MBA Assignment: Purchasing and Procurement Strategies of IKEA & Dell

This report presents a comparative analysis of the purchasing and procurement strategies of IKEA and Dell. It begins with case studies of both companies, focusing on their unique approaches to supply chain management, inventory control, and cost reduction. For IKEA, the report explores strategies competitors could use to challenge IKEA's market position, including product innovation, pricing, and procurement practices. The Dell case study examines its direct sales model, build-to-order strategy, and supplier integration, highlighting key aspects of its supply chain design and outsourcing practices. The report also discusses Dell's cost containment strategies, the importance of customer information, and the role of outsourcing in achieving competitive advantages. The analysis covers topics like collaborative planning, supply chain development, and technological innovation, offering insights into how both companies manage their operations to achieve efficiency and maintain a competitive edge in the market. The report concludes by emphasizing the importance of customer satisfaction, innovation, and strong supplier relationships for success in the global marketplace.

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PURCHASING AND PROCUREMENT
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Executive Summary
This report is based on the purchasing and procurement management aspects. There is a
discussion of two companies- IKEA and Dell. This report is designed to address various
problems in the purchasing and procurement management of these two companies.
Next, in the case of IKEA, the business is well developed but there are some aspects that its
competitor can exploit. This report has some of these alternative procurement strategies to beat
the company.
In the part two, there is the case of Dell and some changes that are required in their supply chain
contexts. Inventory management and cost strategies of the company are the main two issues that
the company has to take seriously.
From the discussion, one can understand that there are changes required in Dell Supply chain and
inventory management. This would help in reduction of cost as well. On the other hand, IKEA’s
strategies can be challenged by a company through implementing new design and products.

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Table of Contents
Case study IKEA.............................................................................................................................2
Answer to question no 1..............................................................................................................2
Answer to question no 2..............................................................................................................3
Case study Dell................................................................................................................................4
Answer to question no 1..............................................................................................................4
Answer to question no 2..............................................................................................................5
Answer to question no 3..............................................................................................................6
Answer to question no 4..............................................................................................................7
References:......................................................................................................................................8

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Introduction
Purchasing and procurement are the two important aspects of any organisation that is
directly related to the profit making and organisational functions. This report is aimed to build
the case study of IKEA and Dell with their management aspects. IKEA is well known for its
stylish of products. This company try to put focus to maintain this tradition for increasing the
competition to its rival. There will be discussion on how the companies can structure their
strategies to compete with IKEA by implementing some changes. In the second part of the report
specific discussion will be done regarding the procurement and sales contexts of Dell.
Case study IKEA
Answer to question no 1
 Design new and cool products
To give tough challenges to IKEA, it is important follow up the same rules. For that,
organization has to discover different types of stylish products that will look cool and
interesting to its customers. With this, customers will easily keen to purchase products
from other company.
 Continuing innovation
With continuing innovation process, an organization can beat IKEA Company. With the
help of modern technology and social sites and Medias it is very easy and effective way
to reach peoples mind. Throughout this, other organization can increase the value of
products easily and can attract more customers towards them (Kinuthia and Kihara,
2019).
 Offering unique products
It is important to offer some extraordinary products with interesting offers and reward
system. Through this system, suppliers and customers can easily being attracted by an
organization.
 Pricing
To give tough competition an organization should maintain low cost strategy. Because,
IKEA has maintained same tradition in the marketplace. The cost of IKEA product is
very low, for why people are eager to buy products from this company. Besides this,

