IKEA has established itself as a home furnishing expert that offers a broad choice of well-designed, practical solutions at a reasonable cost, a trait that appeals to families with a combined family income of RM2,000 or less. Currently, the company sells over 8,500 items, including beds, culinary utensils, children’s furniture, textiles, and even their highly sought-after meatball. Search for IKEA stores near me to find your neighbourhood store.
Operations at IKEA
Learn how IKEA operates and its core activities, and the processes linked to it.
- IKEA provides standard, non-luxury goods with a wide range of replacements and complements available on the market. It also offers a variety of services to supplement its company, such as delivery, assembly, kitchen installation, and even sewing services to meet demand.
- In terms of innovation, IKEA does not have any direct competitors. Even though the firm has been around for a long time, they continue to innovate to meet customers’ changing tastes and expectations, unlike any of IKEA’s other indirect rivals. By using distinctive design and style, IKEA has established itself as more than just a furniture merchant or store.
- A completely competitive market may be characterized as having three basic characteristics which are its many customers and sellers, homogeneous goods and unfettered admission and exit into and out of the market. Because perfectly competitive enterprises function at an efficient scale, which means a huge consumer surplus, and because sellers may sell as much as they want, there are a lot of buyers and sellers.
- Sellers have no motivation to lower their prices since this would diminish their profits; they also have no motive to raise prices since this would not demand since customers have complete market information and can acquire close alternative items. A price taker is a company that operates in this market.
- Because this is the market price established for each quantity of the commodity, the price of a commodity is equal to average revenue, which is equal to marginal revenue. When pricing equals marginal costs, a company’s earnings are maximized. If a new business notices that the market is profitable, it will be attracted to it and enter it.
- However, this will increase supply and quantity, lowering the price and profits for all enterprises in that market. As a result, some businesses may end up losing money. If this occurs and the price of a thing falls below its average total cost of production, a company may decide to close down.
- IKEA can obtain economies of scale through mass production to satisfy the performance target cost. On the other hand, the inventory level is high, implying that IKEA’s items are made-to-order. Individual orders are not assigned to customers throughout the manufacturing process in a make-to-stock method.
- Over the year, KEA has reduced its average long-run cost by leveraging economies of scale and growing specialization. Specific items created by specialized employees in various areas throughout the world have delegated the division of labour. Due to the uniformity of procedures, mass manufacturing reduces human mistakes.
- IKEA begins production in wholly-owned companies to prevent inefficiencies associated with outsourcing operations. IKEA has reached another milestone in international procurement to preserve the representation of its design talents and its distribution and retail network, which allows it to provide well-designed things at low rates.
IKEA is the furniture industry’s low-cost leader. A living room equipped using IKEA products can cost up to 65 per cent less than one equipped with comparable items from other retailers. Its target market consists of young married couples, college students, 20-30-year-old singles, and middle-class families that are price sensitive. So, if they can acquire furnishings at a significantly reduced cost, they should do so.