https://research-methodology.net Necessary knowledge to conduct a business research Sat, 19 Aug 2023 11:37:40 +0000 en-US hourly 1 https://rm-15da4.kxcdn.com/wp-content/uploads/2020/08/cropped-logoBRM-32x32.jpg https://research-methodology.net 32 32 https://research-methodology.net/ikea-corporate-social-responsibility/ Wed, 17 Aug 2022 00:43:13 +0000 http://research-methodology.net/?p=7058 IKEA Corporate Social Responsibility (CSR) efforts are led by Chief Sustainability Officer, Lena Pripp-Kovac. Furthermore, retail managers at every country are also Corporate Sustainability Officers (CSO). The home improvement and furnishing chain started to research CSR reports under the title People & Planet Positive starting from 2012. IKEA CSR efforts and activities comprise supporting local communities, educating and empowering workers and addressing the issues of gender equality and minorities within the company. Moreover, the global furniture retailer works to reduce its energy consumption and derive energy from alternative sources. Sustainable sourcing represents an additional CSR issue that IKEA aims to address within the scope of its operations.   CSR Programs and Initiatives IKEA Supporting Local Communities  IKEA Group operates 422 stores in 50 markets around the world.[1] The home improvement and furnishing chain aims to cause positive impact on local communities, where its stores are located. Packing event organized by all IKEA stores in Sweden involved customers and representatives from Save the Children to prepare more than 37,000 welcome backpacks filled with toys and other products for children In UK, IKEA has planted one million trees in communities across the country In Australia, IKEA Perth and IKEA Adelaide employees contribute to the improvement of the environment in which children live and develop.   IKEA Educating and Empowering Workers Starting from January 2015, IKEA has introduced a new hourly wage structure that concentrates on the needs of its employees, rather than market standards. The furniture retailer has launched My Learning online system that provides employees at all levels access to face-t-face and digital learning solutions.   Employee Health and Safety at IKEA In 2021, the furniture retailer introduced a common solution for reporting incidents and accidents that’s easily accessible for all co-workers The number of accidents at IKEA was reduced by…]]> https://research-methodology.net/ikea-ecosystem-a-brief-overview/ Wed, 17 Aug 2022 00:29:08 +0000 https://research-methodology.net/?p=42207 Increasing popularity of ecosystem thinking in business has not gone unnoticed by the Swedish furniture chain as well. Currently, IKEA ecosystem is cantered around the notion of smart home. The Swedish furniture chain is investing in the new unit and expanding the range of products “which currently includes smart light bulbs, smart plugs, and other connected devices to automate home control.”[1]  Named as Home Smart, the new full-fledged business unit is dedicated to smart home products. In other words, increasing numbers of smart home devices are being added into IKEA ecosystem. It can be forecasted that IKEA ecosystem is going to be aggressively expanded with hardware products that can be effectively paired with smart home technologies such as Google’s Nest and Amazon’s Alexa. James F. Moore, economist who coined the term business ecosystem defines the following four evolutionary stages of business ecosystem: birth, expansion, leadership and self-renewal. The evolution of IKEA ecosystem according to this concept is taking place in the following manner: 1. Birth. The world’s largest furniture retailer has already identified smart homes as the basis of its ecosystem. The choice of smart home as a basis of ecosystem is strategically appropriate taking into account increasing integration of internet into various aspects of daily life and chores. 2. Expansion. The company has developed a wide range of innovative products such as Symfonisk WiFi bookshelf speakers and lamps, Riggard LED lamp with wireless charging, Tradfi remote control and others that are considered as smart home products. Furthermore, the latest IKEA additions to smart home concept include electric blinds that go up and down at pre-programmed times and smart air purifiers. 3. Leadership. The furniture retailer is communicating its vision to internal and external stakeholders to strengthen its leadership position in home improvement industry with the focus on innovative products.…]]> https://research-methodology.net/ikea-mckinsey-7s-model/ Wed, 17 Aug 2022 00:28:21 +0000 http://research-methodology.net/?p=11418 IKEA McKinsey 7S model explains how individual elements of businesses can be aligned to increase the overall effectiveness. McKinsey 7S framework considers strategy, structure and systems as hard elements, whereas shared values, skills, style and staff are accepted as soft elements. The framework stresses the presence of strong links between elements in a way that a change in one element causes changes in others. As it is illustrated in figure below, shared values represent the core of IKEA McKinsey 7S framework. This is because shared values guide employee behaviour with effects on their performance and ultimately on the bottom line for the business. McKinsey 7S model Hard Elements in IKEA 7S Model  Strategy IKEA business strategy is based on the IKEA Concept, which is built upon the combination of function, quality, design and value – always with sustainability in mind. Moreover, the Swedish furniture chain offers cost advantage value for customers. Accordingly, IKEA business strategy involves offering increasing variety of products for the lowest prices. Regular engagement in new market development and benefiting from strategic alliances constitute additional pillars of IKEA business strategy.   