Operations Management (IKEA) 1. Describe the customers that IKEA attempts to appeal to IKEA aims to appeal to pre-family and the family stage. Most of the potential consumers in this stage of life desire quality furniture but affordable as a good number of them have started to earn wages at this stage (IKEA, 2011). Additionally, they have a great amount of startup and family expenditure and they lack much space to stay in so they need small furniture to fill the available space. The company’s shops comprise of room settings and real life homes which options on how one can organize and decorate the home or room using its products. Moreover, families are able to acquire what they need. 2. In a country where products keep getting more expensive, explain how IKEA can keep selling them more cheaply. IKEA’s product employs a strategy that is controlled by the product strategy council. The council has its goals focused on client tendencies that may come up. Through placing their price points at a range of 30 to 50 percent below their market rivals, IKEA’s strategy gives them the ability to see their vision realized of providing their clients with affordable prices, and great furniture. Getting involved with closer to 1800 suppliers in over 50 states, an integration of high quality raw materials with low quality materials, and varied redesigns of products that will enable one to optimize the products (Dzierzak, 2008, 21; Leand, 2008, 7). These among other issues creates an opportunity for IKEA to be on the fore front in the furniture industry. Currently, clients have a great influence on companies due to their several options for furniture. Through giving keen consideration to cost efficiency, IKEA handles to most of their current clients that focused on acquiring bargains. The company should focus on offering a wide range of products of home furniture with appealing designs at prices that clients can acquire. The total product range of products comprised of approximately 10000 varied products to select from, making it possible for them to appeal to the bigger public (IKEA, 2011; Wei, 2010). The several redesigning of the product that occurs in IKEA are effective and focused on getting a bigger product range. The fact the product strategies are adapting to new client needs and offers an extensive value to the clients through provision of affordable cost for the quality furniture. 3. Describe IKEA’s process for a developing a new product. IKEA goes on to work to elevate the cost of its products without sacrificing client’s expectations. The process of product development is: a. Pick a price “ product development starts with targeting the in-store price. Through this, the suppliers are to be contacted to assist the goal (Keener, 2011, 36). Materials, colors and designs will add value to production price and have to be taken into consideration. b. Choose a manufacturer “ IKEA relates to a number of manufacturers and products are in most cases advanced with close association so as to offer an effective answer that is able to reduce production costs. IKEA’s objective is to create a comfortable life for everybody and the way that the products are made is vital as the final product the company promotes health and safety. c. Design the product “ after the price to sell and the manufacturer are known, IKEA applies internal competition to select the product design that will be used in production. The product has to be one that will offer high functionality at the most affordable cost. d. Ship it “ distribution and logistics are necessary aspects of the low price puzzle. Palettes of products are transported with limited air and heavy products are made to be flat for shipping. The shipping costs can have a great impact on the design just as in the Trofemug that is designed to fit several mugs on a palette (Dzierzak, 2008, 22). IKEA is growing its distribution areas closer to ports and huge trucks rail paths as the sourcing in China develops. e. Sell it “ IKEA prints 110 million copies of catalog in varied languages (Katie, 2010). The affordable cost model shows that shopping is self-service. Clients are inspired from what they see in the store displays that are set up. They are well created for IKEA furniture that make it possible for people to stay well. Information kiosks and other items are displayed, though clients are not met by the salespeople (Anonymous, 2011, 23; Wei, 2010). Clients are called upon to acquire furniture, load it into their vehicles and assemble it to their homes. 4. What are the additional features of the IKEA concept that contribute to creating exceptional value for customers? Manufacturing and distribution expertise additionally add to the exceptional value for clients. Clients are called upon by IKEA to manufacture products in stated conditions. Clients desire to feel good regarding their goods they acquire. IKEA has come up with a code of conduct managing how one works and the environmental consciousness with distributors (Keener, 2011, 36). The close connection with IKEA creates a safe setting for workers, it similarly aims to reduce the cost of production as manufacturers share vital decisions with the company. The most effective model used by IKEA is in distribution œWe don’t want to pay to ship air. IKEA has designed mugs, sucked air from pillows and applied flat packing to acquire 65 percent target for the shipping containers (IKEA, 2011). It looks to elevate this to 75 percent with ingenuity. Distribution for IKEA is comprised of catalogue. IKEA prints over 110 million copies annually in several languages. Clients are able to acquire products on the internet, though they will find the selections in the catalogue or going to the store (Katie, 2010). IKEA’s stores are several and believes that time used in the store will make purchases possible.Due to this, stores are able to acquire child-care and restaurants (Dzierzak, 2008, 20). In the China market, shoppers are common in taking naps in the beds and go to the restaurants to browse and eat. 5. What would be important criteria for selecting a site for an IKEA store? IKEA locations have to have a good amount of space for the model that involves rooms for living spaces for bedrooms, baths and other rooms. Additionally, parts for lighting and the furniture that appears like a warehouse pick-up (Leand, 2008, 7). Restaurants and child-care are involved. Moreover the whole front of the store have spaces to drive up and load the cars with purchases, all of them flattened. Just as how IKEA targeted China as growth sector, IKEA is after India for new locations. IKEA develops about $500 million in product annually in India with a focus to increase the business operations (IKEA, 2011). IKEA sees this as a way to grow since the economy is on the upward trend and the desire for social projects that is in line with the brand. References Anonymous (2011). Timbuk2 hires sales director to boost its international sales. Bicycle Retailer and Industry News, 20(4), 23. Retrieved on December 9th 2013 from ABI/INFORM Trade & Industry. Dzierzak, L. (2008). Clicking With Consumers. SGB, 41(9), 20-22. IKEA (2011). IKEA Group Announces Strong Financial Growth For Fiscal Year 2010 with Net Profit Up 6.1% at ‚¬2.7 Billion. General new press release. Retrieved on December 9th 2013 from 0_Press_Release Katie, B. (2010). IKEA’s catalogue escapes the page. Strategy, 55. Keener, R. (2011). WHAT I READ. Bicycle Retailer and Industry News, 20(2), 36. Leand, J. (2008). Timbuk2 Rolls Out New Travel Luggage Line. SGB, 41(8), 7. Wei, M. (2010). In IKEA’s China Stores, Loitering is Encouraged. Retrieved on December 9th 2013 from Businessweek.com