Volume commitments IKEA believes in creating long term partnerships with its

Volume commitments ikea believes in creating long

This preview shows page 4 - 6 out of 11 pages.

Volume commitments IKEA believes in creating long-term partnerships with its suppliers in order to achieve this. By committing to buying large volumes over a number of years IKEA can negotiate lower prices. This also benefits the suppliers because they enjoy the greater security of having guaranteed orders. Economies of scale for instance, bulk buying at cheaper unit costs. Sourcing materials close to the supply chain to reduce transport costs. Delivering products directly from the supplier to IKEA stores. This slashes handling costs, reduces road miles and lowers the carbon footprint. Using new technologies for example, IKEA's OGLA chair has been in its range since 1980. The chair has changed through the years to reduce the amount of raw materials needed. Opportunities A business uses its strengths to take advantage of the opportunities that arise. IKEA believes that its environmentally focused business conduct will result in good returns even in a price sensitive market. As the company states: 'There is a true business potential for IKEA in providing solutions that enable customers to live a more sustainable life at home. IKEA is developing effective solutions for customers in order to support them recycling or reusing used products, aiming at no products ending up at landfill and the recycled materials used in producing new IKEA products.' Some of the opportunities that IKEA takes advantage of through its sustainability agenda are: a growing demand for greener products a growing demand for low priced products. Trends in the current financial climate may result in consumers trading down from more expensive stores demand for reduced water usage and lower carbon footprints. IKEA has a number of areas of focus to its work with sustainability, each of which it supports in various ways: 1. Solutions for a sustainable life at home IKEA gives online tips and ideas for this.
Image of page 4
5 2. Sustainable use of resources. IKEA aims for zero waste to landfill, wastewater treatment and programs to reduce its use of water. 3. Reducing carbon footprint. IKEA aims to reduce energy use, use more renewable energy, cut its use of air transport and reduce packaging. Its green transport initiative includes an aim to reduce business flights by 20% in 2010 and 60% by 2015. 4. Developing social responsibility. IKEA's policy includes support for charities such as the World Wildlife Fund, UNICEF and Save the Children. 5. Being open with all its stakeholders. This involves building trust through good communication with consumers, co-workers, key opinion formers and the press. Being sustainable is a central part of IKEA's image. Weaknesses and threats Weaknesses IKEA has to acknowledge its weaknesses in order to improve and manage them. This can play a key role in helping it to set objectives and develop new strategies. IKEA's weaknesses may include: The size and scale of its global business. This could make it hard to control standards and quality. Some countries where IKEA products are made do not implement the legislation
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 11 pages?

  • Spring '14
  • Cameron,Michaelle
  • Marketing

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture