Value Chain

2012 Second International Conference on Business Computing and Global Informatization

The Analysis of IKEA’s Value Chain Management Strategy
Rui Han
Management School Shanghai Institute of Foreign Trade Shanghai, China Hanrui@shift.edu.cn
Abstract—IKEA is the largest furniture retailer in the world. Their critical success factor is that IKEA can seamlessly integrate and optimize end-to-end supply chain to maximize customer value, eventually build their dominate position in entire value chain. This article summarizes and analyzes IKEA’s successful practices of value chain management. Hopefully it can be a good reference or provide strategic insight for Chinese enterprises. Keywords-IKEA; Value Chain; Supply Chain

Xin Zhong
Management School Shanghai Institute of Foreign Trade Shanghai, China Centrezhong001@126.com items at the affordable price to meet the household needs for majority people in the world. Based on this business philosophy, IKEA’s product positioning is both beautiful and practical, high quality, and also low-price. Cost controlling is one of the most important thing of IKEA’s business, from the design of each piece of the furniture, IKEA’s product developers, designers and purchasing department are trying their best to find the most cost-effective program to save customers’ money continuously. Different from most other companies which put design first and then set prices, IKEA’s process is that setting prices first and then designing under the cost top line. IKEA always sets a price according to the customers’ perceived value before the product design and production, and then choosing low cost materials with equivalent quality, cooperating with experienced producers to find out the way that can make full use of the materials and save the transportation costs. By doing so, it can maintain low cost while still keeping the original design ideas. IKEA’s cost control process is continuous, eventually the cost saving will translate to lower price which...