Structure IKEA organizational structure is unique and highly complex. The home improvement and furnishing chain maintains uniqueness and complexity its corporate structure in order to pay less taxes. The company can be divided into three large groups: franchise, range and supply and industry. Large scale of the business that integrates 11 franchisees operating in more than 500 locations in 63 countries[1] necessitates hierarchical organizational structure. Nevertheless, the Swedish furniture chain has proved to be successful in overcoming common weaknesses of hierarchical organizational structure such as high level of bureaucracy and lack of flexibility of the business.   Systems IKEA business relies on a set of systems. These include employee recruitment and selection system, team development and orientation…]]> https://research-methodology.net/ikea-value-chain-analysis/ Wed, 17 Aug 2022 00:19:14 +0000 http://research-methodology.net/?p=1558 IKEA value-chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the global furniture retailer. “Each step in the manufacture of a product or the delivery of a service can be thought of as a link in a chain that adds value to the product or service. This concept of how business fulfils its mission and objectives is known as the value chain”[1]. Figure below illustrates the essence of IKEA value chain analysis. IKEA Value Chain Analysis IKEA Primary Activities IKEA Inbound logistics Inbound logistics for IKEA is associated with purchasing raw materials and ready items from about 1220 suppliers located in more than 55 countries worldwide.[2] The majority of IKEA products (89%) are sourced from external suppliers across the globe.[3] The world’s largest furniture retailer conducts purchasing via its 31 trading service offices in 26 countries. The top five purchasing countries for The Swedish furniture chain include China 20%, Poland 18%, Italy 8%, Germany 6% and Sweden 5%.[4] IKEA inbound logistics is a major source of value creation for the business. Specifically, the proximity of company’s 31 trading service offices to supplier locations helps to ensure that company can monitor production, test new ideas, negotiate prices and check quality of products and raw materials they are buying. Economies of scale are another factor that decreases the prices of inbound logistics for the furniture retailer.  Moreover, flat pack Do-It-Yourself assembly principle for many IKEA products lowers the cost of packaging and makes inbound logistics easier to facilitate. The world’s largest furniture retailer maintains strategic relationships with its suppliers. The average length of supplier relationship is 11 years[5], with some suppliers working with IKEA for several decades.   IKEA Operations IKEA operations are divided into three divisions – Franchise, Property and…]]> https://research-methodology.net/ikea-marketing-communication-mix/ Tue, 16 Aug 2022 00:42:08 +0000 http://research-methodology.net/?p=11405 IKEA marketing communication mix integrates the application of individual marketing communication channels such as print and media advertising, sales promotions, events and experiences, public relations and direct marketing. The extent and patterns of usage of these marketing communication channels by the furniture retailer is discussed below.     IKEA Print and Media Advertising IKEA relies on print and media advertising as one of its main marketing strategies to deliver its marketing message to the target customer segment. The company collaborates with a range of popular journals, magazines and TV channels globally for this purpose. The home improvement and furnishing chain has effectively integrated the elements of creativity in its print and media advertising a number of times. For example, billboard-fitted wardrobes were placed by IKEA in selected outdoor locations in Vienna. People passing by were encouraged to slide its door open to assess IKEA’s solutions to fit many items into the wardrobe.[1] In another instance, the Swedish furniture chain developed a print ad that is designed to put customers to sleep. Specifically, ‘Somnig’ is printed with lavender ink and emits white noise through a speaker. Customers are encouraged to tear it out of IKEA magazine and place next to their bed to have a good night’s sleep.