1. home and garden
2. home furnishings

A-Team
Final Presentation
19.05.2008
Our team

Justyna Batko
– Polonia, Warsaw University if Life Sciences

Alejandro Sanchez
– Elda

Miquel Llorca
– Picassent
Plan of presentation
Introduction
 Task 1- basic information
 Task 2- products and services
 Task 3- 10 OM decisions
 Task 4- forecast
 Task 5- e-commerce
 Summary

For someone who do not know what is

Is a privately-held, international home
products retailer that sells flat pack furniture,
accessories, bathrooms and kitchens at retail
stores around the world.

The company, which pioneered flat-pack
design furniture at affordable prices, is now
the world's largest furniture manufacturer.
A-Team project
Task 1.
Basic information
1. VISION
2. BUSINESS SECTOR

Self-assembly furniture.
3. SIZE

Employees: 118,000

Visitors:

Revenue:
4. LOCATION

World map:

Country’s first store:
- 1980 -> Spain: Gran Canaria (Las Palmas)
- 1991 -> Poland: Platan
5. STRUCTURE
6. HISTORY
Begining point


At the age of five Ingvar Kamprad starts selling
matches to his nearby neighbours and by the time
he is seven, he starts selling further afield, using his
bicycle.
He finds that he can buy matches in bulk cheaply in
Stockholm and re-sell them individually at a very low
price but still make a good profit. From matches he
expands to selling flower seeds, greeting cards,
Christmas tree decorations, and later pencils and
ball-point pens.
Concept beginning

Ingvar's innovative idea was to offer home
furnishing products of good function and
design at prices much lower than
competitors by using simple cost-cutting
solutions that did not affect the quality of
products.

The name IKEA comes from the initials of
Ingvar Kamprad, I and K, plus the first letters of
Elmtaryd and Agunnaryd, which are the names
of the farm and village where he grew up.
1940s – 1950s

The roots of a furniture dealer. Ingvar Kamprad is
entrepreneurial in developing IKEA into a furniture
retailer. This period sees the exploration of
furniture design, self assembly, advertising, the
use of a catalogue and a showroom to reach
the many people.
1960s – 1970s

The IKEA concept starts to take shape. New IKEA
stores open and hero products are developed such
as POÄNG and BILLY bookcase. It is a time where
concept takes shape and is documented in Ingvar
Kamprad's The Testament of a Furniture Dealer.
1980s

IKEA expands dramatically into new markets such
as USA, Italy, France and the UK. More IKEA
classics arrive such as KLIPPAN, LACK and
MOMENT. IKEA begins to take the form of today's
modern IKEA.
1990s

IKEA grows even more. Children's IKEA is
introduced and the focus is on home furnishing
solutions to meet the needs of families with
children. The IKEA Group is formed and
responsibility for people and the environment is seen
as a prerequisite for doing good business.
2000s

IKEA expands into even more markets such as
Japan and Russia. Everything for the bedroom
and kitchen is explored and presented in coordinated furnishing solutions. This period also
sees the successes of several partnerships
regarding social and environmental projects.
A-Team project
Task 2.
Products and services
How the bussines runs?

The business idea is based on a partnership with the customer:
– „we do our part, which starts with our designers working with
manufacturers to find smart ways to make furniture using
existing production processes”
– „then our buyers look all over the world for good suppliers
with the most suitable raw materials”
– „we buy in bulk, on a global scale, so that we can get the
best deals, and you can get the lowest price”
Products

modern, flexible adaptable home furnishings, scalable both to
smaller homes and dwellings as well as large houses

much of IKEA's furniture is designed to be assembled by the
consumer

„democratic design” - the company applies an integrated
approach to manufacturing and design

the company implements economies of scale, capturing material
streams and creating manufacturing processes that hold costs
and resource use down
The price tag first

The fundamental idea is to combine an extremely low price with
beautiful design and high quality.

With the low price in mind, our designers began by reviewing
the whole production process, including materials used,
logistics, and labour and transport costs.

By working together with skilled manufacturers, IKEA designers
find ways to get the most out of a raw material. We are
constantly looking for smart solutions to meet our customers
needs.
Flat packing saves shipping cost

Our flat-packs and our customers' willingness to assemble
products themselves enable us to reduce labour, shipping and
storage costs.

IKEA designs furniture so that it can be packed unassembled.
Ultimately, this means that we are able to offer our customers
products at low prices.
New product - HAMMOCK

Gentle swinging helps both your body and mind to relax.

