From the IKEA’s vision which is to “Create a better everyday life for the many people”, needs of many customers have been met thus fulfilling their vison. The company comprises of 9,500 furnishing articles which are functional and of good looking and at a low price. Furthermore, the company have made the prices of the products sold to be low as possible in order to create a suitable environment for their customers to have a wide range of choices. These functional home furnishing products are of good quality and are manufactured under acceptable working conditions and this ensure environment is not degraded by any harmful waste products.
To the suppliers who grow and develop with IKEA, long-term relationship has been established and this has contributed to good practices.
IKEA have ensured all its suppliers adhere to the fundamental human rights where workforce is treated fairly and with appropriate respect. This company has ensured their suppliers are in a position to provide safe and healthy working conditions, minimum acceptable wages and compensation to their workers incase of overtime and if housing facilities are given they have followed to ensure there is personal hygiene, quietness and good privacy from external factors. On the issues of environment conservation, IKEA have minimized any possible damaging effect which would in turn affect the living condition of the people.
IKEA has more than 590 million visitors per year who are from all over the world and this has been source of business inspiration. Moreover, the company is able to offer furniture at affordable prices for all people and this has increased the demand for their products. High sales by 1.4 percentage totaling to 21.5 billion Euros is another business motivation since this shows there is expansion in the market. There is constant supply for the required row materials to IKEA supplier and this gives the company confidence in all area of its growth. Good terms with the company manufacturers and suppliers has created an avenue for constant flow of products produced to the respective areas where demand is high.
Question 1.2
In order to influence customer perception on the products offered by IKEA, several have been put in place to ensure the purchasers get the best suppliers who supply IKEA products. There has been a good cooperation and collaboration between the suppliers and the IKEA and this have developed confidence on the side of the suppliers. Due to this relationship, suppliers are able to offer quality products to the customers. Furthermore, IKEA purchase raw materials in huge quantities and sell them to IKEA suppliers at affordable prices which make the manufactured product to be of low prices. This ensure there is good relationship between the supplier and buyers. It is also evidenced that IKEA offer financial support to its suppliers and this ensure suppliers are able to influence the perception of the buyers and stick continuously to their products alone. There is an existing bound between the suppliers and the buyers because of the quality products offered which are of low prices as compared to other competitors of the same products.
Question 1.3
It is true that the supply chain for IKEA is really complex. First, the company stores are found in many countries across the world. Secondly, it has 1220 suppliers who are located in 55 different countries making its furniture for sale. Thirdly, the stores are supplied from 31 central distribution centres and are located in 16 different countries or directly from potential suppliers. In some situations, opening of an IKEA store is a national event and this makes people to travel from different places in order to shop there. Management of all this system require long-term cooperation between all the stakeholders to ensure everything go well as required. IKEA have to monitor the supply of the products to customers to ensure is of high quality in order to display good image for the company. Necessary financial support is given to any IKEA suppliers so that they output the required level of the product in the competing market.
Question 1.4
IKEA’s have put effort in promoting sustainability and this has been achieved through the use of the environmental plan which include different major initiatives. Use of formaldehyde in its products including textiles have been minimized thereby controlling impacts on the human life plus the environment. Replacement for polyvinylchloride in home textiles, wallpapers, lampshades, furniture and shower curtains have been done. In assisting the process of recycling, recyclable materials for flat packaging have been adhered to and this has help in controlling environmental hazards. Every supplier in terms with IKEA have to follow IWAY code of conduct in order to ensure the minimum requirement are properly met to observe environmental and forestry standards. Furthermore, there are forest specialist who spread knowledge on how to manage forest and they help IKEA in finding the path used in accessing wood used in manufacturing of their products. Regular surveys and audit on suppliers are done to ensure they have followed the procedures and have used the correct way in suppling wood. Partnership with organizations such as World Wildlife Foundation (WWF) and Rainforest Alliance has enabled IKEA in regulating illegal logging and lack of Forest Stewardship Council (FSC) certification. Through these techniques used by IKEA company sustainability is achieved which has enhanced the company to progress successfully.