Management Economics: Demand and Market Equilibrium for IKEA

Management
Economics

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY .................................................................................................................................3
1. Overview of Ikea its products/services and history:...........................................................3
Products and services:............................................................................................................4
2. Identification of Demand and Market Equilibrium along with discussion about factors
which influence Demand:.......................................................................................................5
3. How factors indicates demand is more elastic or more inelastic:......................................8
CONCLUSION.............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Managerial economics implies to discipline that concerns with the adaptation of business
theories to governance and management. This focuses on application of economic constructs and
corporate decision-making guidelines. This was previously referred to as the Business
Economics, but term has now been abolished in place of the Management Economics.
Management Economics term may be described as the evaluation of economic concepts,
principles, and techniques that are commonly used to try an answer to practical business issues
(Nadar and Vijayan, 2020). Managerial Economics therefore consists of that portion of
economic expertise or economic models employed as a method to evaluate market issues for
sound business decisions. Management Economics is also termed as the Business Economics.
The study covers multiple aspects of management economics in context of Ikea, furniture-
retailer corporation operating at international level. Study consists of identification of market-
equilibrium and demand of its products along with discussion on factors affecting demand in
relation to Ikea. Further, it explores factors which influences price-elasticity of demand of Ikea.
MAIN BODY
1. Overview of Ikea its products/services and history:
IKEA company is Dutch-based Swedish international corporate group which primarily
designs as well as sells its ready-to-assemble customised furniture, different premium kitchen
appliances and deluxe home accessories and several other related goods items. Company
initially incorporated in the Sweden in year-1943 by Ingvar Kamprad, company has been
world's top largest and leading furniture retail corporation since year-2008. As pet Bloomberg's
Billionaires Index, Jan. 2018, company's founder Kamprad was world's 8th richest business man,
with net-worth of around US$ 58.7 billion. Corporation's name is originally an acronym which
comprises founder's initials Ingvar Kamprad and Elmtaryd i.e. family farm birth place of
company's founder, and his home town Agunnaryd. The corporation is famous for its unique
modernist designs for different kinds of home appliances as well as furniture-fittings, and also its
interior decorating work is most often connected with eco-friendly simplicity (IKEA: Abput us.
2020). Moreover, the corporation is renowned for its commitment to controlling costs,
operational details as well as continuous product creation that enabled IKEA to reduce its rates

by average of around two to 3 percent. Here following is discussion about the IKEA's main
products /services, as follows:
Products and services:
Furniture and home-ware: This product has been selected for study purpose as most of
the IKEA's furniture is crafted to be easily assembled by customer, instead of being delivered
pre-made. The organization claims that it helps to minimize overall costs and using packaging
by not handling air; for instance, the size of bookcase is slightly lower if it has been delivered
unassembled instead of assembled. It is even more convenient for people who are using a public
transport, as it is easier to carry flat packages. IKEA furniture 's significant products
involve Poäng armchair, Billy bookcase and Klippan sofa, most of these have sold around tens
of millions since late 1970's. IKEA's all products are labelled with single-word (rarely two-
word) descriptions. The bulk of the titles are originally Scandinavian. while there're several
exceptions, mostly product titles are focused on an IKEA created special naming scheme.
Company founder was autistic and felt that this was simpler to identify the names by
labeling furniture with specific names and phrases, instead of product code (Hagberg and
Sterner, 2019).
Other Product and Services:
Smart home:
Under product named SYMFONISK, IKEA and other company Sonos have produced 2
different wireless speakers which integrateed with present Sonos households or could be used
for starting with Sonos ecosystem, one which is lamp and one which is more traditional style
bookshelf speaker.
Houses and flats:
IKEA company has also extended its product range and included flat-packed houses
including apartments, with the goal of rising the costs involved in first-time home
buyer. Company product, named BoKlok, introduced in joint venture with the Skanska in
Sweden in year-1996. Based now in Nordic countries and UK, reported locations in England
include Paris, Liverpool, Warrington, Ashton-under-Lyne, , Gateshead and Leeds.
Solar PV systems:
The corporation declared in September 2013, solar panel packages, named "residential
kits" for houses would be available by mid-2014 through their 17 uk outlets. This decision