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Michael Porter’s Ideas on a Sound Strategy
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Create a Better Everyday Life for the Majority of
People
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Ikea’s Value PropositionGood design and function
at a low priceTarget customer: person with a thin
walletDo not expect to meet the needs of all
furniture buyers
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Concept began in 1943
First retail store:1958Began as a mail order
businessSwedish market was primarily hand-me-
downsSwedish retail furniture stores locked Ikea
out of supply Swedish prices for furniture were
highIkea began designing and sourcing its own
furniture
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Ikea Organizational StyleInformal work

atmosphereNo status perksSimplicity and
attention to detailVery cost consciousUse common
sense
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An Example of Cost Consciousness and Attention
to Detail: the Bang mug1996 – create a mug that
could be sold for 50¢Avoid red pigment – most
expensive colorDesign to maximize number of