Well done ECONOMIC LOGIC To continue to cannabilise their own new product

Well done economic logic to continue to cannabilise

  • Murdoch University
  • BUS 317
  • Essay
  • srhna
  • 33
  • 86% (7) 6 out of 7 people found this document helpful

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Well done. ECONOMIC LOGIC To continue to cannabilise their own new product development within the brand in order to maintain the vertical integration. Furthermore, being at a low pricing and better raw materials to sustain in competitive advantages. To be more transparent on the IKEA brand, Interogo has sold Inter IKEA intellectual property assets of it trademark for $11 billion (Fast Company.com, 2013). Therefore, IKEA can invest this amount of captial to reenginer their value chain of their inbound logistics to focus more on the techology factor to reduce the cost in order to remain the low price and reach to bigger market. Activities Budgeted Cost inccured Research and Development S$30 million Patent, website fee, legal fee and such S$3 million Labor cost for delivery of online products S$5million Increase of employees to support online platform S$4 million Reputation cost and brand image cost if customers are not satisfied S$15million Though it is inveitable that cost will be inccurred in the initial stage, with the creation of platform for virtual purchases and interactive website to serve customers, there will be an increase of sales as IKEA will now reach a wider segment of customers.
Page | 24 DIFFERENTIATORS Through R&D and availability of products, resources and services in different country to manufacture innovative and creative products to be sold in the market and exclusively on online platform. More opportunity to understand different market and demands from customers thus being able to respond faster as compare to companies that is based locally eg, in china. Leveraging core competency and reducing of cost due to even larger mass production. International Company has business culture and objectives focusing on learning, sharing and reviewing on work within employees that in return improve efficiency and quality of work IKEA should also invest into busniess diversification such as operating interior designer firm as they have the capability of their exsiting designers and products to cater to the general public thus not wasting the competency that they have but to divert it in other aspect of business development for IKEA. All the above mentioned are factors that will allow IKEA to provide better value to the customers. STAGING The implementation for the next 10 years, the focus will be on strengthening IKEA online platform and concurrently promoting growth in the China market in short term and is to expand the market in Asia Pacific, especially China, to gain brand and market presence and to pursue international expansion . Major focus will be on: 1. IKEA online to be rank at major search engine 2. Understand China market and their needs to sustain 3. IKEA to be found every where online 4. Incorporating online platform and China market to increase sales 5. Expand Asian Pacific market 6. Expansion through improved and updated vertical intergration