A value chain refers to a cycle of activities perfumed by given firms in an industry intending to produce quality products and extend them to the end customers. It involves the design, production, and distribution of the products and other processes that take place from start to end when the product is being created. It helps to give the business holders a view of expenditures and profits to limit expenses or to increase expenses and other related costs (Watson & Lonsdale, 2021). IKEA’s value chain prioritizes people in producing and distributing products at low costs. It emphasizes corporation and coordination between the end customers and the management team to ensure customer satisfaction.
Factors that determine the relative attractiveness of the different stages of IKEA’s value chain
IKEA’s value chain is a framework that helps businesses to identify and develop activities that can result in quality products being distributed to end customers. It involves support activities that give a view of the products to be disposed of in the business, for example, the firm infrastructure, human resources, technology development, and the procurement metaphor (Subhadra & Venkatesh, 2017). IKEA’s value chain is also based on the primary activities that determine what must be done in every aspect of the business, for example, the inbound logistics, operations, outbound logistics, marketing and sales, and the service metaphor in integration. The IKEA inbound logistics gives the business a higher level of value addition, and the business can locate its suppliers in time, monitor production and check product quality (Subhadra & Venkatesh,2017). The IKEA operations determine the costs incurred on human resources and other activities in the different units of production in the different countries with selected production units. This helps the overall IKEA industry to track performance in the production units.
The IKEA outbound logistics is also key in determining the relative attractiveness since it helps to track the distribution of products and costs involved in transportation (Watson & Lonsdale, 2021). The IKEA industry also integrates marketing and sales through its website, application, advertisements, sales promotions, and also other events to broaden the distribution scale of products. IKEA has integrated its service as customer service to improve attractiveness by providing online helplines to people, refunds, and positive feedback to customers in difficult situations (Watson & Lonsdale, 2021). IKEA has also helped businesses discover the different areas of competitive advantage during the planning process, bringing more people to the business. The IKEA value chain implementation helps in strategic decision-making in the business, improving the flow of operations and other activities.
How do these factors relate to the company’s strategic positioning decisions, whether they are decisions that attempt to reposition itself or decisions where a particular strategic objective is not feasible?
The factors determining the relative attractiveness of the different stages of IKEA’s value chain relate to the company’s decisions by determining how the business operates and the aims of the business (Subhadra & Venkatesh, 2017). Whittington’s framework model provides four perspectives that help to understand how these factors relate to the company’s strategic positioning decisions. The classical perspective aims to maximize profits within the business through strategic decision-making in the operations of the business. IKEA has successfully implemented this perspective by keeping costs low through its efficient supply chain management, economies of scale, and flat-pack design, which reduces shipping costs (Watson & Lonsdale, 2021). The evolutionary perspective aims to maximize the marketing procedures of the business and ensure the business’s survival. This perspective is relevant for IKEA, given the highly competitive nature of the furniture industry. IKEA has successfully implemented this perspective by continuously expanding its product line, developing innovative marketing campaigns, and entering new markets. The processual perspective aims to evaluate changes coming into the business all the time according to decisions integrated by executives and employees in a top-down manner. IKEA has successfully implemented this perspective by involving its employees in the decision-making process, promoting innovation and creativity, and constantly seeking customer feedback to improve its product offerings. Lastly, the systemic perspective aims at decisions that govern producing the same desired quality products within the business. IKEA has successfully implemented this perspective by ensuring that its products meet strict quality standards and maintaining a high level of consistency across its different product lines and markets.
Conclusion
Whittington’s framework model has enabled IKEA to make strategic decisions that maximize profitability, and marketing procedures, evaluate changes, and govern quality production. This has increased efficiency, reduced costs, wider market reach, and consistent quality products. The processual and systemic perspectives highlight obstacles to successful value addition in the business. Integrating all these perspectives has repositioned IKEA as a globally recognized low-cost provider of stylish and functional home furnishings.
References
Watson, G. and Lonsdale, C. (eds.). 2021. Managing the Supply Base within Business Networks: A Module Reader. (Chapter 14: Value chain positioning: Strategic and Operational choices). Birmingham, University of Birmingham.
Subhadra, N. and Venkatesh, U, D. 2017. Developing Value Grid Model for Ikea from Value Chain Analysis. URL: https://www.diva-portal.org/smash/get/diva2:1080952/FULLTEXT01.pdf
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