[2] Another noteworthy instance of application of creativity in print advertising by IKEA relates to the publication of its more than 200 million catalogues in 2013. While more than two third of IKEA’s marketing budget was previously spent on furnishing living quarters for its catalogues, from 2013 onwards the company started to create images in its catalogue with the help of graphic artists. In other words, starting from 2013 images in IKEA catalogues are not photos but “a collection of pixels and polygons arranged on a computer”[3] and this shift has proved to be…]]> https://research-methodology.net/ikea-porters-five-forces-analysis/ Tue, 16 Aug 2022 00:40:44 +0000 http://research-methodology.net/?p=1560 Porter’s Five Forces model is “a generic framework that deconstructs industry structure into five underlying competitive forces or variables”[1]. IKEA Porter’s Five Forces are represented in figure below: Porter’s Five Forces   Threat of new entrants in Porter’s Five Forces Analysis Threat of new entrants to furniture and home appliances manufacturing industry in general is significant. The following set of factors, among others affects the intensity of threat of new entrants into the industry. 1. Lack of regulatory or technological entry barriers. There are no legal or regulatory barriers to enter the furniture industry. Moreover, knowledge barriers are not substantial as well because furniture producing processes do not involve advanced know-how that is difficult to replicate. 2. Economies of scale. IKEA benefits from the economies of scale to a great extent internationally and this advantage allows the Swedish furniture chain to maintain highly competitive prices. No new market entrant would be able to utilize economies of scale to IKEA’s extent and thus, competing with IKEA on price level remains as a highly challenging, if not impossible task. Such a situation discourages potential new players to enter the industry. 3. Distribution channel barriers. Although there are no regulatory or technological entry barriers as discussed above, distribution channel entry barrier exists. It took more than seven decades for the Swedish furniture chain to establish its global distribution network that comprises more than 500 locations in 63 countries. Without such an extensive distribution network it will be hard for new market entrants to present any real threat for IKEA.   Bargaining power of buyers in Porter’s Five Forces Analysis Bargaining power of buyers in furniture and home appliances manufacturing industry is huge. The following factors increase buyer bargaining power: 1. Absence of switching costs for customers. Currently IKEA lacks an ecosystem of products…]]> https://research-methodology.net/ikea-segmentation-targeting-positioning-targeting-cost-conscious-customers/ Tue, 16 Aug 2022 00:29:57 +0000 http://research-methodology.net/?p=11401 IKEA segmentation, targeting and positioning involves a set of consequent marketing decisions that constitute the core of company’s marketing strategy.  Segmentation refers to dividing population into groups on the basis of their common traits and characteristics. Targeting involves choosing specific groups identified as a result of segmentation as consumers for the brand. Positioning implies the selection of the marketing mix the most attractive to the target customer segment. There are various types of positioning such as mono-segment, multi-segment, standby, anticipatory, imitative, adaptive, defensive and stop-gap types of positioning. IKEA uses the following types of product positioning: – Mono-segment positioning. This type of positioning is associated with making an appeal to the needs and wants of a single customer segment. IKEA uses mono-segment positioning via focusing on a single customer segment that are cost-conscious and prefers to get value for money. – Adaptive positioning. This positioning method is based on periodically repositioning products and services to reflect changes in customer preferences. The Swedish furniture chain takes into account dynamic nature of customer preferences in designing its products. For example, increasing popularity of minimalism in the global scale has been reflected in the latest ranges of IKEA products. – Aesthetic positioning. The world’s largest furniture retailer uses ‘democratic design’ concept to develop its products. Democratic design appeals to the needs and preferences of a specific customer segment that value balance between function, form, quality, sustainability and low price. The following Table illustrates IKEA segmentation, targeting and positioning: Type of segmentation Segmentation criteria IKEA target customer segment     Geographic Region Europe,   Americas, Asia & Australia, Russia. In total 11 franchisees operate in more than 500 locations Density Urban   Demographic Age 18 and older Gender Males & Females Life-cycle stage Bachelor Stage young, single people not living at home Newly Married Couples young, no…]]> https://research-methodology.net/ikea-7ps-marketing/ Tue, 16 Aug 2022 00:22:15 +0000 http://research-methodology.net/?p=11398 IKEA 7Ps of marketing comprises elements of the marketing mix that consists of product, place, price, promotion, process, people and physical evidence. The furniture retailer places greater emphasis on the price element of the marketing mix over other elements due to cost advantage business strategy it pursues.     Product Element in IKEA Marketing Mix There are nearly 12000 products across IKEA range and the company renews its product range annually. The company develops approximately 2000 new products each year. IKEA products are designed by its in-house, as well as, contracted designers.  