Value Chain Analysis of IKEA

Running Head: Value Chain Analysis
0
Value Chain Analysis
Student Name
Date

Report on Value Chain Analysis of IKEA
1
Table of Contents
Introduction –.............................................................................................................................2
Value Chain Analysis of IKEA –...............................................................................................3
IKEA Primary Activities –.....................................................................................................4
IKEA Support Activities –.....................................................................................................8
Conclusion –.............................................................................................................................11
References –.............................................................................................................................13

Report on Value Chain Analysis of IKEA
2
Introduction –
IKEA is a company related to home furnishings, which is founded by Ingvar Kamprad in
Sweden in 1943. Today it is the world’s largest retailer for home furnishing. Company has
grown continuously since it was founded. Company’s vision is to create a better everyone life
for the many people and their business idea is to designing the furniture at affordable price so
that many people will be able to acquire their products and also to achieve quality of products
through optimizing value chain system, building positive relationship with suppliers,
investing in that production which is highly automated and producing large sale volume
(About the IKEA Group, 2017). Furniture at IKEA is mostly flat- pack, ready to be
assembled by the customers, this allow a reduction in packaging and costs to the company.
Company have 9,500 products which include home furniture and accessories. These products
are available at all stores and customer can also order these products through online website
of the company (IKEA all products, 2019). These stores also include cafes and restaurants
which serve Swedish food. They have 355 stores in more than 29 countries and also have
more than 100,000 employees. Low prices of the products are one of the key strategies of the
company, which help in gaining competitive advantages and it also help to make the
customers to buy their products at affordable price. The company focuses on every lifestyle
of its customers, different age groups and types of households and always focus on the
environment and people, so it will help the company to make better utilization of energy as
well as raw material. So, this will help the company in reducing cost, positive impact on
environment and achieving their goals (History, 2019).
Every organization has three main strategies which are using by them for achieving their
objectives, which includes organization strategy, information strategy and business strategy.
The value chain is incorporates from all these strategies. The value chain analysis is a set of
various activities which use by the organization to operate their business effectively and
efficiently (Fearne, Martinez and Dent, 2012). In other words, value chain analysis refer as a
process of classifying various activities related to organization and analysing those activities
which helps the company to contribution towards creation of value to the final products or
services which are deliver to the customers for the decreasing cost of operation of the
company and increase differentiation from the competitors of the organization (Abdelhadi,
2016). All activities which are used by the company have to go through value chain of that
company. This analysis of value chain of the organization helps them in creating value and to

Report on Value Chain Analysis of IKEA
3
gain competitive advantages. Activities which include in value chain are classified into
primary activities and support activities. Primary activities are those activities which directly
add value to the organization. Supports activities are those activities which are not directly
add value but it affect indirectly to the value of the products and organization (Liu, 2018).
Value chain analysis is a set of activities which are used by the company to gain competitive
advantages, to increase performance and productivity of the organization and to achieve the
goals and objectives of the organization (Hastings, Howieson and Lawley, 2016). The report
consists of value chain analysis of IKEA.
Value Chain Analysis of IKEA –
Value chain analysis of IKEA is an analytical framework which assists in identifying various
activities related to business which create value and gain competitive advantage to the
furniture retailer across the world. There is a link between each step while manufacturing of
the products or rendering the services to the customers that helps in adding value to the final
products or services and create competitive advantages for the company. Value chain analysis
measure the performance of the organization as in which ways business fulfils its goals and
objectives or what are the strategies of the business in achieving their goals and objectives
(Anandajayasekeram and Gebremedhin, 2009). IKEA is continuously focus on creating value
to their products or services and also focus on how they can differentiate their products from
their competitors and gain competitive advantages. Before delivering the products or services
to their customers, company focuses on their design goals as affordability, good design of the
products, sustainability and fantastic functions within the organization, so buyers are ready to
pay more prices for the products of good quality, design and functions and buyer can also buy
furniture at affordable price with good quality and design of the products. IKEA design their
products by using science and technology and in innovative way because the company ensure
the safety of their customers and satisfaction level of the customers. As company has an
IKEA Test Lab, which is one of the largest laboratories of the furniture across the world, so
they managed to create high quality products with innovative design for their customers. In
this Test Lab of IKEA, there are more than 30 laboratory technicians who were carrying out
more than 50000 experiments in one year to measure the performance of the new products
and quality of new services which are delivering to their customers.
External analysis is also important for every organization to increase their profitability and
growth. Company uses PESTEL analysis as political, economic, social, technological,