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stylish and quality products are also delivered in reasonable price by this reputed
company. Therefore, an organization should deliver same quality products in reasonable
price which is lower from IKEA. It is expected that, through this process, customers and
suppliers can get interest to purchasing goods from that rival company. Therefore, that
particular organization can get the opportunity to expand business for
internationalization.
Answer to question no 2
 Reduce cost
The new procurement strategy has the ability to reduce the price of products. Effective
procurement management allows organization for reducing cost by procuring services,
supplies and contracts prices. With proper procurement, system allows organization to
provide best offers and warranties for increasing the value of business. On the other side,
effective purchasing process has the ability to have a look into company’s selected
budget and the process of spent economy.
 Greater efficiency
When an organization gain the ability of proper procurement system, this will outcome in
the services, quality goods that are being delivered on time to its customers. Throughout
this process, an organization can gain trust and keep positive mental state about
company’s services. This process also helps to get solutions of issues like labour
shortage, economic instability and natural disaster. As a result, supply chain of an
organization will be increased through proper procurement process.
 Procurement process help in innovation
For tough competition, an organization can gather ideas of innovation from proper
procurement process. Effective procurement system allows an organization for looking
for innovative goods and services to offer customers. After this, an organization feels
secure and able to do exclusive deals with suppliers (Nigussie, 2018).
 Transparent in business process
To become success in business filed an organization should have to maintained the
transparency about business. Throughout this, that particular company can deliver actual
information to its customers and suppliers. Through this technology, rival company can
gather more information and reflect own information to others. Besides this, for

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increasing customer base, an organization should deliver the clear information that is
related to products and costs. Throughout this process, a rival company can gain the
ability to provide tough challenges to IKEA (Mani and Haridasan, 2018).
Case study Dell
Answer to question no 1
 Target audience
The target market of this reputed company has divided in four part. Those are big
organization and Government companies, medium business, small business and home
users. Providing all types of facilities and services to these particular audiences Dell is
able to provide satisfaction to all. It is reported that 70% of sale of this company is done
to large organization.
 Direct sale model
In direct sale model, Dell is not put any additional cost and times for delivering PC to its
customers. On the other hand, additional cost and time required at the time of product
delivery through retailer. This is one of the unique strategies, which has the ability to
increase information development of Dell Company. Besides this, the use of modern
technology allows customers becoming partners of Dell.
 Build-to-order
This is the strategy where Dell manufactures pc on the orders of customers. After ge5t the
orders from customers, this company takes preparations to make computers as per
customers’ demand. Throughout this, dell is able to know about the needs and demand of
customers and can provide best services.
 Suppliers integration
Dell gets suppliers from all over the world. On the other hand, suppliers are getting
satisfactory behavior from the business culture of Dell. Through this, suppliers are getting
interest for purchasing pc, computers, laptops and other equipment from this reputed
company. As a result, Dell is gaining the capacity for expand business in all over the
world.
 Integrated supply chain design

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For the development of supplier chain, Dell has taken various activities. For making plan,
this company is deliver the ideas how to design and take part for the integration system.
Answer to question no2
 Out sourcing
Dell is using out sourcing strategy for the involvement of various activities. Throughout
this strategy, this company has the capability to collect information and make proper
planning. After implementation of outsourcing, this company has set the low price
strategy and increase quality of products.
 Collaborative planning
Dell has maintained a good team work for increasing competitive advantages. Therefore,
this company has adopted lots of activities for improving the performance of team. Team
member of this company are done their job collaboratively. Team leader divides each role
to different category employees. As a result, different category people are able to make
business plan for better business.
 Development of supplier chain
By providing various facilities and satisfaction, this company is able to maintain a good
supplier chain. Good relationship between company and supplier chain has been
maintained from the early stage of this company. This is known as a tradition for being
success in business.
 Implementation of manufacturing technology
Dell is well known for its best manufacturing process. For that, this company has used
various modern technologies. For promotion of new products, this company has set focus
on the digital marketing. Besides this, with the use of social Medias and sites, Dell is able
to provide all information to its customers. This is another technique to attract customers
for purchasing products. Not only this, but also involvement of technology increase the
quality of precuts in reasonable price.
 Input innovation
Dell is always trying to put innovation in its business process. Therefore, this company
has taken help from different location. With innovation, this company is able to delivery
different products to its customers. Innovation brings fame to this company. On the other