IKEA promotes the idea of democratic design. The furniture maker adheres to the following five dimensions of democratic design: form, quality, function, sustainability and low price.  IKEA products are associated with no-frills simplicity to sustain its cost leadership business strategy. Furthermore, some of IKEA products such as furniture are not assembled and ready to use by customer. Instead, the retail giant prefers to sell large furniture items as flat pack and customers have to assemble furniture themselves according to clear guidelines and illustrative instructions supplied by the company.  Selling products in flat pack form immensely contributes to cost leadership business strategy because it is much cheaper to transport and store flat packs than ready assembled items.   Place Element in IKEA 7Ps of Marketing IKEA has 11 franchisees operating in more than 500 locations in 63 countries.[1] The Swedish furniture chain promotes itself as a multi-channel retailer effectively integrating online and offline sales channels. Currently IKEA is concentrating on smaller city-centre stores and planning studios for kitchens, as the world’s largest furniture retailer tries to decrease its dependence on selling only through giant out-of-town warehouses.   Price Element in IKEA Marketing Mix  IKEA pricing strategy integrates the following: 1. Cost leadership. Competitive costs are placed at the core of…]]> https://research-methodology.net/ikea-marketing-strategy/ Tue, 16 Aug 2022 00:22:05 +0000 http://research-methodology.net/?p=7056 IKEA marketing strategy is based on sophisticated customer research and market research. “IKEA actually sends design experts into people’s homes to listen to their concerns and provide feedback. This allows IKEA evangelists to make marketing decisions based on people’s real-life experiences rather than just surveys or data.”[1] Accordingly, it can be argued that marketing strategy of IKEA is proactive, rather than reactive. In 2018, the world’s largest furniture retailer shifted its marketing focus from rooms to product innovation. The ‘magic’ blue bag has been placed at the core of marketing strategy of IKEA and the latest ads have been designed to illustrate how the addition of just a few innovative items can transform the home for the better. Generally, IKEA marketing strategy integrates the following: 1. Focusing on product and price elements of the marketing mix. Specifically, IKEA attempts to offer the greatest range of products for the lowest cost. Economies of scale play an instrumental role in achieving competitive prices. The Swedish furniture chain offers mixed-and-matchedproducts accommodating unique style and needs of each customer. Reusable durability is another important feature of IKEA products. Along with product and price, additional elements of marketing mix, also known as 7Ps of marketing include place, promotion, process, people and physical evidence. 2. Using mono-segment, adaptive and aesthetic types of product positioning. The furniture retailer targets cost-conscious customer segment that prefers to get value for money they pay. Accordingly, IKEA has adapted the lowest costs of its products along with the widest range as the unique selling proposition of the brand. The home improvement and furnishing chain continually adapts its products to changing customer needs and wants on the basis of its proven ‘democratic design’ concept. 3. Integrating several channels of marketing communication such as print and media advertising, sales promotions, events and experiences,…]]> https://research-methodology.net/ikea-pest-analysis/ Mon, 15 Aug 2022 01:05:47 +0000 http://research-methodology.net/?p=1557 PESTEL is a strategic analytical tool used to assess the impact of external factors on businesses. The acronym stands for political, economic, social, technological, environmental and legal factors affecting businesses. It is important to clarify that businesses have little and no influence over factors within PESTEL framework; however they can develop strategies to eliminate or at least to minimize negative effects of these factors. IKEA PESTEL analysis can shed a light into opportunities to strengthen competitive advantage of the business in various fronts.   Political Factors in IKEA PESTEL Analysis IKEA revenue is subject to political situation in the market and a wide range of political factors such as government attitude towards the brand and political stability. Other political factors that can affect IKEA’s business include the level of bureaucracy, degree of corruption, home market lobbying and import restrictions in markets where the global furniture retailer operates.   Use of Prison Labour in East Germany The company has been involved in a series of issues on political grounds.  In 2012, IKEA had to admit that the company used prison labour in East Germany in 1970s and 1980s to produce its products. It has to be specified that the use of prison labour took place at manufacturing sites of IKEA suppliers, not the sites managed by the retail giant itself. An independent report by Ernst and Young concluded that while IKEA had a policy of visiting production facilities to control working processes, access to East German suppliers had been restricted. Although IKEA offered formal public apology to those affected, the incident caused a significant political controversy around the globe.