Application of Operations Management on IKEA: A Business Analysis

This report provides a comprehensive analysis of IKEA's operations management, examining its input and output models from an operations manager's perspective. It explores the homely store layout, product design, supply chain, and customer service strategies that contribute to IKEA's success. The report highlights the importance of customer satisfaction in IKEA's business model, emphasizing the role of customers in the layout strategy, self-service approach, and additional services like play areas and restaurants. Furthermore, it discusses the significance of an effective supply chain and flat-pack design in reducing costs and enhancing customer experience. The analysis concludes that IKEA's business model is fundamentally centered on customer satisfaction, making it a key driver of the company's prosperity.

Running head: APPLICATION OF OPERATIONS MANAGEMENT
APPLICATION OF OPERATIONS MANAGEMENT
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Executive Summary:
Aim of the report is to study the case IKEA, a prosperous, worldwide furniture retailer and
analyse from the viewpoint of operations manager. Input and output of the business have
been studied along with the role of customers in business process and layout strategies. The
report concluded that customer satisfaction should be the key to prosper for any business and
business model of IKEA is based on it.

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Table of Contents
Introduction:...................................................................................................................3
Input Model of IKEA:....................................................................................................3
Answer:......................................................................................................................3
Output Model of IKEA:.................................................................................................4
Answer:......................................................................................................................4
Role of Customer in Layout Strategy:...........................................................................4
Answer:......................................................................................................................4
Conclusion:....................................................................................................................5
References:.....................................................................................................................6

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Introduction:
Administration of business processes is done through operations management. The
fundamental idea is to set the efficiency of the business to an optimum level (Turkulainen et
al. 2017). IKEA is a prosperous worldwide furniture retailer having 276 stores in 36 different
countries. The following report is based on application of operations management on IKEA
to analyse its input and output process and to discuss the role of customer in layout strategy.
Input Model of IKEA:
Answer:
From the viewpoint of an operation manager, the concept of the input model of the
business is developed based on suitable environment for customer attraction and satisfaction.
The first input that can be mentioned is the homely design of the store layout. Furniture are
arranged to develop the look of the interior of a house. The store in Sweden is developed in a
combination of showroom and warehouse. Additional services like play area for children,
parent and baby room, restaurant and café has been integrated with the store. Besides the
presence of staffs and information points, customers are allowed to roam and choose (Russo
and Confente 2017).
In case of product designing, priority has been given to customer requirements and
innovative styles. Flat-pack design is the speciality of IKEA. Consisting nearly 1.300 direct
suppliers, 10,000 sub suppliers and 26 distribution centres, the supply chain of IKEA has
been built up with the help of information system. The business heavily depends on the
proper working of supply chain, from purchasing of raw material to deliver to the customer
(Fahimnia et al. 2017). Maintenance of cleanliness and monitoring product quality can also

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be regarded as the part of input model of the business. The stores are located in such a way
that it reduces transport costs and easily accessible to customers.
Output Model of IKEA:
Answer:
Main objective of IKEA is to set up the business according to the demands of the
customers as that will increase the reputation and profitability of the organisation. Due to a
homely environment customers enjoy their time at the store and they took the idea of
designing according to the display. Customer satisfaction will increase according to the
subsidiary services presented by the stores. Effective supply chain management will keep the
customers satisfied as well as the primary raw material dealers (Zurich 2017). Adequate
stocks, home delivery for customers and maintenance of quality is the major reasons increase
of reputation of the organisation.
Role of Customer in Layout Strategy:
Answer:
IKEA deals in furniture business all around the world. Main objective of the
organisation is to build up consumer interest and maintain customer satisfaction (Cichosz et
al. 2017). From the viewpoint of a customer, one will feel more comfortable in a store that
will provide a homely environment. Customers always want to explore the products
themselves according to their requirements of affection. Excessive exaggeration of products
from store staffs ultimately develops a negative mentality. Layout strategy of IKEA is based
on customer satisfaction. The interior of the store at Sweden has been designed according to
the room planning of general houses. Idea of self-serving is appreciated by the customers, so
following that the stores have less staffs and management allows the customers to explore the

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products themselves. Additional services like parent and baby room, restaurant and café are
integrated with the store space to increase customer attraction. Customers rely on the
information of the products, therefore for larger products they take help of information desk.
Business process has solely integrated home delivery process viewing the frustrating
problems of the customers of excessive crowd in stores, loss of time and product availability.
1,300 direct suppliers, 10,000 sub-suppliers and 26 distribution centres has been developed
by the company for that. Flat-pack design has been adapted as the primary as the primary
strategy as it reduces the cost in assembly and delivery.
Conclusion:
The report shows the overall analysis of the input and output process of the business.
It concludes that role of the customer is very important in business process and layout
strategy. The business has been set up on the basis of the objective of customer satisfaction.

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References:
Cichosz, M., Goldsby, T.J., Knemeyer, A. and Taylor, D.F., 2017. Innovation in logistics
outsourcing relationship–in the search of customer satisfaction. LogForum, 13(2).
Fahimnia, B., Sarkis, J., Gunasekaran, A. and Farahani, R., 2017. Decision models for
sustainable supply chain design and management. Annals of Operations Research, 250(2),
pp.277-278.
Russo, I. and Confente, I., 2017. Customer loyalty and supply chain management: Business-
to-business customer loyalty analysis. Routledge.
Turkulainen, V., Turkulainen, V., Kauppi, K., Kauppi, K., Nermes, E. and Nermes, E., 2017.
Institutional explanations: Missing link in operations management? Insights on supplier
integration. International Journal of Operations & Production Management, 37(8), pp.1117-
1140.
Zurich, L.B., 2017. Service Operations and Management.