MBA_SM_2012_Spring_Oh Kwang Ho_IKEA&HermanMiller_20120120

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IKEA & HermanMiller:

IKEA & HermanMiller Oh Kwang Ho [117065] 2012. 01. 20

Contents:

Comparison IKEA & HermanMiller A nswers on questions in video case KOREA industry analysis Conclusion Contents I II III IV Overview mission, vision, value and business strategies

가. Overview of IKEA:

Comparison IKEA & HermanMiller I 가 . Overview of IKEA 나 . Vision of IKEA 다 . Mission of IKEA 라 . Company Value 마 . Strategies of IKEA

가. Overview of IKEA:

가 . Overview of IKEA Type Company Motto Concept of IKEA Location Founder Low-cost home products self assemble furniture, appliances and home accessories Älmhult , Småland , Sweden (1943) “ Affordable Solutions for Better Living” Ingvar Kamprad IKEA has always tried to do more with less. This goes hand in hand with environmental work-to-use resources in an economical and careful way Employees 127,000 (2010) in 44 countriesManias 1 . IKEA

나. Vision of IKEA:

나 . Vision of IKEA The IKEA vision came from innovative idea of the founder named Ingvar Kamprad , which 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 Creating a better everyday life for the many people

다. Mission of IKEA:

다 . Mission of IKEA Offering a 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. The IKEA product range focuses on good design and function at a low price. It offers home furnishing solutions for every room in the home. Low prices are the cornerstone of the IKEA vision and our business idea. Low prices make well-designed, functional home furnishings available to everyone. T he IKEA way is to maximize the use of raw materials in order to fulfill people's needs and preferences by offering quality products at an affordable price. Product range Low prices A better everyday life

라. Company Value:

라 . Company Value Design Good design & function, but low price 1.IKEA product starting with a functional need and a price 2.low-cost manufacturing processes Function IKEA designers are always seeking new ways to improve people's lives - without emptying their wallets. Low price 1.IKEA keeps prices low by using production capabilities . 2. IKEA customers self service like assembling Trends come and go, but combining a low price with good design and function never goes out of style.

마. Strategies of IKEA:

마 . Strategies of IKEA IKEA is constantly trying to do everything a little better, a little simpler, more efficiently and always cost- ffectively All activities with low price Self service model Branded experience Internal production efficiencies 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. Branded experience is ultimate goal: customers will be loyal to the brand. Focus on quality of furniture but also the value furniture brings to everyday use for the customer Suppliers are usually located in low cost nations and produce highly standardized products intended for the global market.: globally integrate operations, effective combination of low cost Good design & function, but low price

PowerPoint Presentation:

가 . Overview of HermanMiller 2 . HermanMiller Type Company Motto Concept of IKEA Location Founder Office furniture, equipment, modern furniture for the home. Zeeland, Michigan, USA “Our journey towards a better world around you” DJ De Pree (1923) Herman Miller, Inc., works for a better world around you. The company do this by designing furnishings and related services that improve the human experience wherever people work, heal, learn, and live. Employees 127,000 (2010) in 44 countriesManias

나. Vision of HermanMiller:

나 . Vision of HermanMiller Zero landfill Zero hazardous waste generation Zero air emissions (VOC) Zero process water use 100 percent green electrical energy use Company buildings constructed to a minimum LEED Silver certification 100 percent of sales from DfE -approved products To Design and build a better world.

다. Mission of HermanMiller:

다 . Mission of HermanMiller To design furnishings and related services that improve the human experience wherever people work, heal, learn, and live . Go beyond compliance with environmental regulations and other requirements. Pursue prevention of pollution and elimination of waste of any kind. Implement technologies to efficiently use energy resources. Design our products, processes, and buildings for the environment. Promote environmental knowledge and awareness.

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라 . Company value Curiosity & Exploration Engagement, Performance Relationship, Design Foundations, Inclusiveness Transparency, A better world Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay.

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2 / 5 마 . Strategies of HermanMiller Recognized by customers as a pioneer in design and sustainability, and as an advocate that supports their needs and interests Brand Problem-Solving Design and Innovation Operational Excellence Building and Leading Networks Pursue a program of new product research, design, and development actively Embrace the concepts of lean manufacturing Consider the networks of innovative designers, owned and independent dealers, and suppliers as the most important competitive factors A leader in design and development

3. Comparison (IKEA vs. Herman Miller):

Mission Text in here Vision VALUE Strategy Creating a better everyday life for the many people To Design and build a better world. Offering a wide range of well-designed, functional home furnishing products at prices. Environmental goals are a key metric of business success. Brand Problem-Solving Design and Innovation Operational Excellence Building and Leading Networks All activities with lowprice Self service model Branded experience Internal production efficiencies IKEA Herman Miller 3 . Comparison ( IKEA vs. Herman Miller) Design & Quality Simple & Straightforward Functional Improve people’s life Low price Curiosity & Exploration Engagement, Performance Relationship, Design Foundations, Inclusiveness Transparency, A better world Good design & function, but low price A leader in design and development

THE VALUE OF SETTING A LONG-TERM STRATEGY:

A nswers on questions in video case II THE VALUE OF SETTING A LONG-TERM STRATEGY http:// www-935.ibm.com/services/us/gbs/bus/html/gbs-built-for-change.html Anders Dahlvig , President and CEO, IKEA GROUP 14 / 27

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IKEA’s vision is ‘to create a better everyday life for the majority of people’. Q1. What is this firm's vision? 15 / 27