[1] Moreover, allegations that IKEA founder Ingvar Kamprad was an active recruiter for Swedish Nazi group has sparked controversy with negative effects on the brand image.[2]   Symbolic Role of Doll Lufsig Another…]]> https://research-methodology.net/ikea-ansoff-matrix/ Mon, 15 Aug 2022 00:25:35 +0000 https://research-methodology.net/?p=41825 IKEA Ansoff Matrix is a marketing planning model that helps the Swedish furniture chain to determine its product and market strategy.  According to Ansoff Matrix, there are four different strategy options available for businesses. These consist of market penetration, product development, market development and diversification. IKEA Ansoff Growth Matrix   Within the scope of Ansoff Matrix, IKEA uses all four growth strategies in an integrated manner: 1. Market penetration. Market penetration implies selling existing products to existing markets. IKEA uses market penetration strategy aggressively. Effective marketing strategy plays an important role in increasing the efficiency of market penetration for the furniture retailer. Traditionally the world’s largest furniture retailer had relied on its famous catalogue printed in large quantities as a time-tested instrument to pursue market penetration strategy. However, in 2020 the company announced that it will stop producing catalogues starting from 2022 due to the decline of demand. 2. Product development. This involves developing new products to sell to existing markets. Product development is one of the main growth strategies for IKEA. The home improvement and furnishing chain has more than 12000 types of products in its range and it launches about 2000 new products every year.[1] The company makes some of its products in-house, as well as, purchases from suppliers. 3. Market development. Market development strategy is associated with finding new markets for existing products. The world’s largest furniture retailer engages in market development extensively. IKEA has 11 franchisees operating in more than 500 locations in 63 countries.[2] The company is forecasted to enter into more developing markets in short and medium term perspective. 4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. IKEA experiments with diversification business strategy occasionally. IKEA restaurants within furniture retail shops can…]]> https://research-methodology.net/ikea-organizational-structure-expecting-benefits-major-restructuring/ Mon, 15 Aug 2022 00:15:47 +0000 http://research-methodology.net/?p=11383 IKEA has a unique organizational structure. Specifically, “around the globe, a large number of companies operate under the IKEA trademarks. All IKEA franchisees are independent of Inter IKEA Group. A large group of franchisees are owned and operated by INGKA Group. Inter IKEA Group and INGKA Group have the same founder, and a common history and heritage, but have operated under different owners and management since the 1980s”[1] Figure 1 below illustrates the essence of IKEA organizational structure: Figure 1 IKEA organizational structure Inter IKEA Group integrates of a group of companies. The group sets strategic direction for the whole business and connects all IKEA franchisee. The group is formed of three core businesses as illustrated in Figure 1 above: 1. Inter IKEA Systems B.V. is the furniture retailer’s franchisor worldwide. This unit also deals with franchise agreements with 11 franchisees that operate in more than 500 locations.[2] 2. IKEA Range & Supply develops and supplies products for the home improvement and furnishing chain. 3. IKEA Industry produces home furnishing products and it manufactures about 10-12% of the total range. The present organizational structure of IKEA illustrated in Figure 1 above is the outcome of a major restructuring initiative that was introduced in 2016. To improve the franchise system and clarify roles, IKEA range, supply and production activities were transferred to the new Inter IKEA Group headed by Inter IKEA Holding B.V.  Currently, Jon Abrahamsson Ring is the CEO of Inter IKEA Holding B.V. The Figure 2 below illustrates the overview of the franchise system. Figure 2 Overview of the IKEA franchise system[3] Specifically, IKEA Group sold key subsidiaries for EUR 5.2 billion to increase the flexibility of the business to be able to adapt to changes in the external global marketplace. IKEA management considers this change to be much…]]> https://research-methodology.net/ikea-swot-analysis/ Mon, 15 Aug 2022 00:13:56 +0000 http://research-methodology.net/?p=1556 SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. SWOT analysis is a strategic tool that helps businesses to analyse internal and external factors affecting the bottom line. Strengths and weaknesses are internal factors that can be influenced by the company. Opportunities and threats, on the other hand, are external factors that have to be taken into account in strategic decision-making by the senior management.  The following table illustrates IKEA SWOT analysis: Strengths 1.      Market leadership in the global scale 2.      Democratic design concept 3.      Competency in cost-cutting through product and process innovation 4.      Brand value and solid financial position 5.      Vast, yet focused product range Weaknesses 1.      Weak presence in Asia 2.      