Essay on The Key Success Factors of Ikea

2028 Words Jun 28th, 2014 9 Pages
Success Factors of IKEA

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The Key Success Factors of IKEA
Advanced English Writing

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Abstract Taking advantage of three mayor cost-cutting strategies, IKEA has been able to maximize its profit and to succeed internationally with its concept. The self-service and do-it-yourself approach to selling furniture is one of the critical success factors IKEA uses to save costs and increase profit margins. Furthermore, it has a complicated company structure, partially in order to avoid taxes, but also to allow for some flexible management decisions to be made, based on the international needs. The third key success factor that can be held responsible for IKEA’s international triumph is its production and ordering system. The company
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Due to the walk-around, the visitors at IKEA have to look at the whole range of products, so they buy more than they originally plan to. To save time, IKEA offers collection points, where the customer can pick up his products to take them away and he can pay directly at a self-checkout point, possibly preventing the customer to rethink certain purchases. The warehouse of each store provides a nearly perpetual inventory of the most popular products directly in the furniture store. After the collection, the customer should transport them home via car. Hence, the boxes must contain as little packaging material as possible and the furniture is fragmented, so the boxes are smaller. As a consequence, more products fit into one car. At home, the customer has to assemble the furniture by himself. Therefore, the construction has to be easy, and IKEA eased the process by offering a system, where usually only one tool is needed (Riedl, 2008). Due to this processes and the opportunity to shop via the internet, nothing is paid, which cannot be easily made by oneself to save money. These strategies are cost-saving advantages for IKEA because more furniture is sold in total because it is easy to assemble and the walk-around lures the shoppers into buying more. Costs are saved because no personnel is needed for delivery, since almost everything fits into

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