Business strategy of IKEA Essay Example | Topics and Well Written Essays - 2000 words

Business strategy of IKEA - Essay Example Strong Connection with Culture: The IKEA furniture has become an essential part of the culture. Its perennial existence has made it the de facto furniture company and many of its products have a long history. Employee Focus on Thrift: In an environment of increasing competition every last penny has value. The practice and culture of employees being thrifty to ensure that they utilize every last penny properly indicates that the firm’s culture dictated that resources be used properly. Staffing levels are appropriate, and not excessive, and even top employees fly economy to indicate that squandering of resources will not be tolerated. Entrepreneurial spirit of the Kamprands: Kamprand was known for his entrepreneurial abilities and skill of identifying profit opportunities. He had a knack of choosing the ventures with most potential. Even with IKEA he was able to establish a low cost supply line very early into the firm’s existence. High Turnover to Visits ration: IKEA pos es a high visits to turnover ratio. For every million visits to the store revenue of 34 million is generated. This is a really good figure as it reflects the firms’ brilliant selling skills and customer loyalty. Strong presence in 25-50 year old population: The strong connection of Sec B and C to IKEA is a strongpoint for the firm. Even some portion of the A class consider IKEA as an option. The customers are smart, hence IKEA doesn’t need to do the pitch for everyone. Weaknesses: The weakness of IKEA will help us evaluate what is wrong with the firm and how it can improve it for the betterment of its owners and stakeholders. Informal ownership structure/No Shares: The absence of shareholders and a proper board of directors means that there is little accountability of managerial... This essay discusses that home furnishing was a market with immense potential globally. The global sales for the industry reached a staggering $600 Billion in items such as furniture, textile, and floor coverings. A significant percentage (less than 50%) of these sales were constituted by furniture stores. IKEA was standing strong with a 2.5% share in the global market and reaching sales of greater than $20 Billion. The market was highly fragmented, with most of the competition occurring locally rather than globally. Strengths are the core competencies and strong points of firms. A look at the strengths of IKEA would give us an idea of how the firm has been so successful throughout the years. The IKEA furniture has become an essential part of the culture. Its perennial existence has made it the de facto furniture company and many of its products have a long history. The weakness of IKEA will help us evaluate what is wrong with the firm and how it can improve it for the betterment of its owners and stakeholders. The absence of shareholders and a proper board of directors means that there is little accountability of managerial practices. The domination of the Kamprand family means that the corporate structure format of firms is missing and the firm continues to be more of a family businesses influenced by incumbents rather than managerial experts. IKEA has taken the rough route in times of tough economic conditions. It has got rid of workers and insisted on cost cutting rather than innovation. This, however, was the need of the hour as the economic conditions demanded such action.

The impact of service recovery on customer satisfaction, loyalty and Literature review

The impact of service recovery on customer satisfaction, loyalty and word-of-mouth - Literature review Example This essay discusses that service quality in the hospitality industry and hotels specifically has been an area of great research interest. Research has shown importance of service quality. Parsuraman et al. indicated that service quality of hotels is both a significant differentiator and the most aggressive weapon possessed by them. Leading organizations in the hotel industry ensure to put up a high level of service quality over their competitors for over large durations of time. The relationship between service quality and customer loyalty has been of great interest. Researchers have also investigated the relationship between customer loyalty and the complaints received from the customer. Heskett et al. define customer loyalty as repeated purchasing by the same customer and their willingness to recommend the product/service to other customers without any outright benefits. High customer loyalty is beneficial to the organization as it reduces the firms’ marketing costs and inc reases its market share. There can be various reasons of a customer being loyal to a hotel. While some might be loyal because of lack of options, others might face the problem of high cost of switching. Wong and Sohal in their research found that there is a positive relationship between service quality and customer loyalty in the retail trade. Researchers have concluded that service quality is positively related to behavioural outcomes including word-of-mouth, complaints, recommendations and loyalty. Measurement of the service quality expectations of service organizations is primarily done by using the tool SERVQUAL or its variants. Babakus & Boller (1992) and Carman (1990) found that amongst the hotel customers, the most important service quality dimensions are: assurance, reliability and tangibles. Many further studies (Saleh & Ryan, 1999; Fick & Ritchie, 1991) suggested the absence of any significant differences among the rankings of any of the five dimensions. The application of Servqual to two fine dining restaurants revealed the emergence of assurance, and reliability as importance expectations of the customers, and tangibles as the least important (Lee & Hing, 1995). Gabbie and O’Neill (1997) in their research in the hotel sector found that reliability and assurance were the most important