Case let 1
National Competitive Advantage of IKEA Group, a Swedish company founded in 1943 with its headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and furniture. It is the world's largest retailer, which specializes, in stylish but inexpensive Scandinavian designed furniture. At the end of 2005 the IKEA Group of Companies had a total of 175 stores in 31 countries. In addition there are 19 IKEA stores owned and run by franchisees, outside the IKEA store around the world.
In Sweden, nature and a home both play a big part in people's life. In fact one of the best ways to describe the Swedish home furnishing style is to describe nature-full of light and fresh air, yet restrained and unpretentious.
To match up the artist Carl and Karin Larsson combined classical influences with warmer Swedish folk styles .They created a model of Swedish home furnishing design that today enjoys world-wide renown. In the 1950s the styles of modernism and functionalism developed at the same time as Sweden established a society founded on social equality .The IKEA product range -The IKEA product range- modern but not trendy, functional yet attractive, human-centered and child friendly - carries on these various Swedish home furnishing traditions.
The IKEA Concept, like lots founder, was born in Samaland. This is a part of Southern Sweden where the soil is thin and poor. The people are famous for working hard, living on small means and using their heads to make the best possible use of the limited resources they have. This way of doing things is at the heart of the IKEA approach to keeping prices low.
IKEA was founded when Sweden was fast becoming an example of the caring society, where rich and poor alike were well looked after. This is also a theme that fits well with the IKEA vision. In order to give the many people a better everyday life, IKEA asks the customer to work as a partner. The product range is child-friendly and covers the need of the whole family, young and old. So together we can a better everyday life for everyone.
In addition to working about around 1,800 different suppliers across the world, IKEA produces many of its own products through sawmills and factories in the IKEA industrial group, Swedwood.
Swedwood also has a duty to transfer knowledge to other suppliers, for example by educating them in issues such as efficiency, quality and environmental work.
Swedwood has 35 industrial units in 11 countries.
Purchasing: IKEA has 42 Trading Service Offices (TSO's) in 33 countries. Proximity to their suppliers is the key to rational, long term cooperation. That's why TSO co-workers visit suppliers regularly to monitor production, test new ideas, negotiate prices and carry out quality audits and inspection.
Distribution: The route from supplier to customer must be as direct, cost- effective and environmentally friendly as possible. Flat packs are important aspects of this work: eliminating wasted space means we can transport and store goods more efficiently. Since efficient distribution plays a key role in the work of creating the low price, goods routing and logistics are a focus for constant development.
The business Idea: The IKEA business idea is to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them. And still have many left! The company targets the customer who is looking for value and is willing to do a little bit of work serving themselves, transporting the items home and assembling the furniture for a better price. The typical IKEA customer is young low to middle income family.
The Competition Advantage: The competition advantage strategy of IKEA's product is reflected through IKEA's success in the real industry. It can be attributed to its vast experience in the retail market, product differentiation, and cost leadership.
IKEA Product Differentiation: A wide product range The IKEA product range is wide and versatile in several ways. First, it's versatile in function. Because IKEA think customer, shouldn't have to run from one small specialty shop to another to furnish their home, IKEA gather plants, living room furnishings, toys , frying pans, whole kitchens i.e.; everything which in a functional way helps to build a home - in one place , at IKEA stores.
Second, it's wide in style. The romantic at heart will find choices just as many as the minimalist at IKEA. But There is only one thing IKEA don't have, and that is, the far- out or the over-decorated. They only have what helps build a home that has room for good living.
Third, by being coordinated, the range is wide in function and style at the same time. No matter which style you prefer, there's an armchair that goes with the bookcase that goes with the new extending table that goes with the armchair. So their range is wide in a variety of ways.
Cost Leadership: A wide range with good form and function is only half the story. Affordability has a part to play - the largest part. A wide range with good form and function is only half the story. Affordability has a part to play- the largest part. And the joy of being able to own it without having to forsake everything else. And the customers help, too, by choosing the furniture, getting it at the warehouse, transporting it home and assembling it themselves , to keep the price low.
Questions
1. Do you think that IKEA has been successful to utilize Porter's Five force analysis? Give reasons.
2. Where do you think can IKEA improve?
Case let 2
For ITC Ltd., 2007-2008 continued to be year of quiet growth. Just more launches in its relatively new segment of non-cigarettes fast moving consumer goods, and solid growth. As in the past few years, ITC's non-cigarettes businesses continued to grow at a scorching pace, accounting for a bigger share of overall revenues. "The non-cigarette portfolio grew by 37.6% during 2006-2007 and accounted during that year for 52.3% of the company's net turnover." An ITC spokesman said. In fact, over the first three quarters of 2007-08, ITC's non-cigarette FMCG businesses have grown by 48% on the same period last year, "Indicating that its plans for increasing market share and standing are succeeding."
The branded packaged foods business continued to expand rapidly, with the focus on snacks range Bingo. The biscuit category continued its growth momentum with the 'Sun feast' range of biscuits launching 'Coconut' and 'Nice' variants and the addition of ' Sunfeast BenneVita Flaxseed' biscuits. Aashirwad atta and kitchen ingredients retained their top slots at the national level, with the spices category adding an organic range. In the confectionery category which grew by 38% in the third quarter, ITC cited AC Nielsen data it claims market leader status in throat lozenges. Instant mixes and pasta powdered the sales of its ready to eat foods under the kitchens of India and Aashirwad brands.
In Lifestyle apparel, ITC launched Miss Players fashion wear for young women to compliment its range for men.
Overall, the biscuit category grew by 58% during the last quarter, ready to eat foods under the kitchens of India and Aashirwad brands by63% and the lifestyle business by 26%.
For the Industry, the most significant initiative to watch the ITC foray into premium personal care products with its Fiama Di Wills range of shampoos , conditioners, shower gels, and soaps. In the popular segment, ITC has launched a range of soaps and shampoos under the brand name Superia.
Ravi Naware, Chief executive of ITC's food business was quoted recently as saying that the business will make a positive contribution to ITC's bottomline in the next two to three years.
In hotels, ITC's Fortune Park brand was making the news during the year, with a rapid rollout of first class business hotels.
In the agri-business segment, the e-choupal network is trying out a pilot in retailing fresh fruits and vegetables. The e-choupals have already specialized in feeding ITC high quality wheat and potato, among other commodities grown by farmers with help from e-choupal.
Questions:
Q1. Do you think the progress of ITC Ltd. is realistic?
Q2. After analyzing the above case, do you think every company should aim at cost leadership with high quality product?
Section II
1. What are the basic principles of Organizational structure? What are the types of Organizational structures?
2. Though BCG matrix can be very helpful in forcing decisions in managing a portfolio of products, it can be employed as a sole men of determining strategies for a portfolio of the product. Do you agree with this statement or not? Why or why not?
Write a paper including all above Questions and references, Word Limit: 1200-1500