1. business and industrial

Team CS
Ľubka
Michael
Anja
Emil
Entrepreneurship and innovation
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many companies have their standard business model that most
participants follow
a strong tendency to follow these standards at the same time is
opening space for new entrants which have new idea about business
model which revolutionize way how products are sold
practice is defined as BUSINESS MODEL INOVATION
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Is a Swedish furniture company registered in the Netherlands,
founded by Ingvar Kamprad
• known for it’s bright furniture and approach of requiring form their customers to assemble
their furniture for themselves
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As of October 2011, IKEA owns and operates 332 stores in 38 countries, In fiscal
year 2010, US$23.1 billion worth of goods were sold, a total that represented a 7.7
percent increase over 2009.
There were over 470 million visitors to IKEA's websites in the year from
September 2007 to September 2008
A July 2013 media report speculated that IKEA is the world's largest
consumer of wood after a finding that the company uses 1% of the
Earth's wood supply
Traditional furniture
manufacturers value
chain:
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design
parts
assembly
ship and warehouse
sale, retail or catalogue
IKEA’s value chain:
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design
Parts - outsourced
Assembly - outsourced
ship and warehouse
sale, retail or catalogue
Delivery - customers
• recognition
of the furniture value chains gives IKEA an advantages:
1. by outsourcing it’s manufacture of the parts it doesn’t have to incur cost of
maintaining manufacturing facilities
2. IKEA basically outsources the assembly and delivery to their customers
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approach provides substantial cost savings for IKEA and also
allows IKEA to target customers that is looking for a good value and
doesn’t mind assembling
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firm’s sales increase 21.7 % from 2007 to 2008
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Pro Flowers, later called "Provide Commerce", was started by Jared Polis in 1998.
Provide Commerce also offers fruit, sweets and gift baskets direct from the
supplier through its Gourmet Food Business Unit, but they also sell and ship fresh
flowers for all occasions
Like IKEA Pro Flowers also created competitive advantage by reconfiguring
industry’s value chain
In February 2006 Liberty Media Corporation purchased Provide Commerce, Inc. for
a sum of $477 million in cash, at which point Provide Commerce became a wholly
owned subsidiary of Liberty Media.
today, ProFlowers is a major flower retailer in the United States
Tradiotional value
chain:
PRO FLOWERS
recounfigured value
chain:
• grower
• grower
• importer
• wholeslaer
• delivery via UPS or
FedEx
• retailer
• customer
• customer
The way Pro Flowers made it’s approach work is by contracting with
global network of flower growers and supliers
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when an order is received by their website, appropriated flower grower is
filling the order and shipping the flowers via UPS and Fed Ex
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This approach results in a considerable savings for the Pro Flowers by
eliminating steps in traditional flower value chain
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Their innovation is crucial for the business where the merchandise needs
to be fresh, so changing the traditional value chain beside cost savings,
they made their service much better
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Do you think that IKEA and Pro Flowers have plans that effectively describe
what the firm offer to customers. How could these firm’s models be
changed so they would be more appealing?
Both firm’s by changing traditional value chain in their industries at the same
time improved their service
Therefore they have straightforward plan which is describing to their customers
what they can get
IKEA is offering stylish, modern furniture for a competitive price for the
customers who don’t mind assembling that furniture. Furniture have good quality
with possibility to buy it online and later change some parts of the furniture
(color of the kitchen cupboard, glass board of the table etc.)
Pro Flowers are providing fresh flowers with wide range of choice for every
occasion directly to your home(service cannot be better)
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Do you think that IKEA and Pro Flowers have plans that effectively
describe what the firm offer to customers. How could these firm’s
models be changed so they would be more appealing?
These models are revolutionary by itself and by changing the traditional value chain
both firms made them more appealing for the customers and for them
At the same time both models made the service for the customers much easier and
simple as it has to be
Changing the models these services can only be more complicated with a possibility
to change the model which would look as an traditional one
Still, business environment and consumer behavior have tendency to change so it is
important to follow them and adopt business model to make the perfect business fit
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What is IKEA’s core competency? What are it’s strategic assets? Is there
anything about IKEAS business model that makes what the company is doing
hard to replicate?
IKEA dose not manufacture its own products, but works through a complex network of
suppliers around the world to help company maintain its low-cost position. (1,800 suppliers
in 55 countries.)
By providing the manufacturers with technical and financial assistance, IKEA establishes
durable partnerships with furniture producers and suppliers. To secure suppliers and help
suppliers develop, IKEA also has launched partnerships as joint owners in several countries
including Poland, Russia, and China
In addition to using high volume runs to cut costs, IKEA always believed that costs are kept
under control starting at the design level of the value-added chain. IKEA designers work
closely with suppliers to build savings into the products by designing products that can be
produced at a low cost. It sells most of its furniture as kits for customers to take home and
assemble themselves
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What is IKEA’s core competency? What are it’s strategic assets? Is
there anything about IKEAS business model that makes what the
company is doing hard to replicate?
Designing and innovation..!IKEA's pricing, and catering to the local populous
(race, income bracket, etc) all contribute to the success of IKEA.
Attract people of all economic brackets but their key competency lies in their
appeal with the lower-middle class communities.
IKEA’s business model adopted some other companies(Seamens, B&Q, John
Lewis, Argos) but for all of them it is hard to be successful because in every
industry the most successful player would be the one who invented a new
value chain first.
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Supose that you are CEO of Pro Flowers and you have received an e-mail of a
highly reputable rose grower who wants to know which business you adopted
and why she has to part of it
Pro Flowers are the first company which has adopted unique business
model, and we are pioneer in our industry.
By adopting our business model we succeeded to improve our service by
offering only fresh and wide range of roses to each home within a
country.
We are choosing only the best rose growers in a country and we would
be delighted to do business with you.
By offering our service we would promote your product- roses and
together we could make perfect business fit.
We would like to remind you that most of the reputable rose growers are
doing business with us and each day we are stronger and stronger.
4.
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How does Pro Flower business
models motivate its customers and
partners to participate in its
business
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Contract growers are highly
motivated because Pro Flowers has
become major flower retailer within
US so their market share is big
From the same reason Pro Flower
can only make their business with the
reputable grower which has sufficient
volume of stock
Thais is the reason why for the Pro
Flowers is much easier to be involved
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in a business with a major rose
growers
GENERALY attraction for the partners
would be 9 of 10
For the customers it is even more
simple
PF is providing only fresh flowers to
their customers directly to their
home and it is hard to even imagine
better service then theirs
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Which industries, other then furniture and flowers, are ripe for
business model innovation ?
In almost every business there is an opportunity to adopt business model by
cutting cost or improving service, so opportunities are endles
Change of a business model is most welcomed in industries with a
complicated or complex value chain as retailing, shipping, logistics or trade
where business is dependent on many contractors or partners
The more business is simple the less it’s has a need for changing the business
model
6.
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Why do you think IKEA hasn’t grown more rapidly?
Not every customer want to assemble and to deliver furniture by them
self
There are furniture manufacturers which are cheaper then IKEA
In world standards IKEA is not so spread around the globe (1’ store in
Latin America in Dominican Republic, failure in Japan)
In the beginning they had to adopt their strategies(Japan) and even
now they are changing their business model and policies after failures
(U.K. shipping scandal)