Business Development Canvas of IKEA

This report discusses the Business Development Canvas of IKEA, including SWOT analysis, designing a new business concept, BMC elements, graphical representation, implementation considerations, and conclusion. The report suggests a hybrid business model with crowd-sourced designing to enhance the ROI of the business. The report also highlights the risks of low-quality design, business turbulence, and intellectual property right infringement while implementing the new concept.

BUSINESS DEVELOPMENT CANVAS OF IKEA
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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 SWOT........................................................................................................................................4
3.0 Designing a new business concept based on SWOT:................................................................5
4.0 BMC Elements affected the element of business model canvas:..............................................6
5.0 Graphical Representation of new generated BMC....................................................................7
5.1 New BMC:.............................................................................................................................7
5.2 Analysis of new BMC:...........................................................................................................8
5.3 Graphical presentation:........................................................................................................10
6.0 Implementation Considerations...............................................................................................12
6.1 Low-quality design:.............................................................................................................12
6.2 Business turbulence:............................................................................................................12
6.3 Intellectual Property Right Infringement.............................................................................12
7.0 Conclusion:..............................................................................................................................13
References......................................................................................................................................14
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1.0 Introduction
The concept of business model canvas may be considered to be one of the key aspects of
strategic management studies. The concept focuses on the business strategy sets and aligns the
same to the long-term corporate objectives so that the implementation and monitoring of
strategies may be optimised in most efficient manner. The given report deals with the discussion
and analysis of business model canvas of IKEA in the context of theoretical framework.
At the very outset of the study, the researcher provides an overview of the study followed by the
SWOT analysis of the present business model of the firm. In addition, the report identifies
designing a new business concept based on SWOT and highlights the BMC elements affecting
the business of the organisation. In the subsequent parts of the report, the researcher attempts to
graphically present the new BMC along with its critical evaluation. Moreover, the report also
provides the implementation considerations for the management for the newly devised BMC.
Finally, the report is wrapped up by way of concluding note.
It may be observed that the business model canvas of IKEA helps to deliver, produce and arrest
the value of the global market. The core aspect of the business model proposes a systematic
review and analysis of the business policies to endorse commercial opportunities (Erlyana &
Hartono, 2017). Considering the factors, the current study is going to discuss the points of risk
factors of the BMC contrasting with relevant theories so that a list of future attentions could be
projected to IKEA.
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2.0 SWOT
Strength
 Diversified product ranges from
international design excellence.
 Skilled labour with an efficient cost
structure is the main source of varied
suppliers (Fernando, Shaharudin &
Wahid, 2016).
 Cost effective promotional activity.
Weakness
 The demographic strategy minimising
its competitive advantage.
 Failing to maintain its control standards,
product quality and proper
communication with its stakeholders
(Madsen, 2016).
Opportunity
 Inheriting Crowd Sourced Designing
view can increase its ROI margin.
 Need to focus an online business mode
to grab the opportunities of emerging
market (Liu & Walsh, 2018).
 Presenting premium quality products
 Strategic partnership with other market
leaders
Threat
 Increasing labour cost.
 Extra services offered by the rival
brands.
 Low value proposition disrupting the
sales channel
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3.0 Designing a new business concept based on SWOT:
As per the current analysis, IKEA needs to be dependent on the hybrid business model rather
than relying on a single type of model. For this purpose, a Crowd Sourced Designing model can
be useful for the chosen firm to interact with a wide range of customers who can unlock brand
value in the long run.
In order to mitigate its current business model’s loophole, the designing team of the firm would
require assessing four major metrics named customer fascination, a cynical view of testers, the
eager acceptance of external trends and high-velocity decision making (Dragičević, 2018). It
would help IKEA to experience new product lines and services that further could make a
delightful customer group for the brand.
It is also expected that this kind of business model would help the firm to boost up the sales
volume in the international marketplace. According to Rahayu, Hartono and Agustina (2019), to
implement the model successfully the firm could make a strategic partnership with the market
leading firms who have enough efficiency in crafting innovative furniture designs. The viable
growth of the model would also help the firm to increase its ROI both in the functioning and
evolving market.
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4.0 BMC Elements affected the element of business model canvas:
Customer value proposition – The value-creating part of the business model is capable enough
to decide the selective input and output of the company. This kind of approach would help IKEA
to align the product lines as per the diversified and cost-effective crowd-based value. In the view
of (Andreas, 2015), this can be an integrator stand to formulate a solid end-customer relationship
by ensuring effective delivery and high profitability.
Cost drivers – IKEA requires identifying the cost component which can make the greatest
impact on the cost structure of this new model. Fröding and Lawrence, (2017) mentioned that the
accumulated cost data can be the key driver as the knowledge related benefits can be drawn on a
large scale and the pre-existing solution can increase the product likelihood to get a more
valuable outcome.
Revenue model – The key revenue stream identified by the firm would help the management to
construct its product launching cost in managing a sustainable business outcome. Adding to this,
the detailed approach of crowd sourcing can be the key revenue driver for IKEA as it would
enhance the quality of contributors along with a diversified product category (Keane, Cormican
& Sheahan, 2018).
Growth model and capabilities – The intrinsic motivational factors like monetary incentives in
case of crowd sourcing ingenuities and extrinsic motivational factors like building a reputation
after collaborating with another firm could enhance its community capabilities (Zollo, Bettinazzi,
Neumann & Snoeren, 2016). Moreover, paying attention to product and service quality could
ensure its sustainable growth in the global market.
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5.0 Graphical Representation of new generated BMC
5.1 New BMC:
Key Business
Partners
Key Business
Activities
Value
Proposition
Relationship
with customer
Segmentation of
customer
Customers and
designer of
furniture
Quality control
processor
Wood processors
Transport firm.
Supply chain and
logistics and
assembling
organisations.
Crowd Sourced
Designing and
making innovative
furniture
Brand promotion
Tie up with Design
museum
Sales and services
Customers
are able to
provide
design of
furniture and
the same
could be
advertised to
other
customers as
well.
Highly
Affordable
Home
Furniture for
young stars
Classy and
innovative
furniture for
Designer
customers can
get 30% off on
the products
after the
selection
through online
voting scheme.
Special loyalty
scheme for
design
providers
Discounts for
old group
Childcare and
event
management for
all age group
Restaurants
Business class people
Mediocre people
Aged group
SME and
Students
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business class
stylish people
Dining and
event facility
with child
and old
people care
Key Business
Resources
Channels
Customers with
designing skill-set
Labour
Innovative stores
Online business
Lifting machine
and trucks
Website
Emails and
newsletters
Superstores
Booklets and
catalogues
Cost structure Revenue Streams
Online business maintenance cost
SEO cost
Labour & material cost
Production cost
Advertising and brand promotion cost
for crowd sourced design
Transport& delivery cost
Warehouse cost
Crowd sourced design would enhance the ROI
Delivery and assembly fees
Product and design Sales
Restaurant and family events
5.2 Analysis of new BMC:
The present business model canvas (BMC) is based on the SWOT analysis. The most vital
elements are mentioned in the orange colour in the present BMC (see 5.1).
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Key business partners:
Customers are considered as key business partners as it acts as the source of crowd sourced
designs.
Key business activity:
Innovativeness in the design is needed to manage the overall sustainability in the global furniture
market. Thus, innovative designing through crowd sourcing has been considered as a significant
change in the recent business model canvas under the “key business Activity” (Sparviero, 2019).
Value proposition:
The crowd sourced design and classy furniture act as a motivator to earn loyalty and enhances
the value proposition.
Relationship with customer:
30% discount to the selected designer for the furniture and added feature of event management
can bring greater loyalty to the brand. Additionally, the childcare and restaurant facility would
also be advantageous to the brand (Khizhnyak, 2018).
Segmentation:
Diversified segmentation would be the main attraction of the brand. Persons belonging to
different age groups with varied interest areas will be targeted.
Key business resource:
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Designer customer, innovative stores and online business have been added in the new BMC of
IKEA to enhance the ROI of the business.
Channel:
This segment has been kept the same as before. No new product channel has been introduced;
however, the effort has been towards the enhancement of value proposition through the
recommedation based services in websites and newsletter subscription segments.
Cost structure and revenue stream:
Revenue stream has been changed depending on the changed cost structure due to the brand
promotion cost for crowd sourced design, which is the driving factor of enhancing ROI in the
new BMC of IKEA (Starostka, 2016). Moreover, the family events in IKEA restaurants have
been considered highly innovative to add value in the overall business model.
5.3 Graphical presentation:
The pictorial presentation has been made considering the values based on the proposed business
model canvas.
Parameters of Business Model
Canvas
Value based on the existing business
model (0-100 scale)
Quality 90
Crowd source design 90
Product Range 85
Price 30
Service 65
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Customization based on target mass 80
Instant fulfilment 90
Business partners 90
Loyalty and discount 85
Segmentation 30
Key Business resources 85
Channels 75
Revenue stream 90
Cost structure 40
Table 1: Business Model canvas and values of each parameter
(Source: Created by author)
Quality
Design
Range
Price
Service
Customisation
Instant fulfillment
Business partners
Loyalty and discount
Segmentation
Business resources
Channels
Revenue stream
Cost structure
0
10
20
30
40
50
60
70
80
90
100
90 90 85
30
65
80
90 90 85
30
85
75
90
40
Pictorial Presentation of Proposed Business Model Canvas of IKEA
Value
based
on the
existin
g
busines
s model
(0-100
scale)
Figure1: Business Model canvas and values of each parameter
(Source: Created by author)
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6.0 Implementation Considerations
While implementing the new concept of crowd-sourced design, three major risks are to be
considered by IKEA which is as follows:
6.1 Low-quality design:
The lack of assessment of the designer might lead to low-quality design, thereby reducing
customer attraction in a long term basis. On the other hand, Byba, Tenytska and Bilyzna, (2018)
mentioned that employment of quality control board as a key business partner can mitigate the
issue and the company can gain the advantage of the proposed idea.
6.2 Business turbulence:
The risk of engaging the unknown design within the competitive business environment might
create an issue in IKEA’s overall business sustainability. Hesitations about a new idea and the
degree of commitment towards crowd sourcing might be a questionable condition to IKEA. On
the other hand, following the parameters - capability, capacity and calendar, through the selected
business resources could provide IKEA’s scope to tackle the business turbulence that might be
caused by the unknown factor (Mudakkar & Uppal, 2018).
6.3 Intellectual Property Right Infringement
In the crowd sourced design, Kim and Min (2015) pointed out that there will be a risk of having
a certain degree of accessing intellectual property, thereby losing the overall innovation and
business value. Therefore, the candidates and designers are to be signed security protections to
avoid this issue.
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7.0 Conclusion:
Based on the discussion and analysis put forward in the preceding sections of the report, it may
be argued that the business model canvas is a success-critical deliverable for the success of the
management and overall business as a whole. BMC defines the growth path and strategic
positioning of a business in the market. It may therefore be concluded that a well-designed BMC
supported by efficient management in terms of implementation, monitoring control may
significantly contribute towards the attainment of corporate goals of the business in the long-run
in most cost and time efficient manner.
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References
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