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hand, customers are also taking advantages and benefits with the implementation of
innovation in business process.
Answer to question no 3
For global business, Dell always try to focus on the low cost strategy. For that, this
company has adopted lots of significant strategies for maintain qualities of products. Beside this,
Dell tries to emerge the concept of outsourcing. Whether companies are trying to enhance their
productivities and competitive advantages, Dell is focusing to discover new techniques to
maintain low cost facilities to its suppliers. Dell believes that this particular system is the core
key factor of getting success. Firms of Dell maintain two advantages one is strategically
flexibility and other is lowers price rates of products. Dell thinks that through customizing,
pricing and fast order fulfillment is the way to increase competitive advantages. Apart from this,
Dell has maintained the tradition by giving satisfaction services to its customers. For that, this
company has taken so many modern techniques and appoint various technologies for bringing
innovation and increase the value of products. For increasing competitive advantages and quality
of products, Dell appoints numerous experts in business. These experts have gained the capacity
for providing best ideas and though on how to increase business in marketplace easily. Besides
this, with the involvement of experts, other employees are able to take part in the process of
growth with the organization. They also get the chances to be more efficient. As a result,
customers of this company are getting interest and choosing to buy products (Li and Tsai, 2017).
Dell has maintained outsourcing strategy for the increasing competitive advantages in the market
place. Therefore, Dell has collected the abilities to do diligent work with their independent
suppliers. For outsourcing, Dell is able to take benefits and allows other ton take same
advantages. According to the report, through outsourcing Dell has gained the capability to save
costing almost 9% and increase the product quality and capacity almost 15%.
Answer to question no 4
This company has strong belief if it can sell pc to the hands of customers directly, then it
will easy to reach customers needs and demands. Dell has maintained two different information
loops for maintaining the flow of data. First one is between Dell and customers and second one is
procurement, among sales and suppliers. Through this system, Dell is able to forecasting its
tradition and historical information. Therefore, this company has various strategies and activities

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to fulfillment the needs of suppliers.The flexibility in costing, product quality and manufacturing
is the main function of Dell. Outsourcing of this company has maintained a good relationship
between suppliers and clients. Therefore, strong bonding allows Dell to have strong engagement
for increasing the standards of services. For this positive attitude, suppliers of this company are
eager to provide facilities to increase and implant more strategies, business investments, quality
initiatives and information management. As a result, they are keen to purchase products from this
reputed company. Besides this, low cost strategy is another aspect that provides the chance for
enhancing competitive advantages of Dell Company. Besides this, suppliers are from different
countries are taking part for having business with this reputed Company. Besides this, valuable
services are possible to deliver to its customers and suppliers. This strategy is able to gain the
trust of suppliers and others, which indicates the positive signal towards the growth of this
reputed company (Effah, 2016).
Conclusion
The above discussion shows that, IKEA has well-development purchase management strategies.
By providing unique products with best quality an organization can give competition to IKEA.
Therefore, with innovation and use of technology, an organization can put various and different
ideas that are completely different from the IKEA have, to gain competitive advantages. On the
other hand, Dell has faced lots of issues that are connected to inventory. The only aim of Dell is
providing best products and services in low cost strategy. For that, this company has adopted so
many strategies for increasing the value of business. After implanting resourcing strategy, this
company would be able to provide satisfaction to its suppliers and consumers. This will help in
developing the supply chain more effectively.

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References:
Kinuthia, C.W. and Kihara, D.A., 2019. DETERMINANTS OF PROCUREMENT
OPTIMISATION IN SELECTED COUNTY GOVERNMENTS IN KENYA. International
Journal of Supply Chain and Logistics, 3(2), pp.40-62.
Mani, V. and Haridasan, V., 2018. Optimizing the Medicine Procurement Process. International
Journal of Engineering & Technology, 7(4), pp.2366-2369.
Nigussie, T., 2018. Assessment Of Core ProjectconstraintsManagemnt Practice: Inthe Case Of
Information System Project Inethio-Telecom (Doctoral dissertation, Addis Ababa University).
Effah, S., 2016. Topic: assessing the public procurement act in the management of drugs at
Suhum government hospital (Doctoral dissertation).
Li, H.W. and Tsai, T.C., 2017. Sharing roles and responsibilities of construction project delivery
methods in Taiwan. In ISARC. Proceedings of the International Symposium on Automation and
Robotics in Construction (Vol. 34). IAARC Publications.