Damaged reputation due to a series of incidents 3.      Competitive advantage difficult to sustain 4.      Lack of differentiation of IKEA products and services 5.      Lack of flexibility due to large size Opportunities 1.      Increasing emphasis on CSR 2.      Increasing presence in developing countries 3.      Adding premium range of products into portfolio 4.      Strengthening cost leadership competitive advantage through technological innovation 5.      Benefiting from increasing digitalization of various business processes Threats                                                        1.      Decline in demand due to increase in consumer income 2.      Unsustainability of ‘democratic design’ concept 3.      Emergence of competition from Asia 4.      Increasing costs of raw materials 5.      Global economic and financial crisis SWOT Analysis summary for IKEA   Strengths in IKEA SWOT Analysis 1. IKEA is an undisputed market leader in the global market of home improvement and furnishing. The Swedish furniture chain has 11 franchisees operating in more than 500 locations in 63 countries.[1] Additionally, the furniture retailer has 22 Pick-up and Order…]]> https://research-methodology.net/ikea-leadership-effective-application-leading-example/ Sun, 14 Aug 2022 00:30:44 +0000 http://research-methodology.net/?p=11380 The current IKEA leadership practices and patterns are based on leadership principles and life philosophy of its founder Ingvar Kamprad. Known to practice transformational and charismatic leadership styles, Ingvar Kamprad had been a driving force for many decades behind the phenomenal success of the home improvement and furnishing chain.  Ingvar Kamprad founded the furniture retailer in 1943 and after leading the business for 70 years, he handed over control to his three sons. Nevertheless, work principles of the founder associated with frugality and effectiveness continues to serve as a basis for IKEA leadership practices in modern days.     In 2017 Jesper Brodin became President and CEO of IKEA Group, INGKA Holding B.V. and its controlled entities. He is only the 6th CEO in The Swedish furniture chain’s history of more than 75 years.  Mr. Brodin has worked as an assistant to founder Ingvar Kamprad and it is widely believed that IKEA CEO will not change the strategic direction set by the founder of the business. The CEO of Inter Ikea that manages company’s brand and concept Mr. Jon Abrahamsson Ring has also served as founder’s assistant for many years. It has been noted that “former assistants of Mr. Kamprad have had a near monopoly on the leadership of the two main companies in the furniture empire in recent times”[1].  Apart from two executives mentioned above, former Ingka CEOs Peter Agnefjall and  Anders Dahlvig were also former assistant to Mr. Kamprad. IKEA leadership principles are based on the following pillars: 1. Leading by example. It is difficult to contain IKEA leadership style into a single classification due to a unique nature of the business in more than one ways. Perhaps, leading by example, may the most closely characterise leadership practices at IKEA. The famous quote by IKEA founder Ingvar Kamprad…]]> https://research-methodology.net/ikea-business-strategy-competitive-advantage-capitalising-ikea-concept/ Sun, 14 Aug 2022 00:17:09 +0000 http://research-methodology.net/?p=11376 IKEA business strategy is built upon the IKEA concept. The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few. It is achieved by combining function, quality, design and value – always with sustainability in mind. The IKEA Concept exists in every part of the company, from design, sourcing, packing and distributing through to business model.[1]     The following points constitute integral elements of IKEA business strategy. 1. Offering the lowest prices. Cost effectiveness is one of the solid bases of IKEA competitive advantage. The global furniture retailer is able to offer low prices thanks to a combination of economies of scale and technological integration into various business processes. 2. Increasing variety of products. Great range of products also belongs to the list of IKEA competitive advantages. There are 12000 products across in IKEA portfolio and the company renews its product range launching approximately 2000 new products every year.[2] The company is also increasing its presence in food and catering industries. 3. International market expansion strategy. The home improvement and furnishing chain has traditionally engaged in new market development in an aggressive manner. IKEA has11 franchisees operating in more than 500 locations in 63 countries.[3] Furthermore, The Swedish furniture chain has long-term plans to establish its firm presence in many developing countries. 