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The company’s business idea is ‘to offer a 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’. Q2. What is the firm's mission or business idea? 16 / 27

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big, modern, out-of-town stores offering low-priced, flat pack products in a self-service environment, promoted through its catalogues Dahlvig listed five competitive advantages: design, function and quality at low prices, Scandinavian design, inspiration, ideas and solutions, everything in one place, “a day out”. “But most important of all,” he added, “is the fact that we have credibility because we are seen to deliver on what we say. We’re a company with heart and soul.” Q3. 가 ) describe its competitive advantage. 17 / 27

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Unique corporate culture - organization of over 127,000 employees Consists of complex set of ideologist, symbols, and core values that is shared throughout the firm and influences the way business is conducted. Effective vision and innovative business idea IKEA visions is to create a better everyday life for the many people. Business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at low prices that as many people will be able to afford them. Q3. 나 ) Why do you think competitors have found this concept difficult to imitate ? 18 / 27

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Cont’d Incredible market strategy and business ethics Three cornerstones in IKEA’s environmental work: Recycle information resource efficiency and forestry IKEA stores IKEA stores display the product range in room settings, offering customers inspiring home furnishing solutions. To help keep prices low, IKEA stores buy and transport products in bulk, are located in less expensive areas and take advantage of the self-service and assembly concept. Distribution and purchasing The IKEA Group has about 31 distribution centers in 16 countries, supplying goods to IKEA stores. It has about 45 trading service offices in 31 countries. This enables IKEA to develop close relationships with our 1,350 suppliers in 50 countries. 19 / 27

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Q4 . what is in the news about this company? Sustainability IKEA has run a successful business. However, sustainability is increasingly important. The IKEA vision to create a better everyday life for the many people is not just about offering great home furnishing products and helping enable customers to live more sustainable lives. It is also about taking social responsibility towards their customers, co-worker, suppliers and the people who work for them, as well as towards the entire community. IKEA is focusing on producing product that are more sustainable, leading towards a low carbon society, and taking social responsibility. 20 / 27

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Q5. Describe Ander Dahlvig as a strategic leader? background President and CEO of the IKEA Group since April 1999 Joined the IKEA Group in 1984 -worked in various positions Including Store Manager ,Country Manager of United Kingdom and Vice President, Europe Received the Swedish award for Good Environmental Leadership (2002), in recognition of his work with environmental and sustainability issues; the US Foreign Policy Association’s Global Social Responsibility award (2006), given to individuals and companies who are committed to good corporate citizenship in the communities they serve; and the first annual Oslo Business for Peace award (2009) – presented in May of this year with the aim of inspiring and encouraging business leaders worldwide to do business in a responsible way. 21 / 27

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Cont’d Under his leadership IKEA has nearly tripled its number of stores and with over 127,000 employees, and committed to a broad new slate of policies on the environment. IKEA has grown from 7.3 to 21.5 billion Euros, with over 565 million visitors dropping in to one of 296 store in 36 countries during the last financial year alone. The company not only saw 200% growth, it also managed to cut sales prices by 20% and increase profitability. 22 / 27

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Q6. Do you believe Anders Dahlig is constrained in his strategic decision making because of the unique organizational culture at IKEA, or is he free to create and implement strategic decisions as he sees best for the firm? Yes, I believe Anders Dahlig is constrained in his strategic decision making because of the unique organizational culture at IKEA. Each organization have their own culture. It is hard to change organizational culture. Therefore, CEO have to consider the company’s culture. 23 / 27

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KOREA industry analysis Ⅲ Conclusion IV

Ⅲ. Korea furniture market analysis:

Ⅲ. Korea furniture market analysis COMPETITOR ENVIRONMENT GENERAL ENVIRONMENT INDUSTRIAL ENVIRONMENT  In 2011, home furniture market was known 1,600~800 billion won  Consumption pattern of consumers is various and is changing fast.  K eyword : eco-friendly, well-being, 'LOHAS life style' pursuit.  U se of design and various collar for space production is deepened.  G rowing on-line furniture shopping mall is stabilized. Many companies construct or strengthen on-line shopping mall. Extension increases to systematized furniture area, total interior  Many small to medium sized Korean manufacturers act as importer- distributors to offer wider range of products to their customers.  Large-sized Korean manufacturers make direct sales to building contractors through their own sales networks nationwide.

Cont’d:

Cont’d Company All activities with low price Self service model Branded experience These strategies have good impact on this change of consumption pattern In Korea  Change of Consumption pattern - Young people prefer to assemble furniture themselves at low price. - Single people who are increasing recently don’t like high price furniture. - Korean people want to experience in the store Good design and function at low price Main Env . Factor Strategic Reasons IKEA Herman Miller This mission have a good impact on this eco-friendly trend In Korea Eco-friendly , well-being , 'LOHAS life style' pursuit - This year, keyword of household trend exceeds eco-friendly , well-being and go by 'LOHAS life style' pursuit Environmental goals are a key metric of business success Which firm will be more successful in Korean market, if they entered into Korean market directly?

Ⅳ. Conclusion:

Ⅳ. Conclusion Which firm will be more successful in Korean market, if they entered into Korean market directly? IKEA will be more successful in entering into Korean market directly. Because, Consumption pattern of young and single Korean people, who want to assemble furniture themselves at low cost, is proper in IKEA’s competitive advantage “good design and function at low price. Even though the trend of eco-friendly is proper in Herman Miller’s mission, trend of consumption pattern will be more successful factor in entering into Korean market directly.

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Thank You!!!

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