Assembled size
– Length: 220 cm
– Width: 140 cm

good to know
Max. load 250 kg when the hammock is hanging in a load-bearing construction.
Suspension fittings and cord included.
Seats 2.

care instructions
Hand wash, warm (40°C).
Do not bleach.
Iron, high temperature.
Do not dryclean.
Do not tumble dry.

product description & measurements
Fabric: 100% cotton
Rope: 100% polyester
Ring: Steel, Galvanised
The house of quality
A-Team project
Task 3.
10 OM decissions
10 Operations Managemnt Decissions










Goods & service design
Quality
Process & capacity design
Location selection
Layout design
Human resource and job design
Supply-chain management
Inventory
Scheduling
Maintenance
Goods and service design


It is simple and straightforward.
Products are hard-wearing and easy to live with.
– They reflect and facilitate an easy, natural and unconstrained
way of life.
– They express form, and are colourful and cheerful.
– And they appeal to the young at heart of all ages.
Quality



IKEA products have the label "Design and Quality,
IKEA of Sweden" and are sold in IKEA stores.
KEA works to ensure that products and materials are
adapted to minimise any negative impact on the
environment, and are safe for customers from a
health perspective.
IKEA products must be manufactured under
acceptable working conditions by suppliers who take
responsibility for the environment.
Process and capacity design

It starts with focusing on what's important. Will an
expensive finish on the back of a shelf or under a
table-top improve the function? Absolutely not. So
IKEA designers do not do it, because a product is of
no use to the customer if it is not affordable.
 IKEA designers design every IKEA product starting
with a functional need and a price. Then they use
their vast knowledge of innovative, low-cost
manufacturing processes to create functional
products, often co-ordinated in style. Then large
volumes are purchased to push prices down even
further.
Location selection


The IKEA store is where the IKEA range is sold.
It is also where the range comes to life.
Layout design

Inside the IKEA store, there are hundreds of
inspirational displays
– realistic room settings
– real-life homes
– product combinations that provide fresh ideas and know-how
on contemporary interior design


There are up to 10,000 different products offered in
some IKEA stores.
There are many new products introduced throughout
the year in the IKEA store.
Human resources and job design

118.000 co-workers spread across functions
–
–
–
–
–
–
–
purchasing
distribution
whole-sale
range
retail
support functions
the Swedwood Group
Supply-chain management





every product start with functional need and a price
innovative, low-cost manufacturing processes to
create functional products, often co-ordinated in style
designed to be transported in flat packs and
assembled at the customer's home
this lowers the price by minimising transportation and
storage costs
IKEA's code of conduct defines what suppliers can
expect from IKEA and specifies what IKEA requires
from its suppliers.
Inventory



IKEA has 45 trading service offices in 31 countries
this allows company to be close to suppliers - about
1,350 in 50 countries
They can monitor production, test new ideas,
negotiate prices and check quality while keeping an
eye on social and working conditions.
Top five purchasing countries

China 22%, Poland 16%, Italy 8%, Sweden 6% and Germany 6%
Scheduling



IKEA has 31 distribution centres in 16 countries.
Using flat packs, transporting goods where possible
by rail and sea, and utilising fuel-saving techniques
allows company to be cost-effective and
environmentally friendly.
IKEA provide production and design for one year
production of one line of products is done
simultaneously with the research and design process
of new products
Maintanance


they pay much attention to be in touch with
customers and their needs
catalogue serves as a permanent invitation to the
IKEA store
– constant inspiration
– serves as an invaluable source of product information
– contains details on how to get to the nearest store and its
opening hours
A-Team project
Task 4.
Forecasting
Steps in forecasting



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Determine the use of the forecast
Select the items to be forecast
Determine the time horizon of the forecast
Select the forecasting model(s)
Gather the data
Make the forecast
Validate and implement results
1. USE OF THE FORECAST
We use forecasting in order to predict
which i going to be the impact of our
new good in the global market.
 Then forecasting can help us to know if
this new good is going to be profitable
or not.

2. ITEM
3. TIME HORIZON

SHORT-TERM:
- Marketing.
 MEDIUM-TERM:
- Increase our budget.
 LONG-TERM:
- Using this new good to expand our
company in a new work field.
4. FORECASTING MODELS
Qualitative Methods: We use our
experience to predict the market
devolpment.
 Quantitative Methods: When we have
data, we can use mathematical
techniques to predict the market
development.

Quantitative Forecasting Methods

We have done a study of the last 8
years using these two methods:
- Moving average.
- Exponentical smoothing.
5. DATA
YEAR
2000
2001
2002
2003
2004
2005
2006
2007
GAIN (million €)
1100
1000
1150
1200
1250
1280
1300
1400
6. FORECAST
7. RESULTS
1600
1400
1200
1000
800
600
400
200
0
GAIN
Year
2008
2007
2006
2005
2004
2003
2002
2001
MOVING AVERAGE
(n=3)
2000
Million euros
FORECASTING
EXPONENTIAL
SMOOTHING (a=
0.5)
8. CONCLUTIONS

The most important conclution is that
according to our results our company is
not going to increase its benefits, but
proably it will do it next years, because
despite of forecasting give us lower
values than real values, we achieve
very high benefits.
A-Team project
Task 5.
Ecommerce

fully interactive room images
– users can engage with the images and see
tips and ideas for a variety of products and
everyday situations
“The trick was to develop a user interface
that balances efficiency and discovery”

with an IKEA step-by-step guide
shopping are easier
Payment Methods
Ask Anna

the automated customer service chat
character driven by artificial intelligence

Anna has proven to be very effective in
providing 24/7 support and advice to
millions of IKEA customers worldwide,
reducing support costs
Summary

wide range of well designed, functional home
furnishing products at prices so low that as many
people as possible will be able to afford them
Sources
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www.ikea-group.ikea.com
www.ikea.com
www.wikipedia.org
www.franchisor.ikea.com
"IKEA: Flat-pack accounting", The Economist, 200605-11
Questions?