4. Benefiting from strategic alliances. The global furniture retailer benefits from strategic alliances to a maximum extent. The formation of strategic alliances is placed at the core of IKEA business strategy. The list of the most successful collaborations include partnership with Apple to explore the possibilities of Augmented Realityas a tool for home-furnishing, partnership with LEGO for new product development and partnership with Adidas in knowledge sharing about customer behaviour. Experience and competency…]]> https://research-methodology.net/ikea-organizational-culture-simplicity-teamwork-diversity/ Sun, 14 Aug 2022 00:12:43 +0000 http://research-methodology.net/?p=11388 IKEA organizational culture plays an important role in maintaining cost-effective business operations to sustain cost leadership business strategy for the furniture giant. In other words, due to its cost leadership business strategy, IKEA does not offer the most competitive financial compensation to its workforce. Instead, the home improvement and furnishing chain attracts employees with intangible benefits that are deeply integrated within IKEA corporate culture. IKEA organizational culture is based on the following principles: 1. Simplicity and high level of informality. It has been noted that “humbleness in approaching tasks and simplicity in the way of doing things are cornerstones of the IKEA culture”.[1] For example, in IKEA US only a few executives have business cards and “everyone is on a first-name basis and sits side by side at IKEA desks and if you have an ego that needs stroking, IKEA is not the workplace for you.”[2] 2. The value for teamwork. Executives who prefer to manage as one-man show do not fit into IKEA organizational culture. The Swedish furniture chain wants to ensure that it employs only individuals who share its values and appreciate its culture. For this reason, individuals wishing to join IKEA are offered to take an online test which poses a series of 10 work-based scenarios with a choice of actions. The outcome of the test advises applicants if they are likely to ‘fit’ into IKEA organizational culture. 3. Embracing diversity among employees and different ways of doing things. Diversity among the workforce in terms of gender, race, age, ethnicity and sexual orientation is an important element of IKEA corporate culture. As illustrated in table below, there is an adequate level of women representation among across franchisees in floor level workers, as well as, management.   IKEA employee gender diversity in FY21[3] Furthermore, the furniture retailer supports…]]> https://research-methodology.net/ikea-group-report-4/ Mon, 01 Aug 2022 13:43:07 +0000 http://research-methodology.net/?p=7043 IKEA Group owned by Stichting INGKA Foundation is the largest furniture and home appliances manufacturer and retailer in the world. Founded almost eight decades ago in Småland, southern Sweden by Ingvar Kamprad, today IKEA Group has 11 franchisees operating in more than 500 locations in 63 countries (Annual Report, FY21). By the end of FY21 IKEA employed 225000 people worldwide, an increase of 8000 people compared to the previous year. The world’s largest furniture retailer offers nearly 12000 products and develops approximately 2000 new products each year. In FY21 the company generated total operated income of EUR 25.6 billion, an increase of 8.5% compared to the previous year. Net profit for the year amounted to EUR 1.4 billion (Annual Report, FY21). IKEA’s vision is “to create a better everyday life for the many people” and the company follows an extreme cost leadership business strategy along with new product development strategy to realize this vision. International market expansion strategy also represents an important element of IKEA business strategy. Leadership style exercised to manage the home improvement and furnishing chain can be branded as leading by example, as set by the late founder of the business Ingvar Kamprad. Furthermore, the company has integrated the principles of frugality and intangible employee motivation into its leadership practices. The Swedish furniture chain has devised a unique and complicated organizational structure designed to pay minimum taxes. IKEA possesses a number of noteworthy strengths such as market leadership, ownership and efficient application of democratic design concept and solid financial position of the business. At the same time, the global furniture retailer has serious weaknesses as well. These include weak presence in Asia, difficulty to sustain the competitive advantage and the lack of flexibility of the business due to its large size. IKEA Group Report contains the application…]]> https://research-methodology.net/situational-factors-impacting-consumer-buyer-behaviour/ Sun, 17 Jul 2022 00:53:54 +0000 http://research-methodology.net/?p=3559 Generally, factors impacting consumer behaviour include motivations, culture, age and gender, social class, lifecycle, life style, and reference groups etc (Arnould et al., 2002, Agwaral, 2006, Hudson, 2008). Full range of factors impacting consumer behaviour can be divided into psychological, situational, and social categories and each of these categories is discussed in more detail further below. Figure 1. Factors Impacting Consumer Behaviour Psychological and Personal Factors Impacting Consumer Behaviour Psychological factors impacting consumer behaviour include lifestyle, interests, occasions for the use of products and services, benefits sought for the use of products and services etc (Batra and Kazmi, 2008). Personal factors affecting consumer behaviour is related to psychological factors and they include attitudes, motivations, perceptions, occupation ect. Lifestyle is one of the most important consumer variables and an important base for customer segmentation (Majumdar, 2010). Therefore, lifestyle analysis is