget on this area and leaves very few
resources for any form of digital development.
IKEA has to widen its reach to the younger generations by increasing its
campaigns and posts on social networks like Facebook, Instagram, TikTok, or
Pinterest. There is a need to scale up working with influencers and content
creators which can further amplify its reach.
IKEA should develop distribution hubs in critical geographical areas in order to
reduce shipping costs and enhance distribution.
IKEA should Incorporate GPS technology to enable better real-time tracking and
automation in Assembling centers to minimize outsourcing.
Provide customers with additional services such as the assembling and disposal of
old furniture ensuring greater customer retention.
On Manufacturing:
In order to strengthen its position as a global low-cost high-quality furniture manufacturer, IKEA
should concentrate on harmonizing sustainability with its eco-efficiency in manufacturing
furnitures. There’s no doubt that since consumers become more demanding and environment issues
become exacerbated, it will be possible for IKEA to provide that commitment by applying new
approaches in production preserving its competitiveness in the market.
IKEA should prioritize the use of biodegradable materials in the furniture and
reinforcing the elements of recycling and dual use substances should be among
major activities of IKEA.
Create a culture that solicits input from employees on product and service
enhancements in order to remain ahead of the competition.
Strengthen partnerships with as many suppliers as possible to always guarantee
quality and to reduce risks associated with politics or the environment.
On Overall Operations Strategy:
To remain competitive and innovative in the furniture retail industry, IKEA must
continuously explore opportunities to enhance its products and services while catering
to evolving customer preferences. By leveraging technology and collaboration, IKEA
can strengthen its market presence and create more personalized customer experiences.
Set aside funds for the purchase of new technologies that will enable customers
to create their own designs using IKEA items.
IKEA should collaborate with local designers to develop a regional-oriented or
specially designed collection for a specific market, which appeals directly.