perceived as one of the critical components of marketing research initiatives. Values and lifestyle systems (VALS) represent framework that divide population into different categories according to psychological factors that are found to be correlated with their purchase behaviour (Assael, 2004). An initial VALS or VALS1 specified eight separate psychographic groups: innovators, survivors, thinkers, makers, achievers, strivers, believers and experiencers. According to VALS framework belonging to each group is associated with specific psychological profile and certain lifestyle. According to Hudson (2008) VALS represents a valuable framework in practical level, because businesses can develop products and services that targets unique needs of individual groups within the framework. However, VALS has been criticised on the grounds of being too abstract and too general and this criticism has caused the development of VALS2 that “classifies people into segments based on whether they control abundant or minimal resources” (Arnould et al., 2002, p.126) Figure 2. VALS2 Figure adapted from Arnould et al. (2002) According to VALS2…]]> https://research-methodology.net/consumer-decision-making-process-a-detailed-analysis/ Sat, 16 Jul 2022 00:13:24 +0000 http://research-methodology.net/?p=3906 The consumer decision making process is complex and involves all the stages from problem recognition to post purchase activities. It has been noted that “the childhood and the human’s development has a crucial impact on personal decision making process” (Sokolowski, 2011, p.1) and the framework of consumer decision making process is found to be addressed by the majority of authors who have addressed the topic of consumer behaviour. All the consumers have their own needs in their daily lives and these needs make them make different decisions. These decisions can be complex depending on the consumer’s opinion about a particular product, evaluating and comparing, selecting and purchasing among the different types of product. Therefore, understanding and realizing the core issue of the process of consumer decision making and utilize the theories in practice is becoming a common view point by many companies and people. There is a common consensus among many researchers and academics that consumer purchasing theory involves a number of different stages. Depending on the different factors and findings, numerous researchers and academics developed their own theories and models over the past years. However, according to Tyagi and Kumar (2004), although these theories vary slightly from each other, they all lead to almost the same theory about the consumer purchasing theory which states that it involves the stages of search and purchase of product or service and the process of evaluation the product or service in the post-purchase product. Five Stage Model initially proposed by Cox et al. (1983) is considered to be one of the most common models of consumer decision making process and it involves five various stages. These stages are: recognition of need or problem, information search, comparing the alternatives, purchase and post-purchase evaluation. This simple model clearly illustrates and explains how the consumers make…]]> https://research-methodology.net/amazon-corporate-social-responsibility-2/ Sun, 27 Mar 2022 00:17:24 +0000 https://research-methodology.net/?p=7240 Since Amazon went public in 1997, the e-commerce giant has been repeatedly criticized for its lack of commitment on corporate social responsibility aspect of the business. Moreover, Amazon’s first sustainability executive Kara Hartnett Hurst was appointed only in August 2014 , a stark proof that CSR aspect of the business has not been paid due attention to for a long period of time.   CSR Programs and Initiatives Amazon Supporting Local Communities In 2020, the e-commerce giant created the Amazon Relief Fund, with a USD25 million initial contribution, focused on supporting its independent delivery service partners and other stakeholders to deal with the negative impact of coronavirus developments on the business. Amazon’s Device Donation Program facilitates the donation of electronic devices and gift cards to schools located near Amazon fulfilment centres throughout the US The company hosts ‘Girls Who Code’ events occasionally to help get more girls interested in coding The e-commerce giant supports local and national nonprofits with cash and product donations.   Amazon Educating and Empowering Workers Amazon Career Choice Program pre-pays 95% of tuition for employees to take courses for in-demand fields, such as airplane mechanic or nursing, regardless of whether the skills are relevant to a career at Amazon. Up to date the program has been attended by more than 10000 employees worldwide. Amazon Virtual Contact Centre, allows Amazon’s customer service employees to work from home. The program “Pay to Quit” offers USD 5000 to warehouse workers who quit to encourage employees to take a moment and think about what they really want.[1] Upskilling 2025 is USD 1,2 billion investment project to provide free skills training to U.S. employees.   Employee Health and Safety at Amazon Amazon employs 6200 safety professionals worldwide In 2020 due to the risk of COVID-19 coronavirus, the company recommended all of global…]]>