GROUP MEMBERS: ABHISHEK BHOJWANI VIRAL TRIVEDI ROHAN SHAH POOJA UMESH ROSHAN RUMANI RISHABH MUTHA PRERANA

PRERANA KAPOOR ABHISHEK SHRIVASTAV NIKITA BANGERA SHUBHAM SANKLECHA VISHAL ABHISHEK DUBEY

INTRODUCTION AND HISTORY

INTRODUCTION
Private held international home product company. Incorporated in 1943. Largest furniture retailer. Originated in Smaland , Sweden.

IKEA VISION
"To create a better everyday life for the many people.

HISTORY
The first stores opened in 1958. Opened stores globally from 1974. Concentrated on design and function.

INDIAN MARKET AND CHALLENGES

WHY INDIAN MARKET ?

2nd largest population. 400 million people in middle class. +7% annual growth.

CHALLENGES IN INDIA
Do it yourself.

CONTINUED
Need to change sourcing strategy. Competitors with low prices.

CONTINUED

WHY NOT IN INDIA YET ?

PORTERS FIVE FORCE

POWER OF SUPPLIERS
Switching cost of suppliers in the industry Number and size of suppliers Power of suppliers Importance of branch for suppliers Powerful branding and Availability of substitute

POWER OF BUYERS
Categorized as Low Buyer switching costs, substitute products Group of customers Buyers alternatives

THREAT OF NEW ENTRANTS

Number of competitors Economies of scale Product differentiation Customer loyalty to established brands

THREAT OF SUBSTITUTE PRODUCTS

Threat is Low Various quality products offered Customer Retention rate is best with IKEA IKEA Brand Perception

RIVALRY AMONG EXISTING FIRMS

Extremely Competitive Industry Growth in New Markets Sustainable competitive advantage Diversity of competitors

IKEA - SWOT

STRENGTH
Powerful brand image. Wide range of products and style available. Affordable and of good quality. Furniture is easy to assemble and Ship. Friendly atmosphere / store layout. Facilities- Daycare center/ restaurants.

Continued
Strong global Hold Economies of scale Focus on training for management and staff

WEAKNESS
Assembling Furniture Relatively few locations Swedish Design may not attract People from other countries Furniture has a particular life span No Direct Competition The size and scale of its global business

OPPORTUNITIES
Untapped Market ( i.e. Asia, Middle East etc. ) Consumer Education Different Types of store Expansion in more cities in the world Increase Online presence through Social Media Growing demand for low priced goods

THREATS
Direct Threat ( Local Furniture Store ). Indirect Threat ( Walmart, Big Bazar ). Global Economic Crisis. More Competitors entering low price. Economic Factors.

Competitive Analysis

COMPETITIVE ADVANTAGE
Differentiation. Customization. Cost Leadership. 85% Unorganized Sector.

ORGANIZED SECTOR
Personalized retail outlets, Prime locations. Range of offering. Quality. Price. Customer base. Eg -: Home Town, Style Spa.

LOW END BRANDED RETAILERS

Serves middle class customers Basic designs Quality Price Located at mainly Shopping Malls Eg -: Big Bazaar

LOCAL UNORGANIZED PLAYERS

Serves middle and lower middle class Basic designs Quality Price Operated mom and pop stores

CUSTOMIZED FURNITURE MAKERS

All kinds of customers High/Low Quality Customized Designs Time Consuming Hand work

CAPITAL STRUCTURE

TOTAL REVENUE IN EURO BILLION 20012012

300 250 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2002 -TOTAL ASSETS -EUR 14210

property ,plant and equiptment other fixed asset inventory recievables

cash and securities

2012 -TOTAL ASSETS EUR BILLION EURO 44748

property ,plant and eqipment other fixed assets inventory recievables

cash and securities

2002- TOTAL EQUITY AND LIABILITIES EURO 14210

group equity long term liabilities other non current liabilities short term payables

other payables

2012 -TOTAL EQUITY AND LIABILITIES EURO 44748

group equity long term liabilities other non current liabilities short term liabilities

other payables

Revenue

2012 2011 CONSOLIDATED INCOME STATEMENT 27,628 15,723 25,173 13,773

Cost of sales

Gross profit
Operating cost Operating income Total financial income and expenses Income before minority interest and taxes tax Income before minority interests Minority interests

11,905
8,423 3,482 427 3,909 695 3,214 -12

11,400
7,808 3,592 165 3,757 781 2,976 -10

Net income

3,202

2,966

CONSOLIDATED BALANCE SHEET ASSETS

2012 2011

Property, plant and equipment

Other fixed assets Total fixed assets inventory receivables Cash and securities Total current assets Total assets

17264
2,672 19,936 4,664 2,270 17,878 24,812 44,748

16,173
2,416 18,589 4,387 2,077 16,828 23,292 41,881

CONSOLIDATED BALANCE SHEETEQUITY AND LIABILITIES

2012 2013

Group equity

29,072

25,411
3,123 1,469 4,592 7,107

Long-term liabilities 2,523 Other non-current liabilities Total non-current liabilities Short-term liabilities 1,625 4,148 6,814

Other payables
Total current liabilities Total equity and liabilities

4,714
11,528 44,748

4,771
11,878 41,881

SALES OF IKEAKEA
Sales

EUROPE
ASIA AND AUSTRALIA NORTH AMERICAS MIDDLE EAST

FINANCIAL STRATEGY
Profits in India = profits of other countries

Per capita income low in India

Products priced at low rates Volumes of products must increase Labour costs are substantially low Higher percentage of local goods

CBA/EVA

COST BENEFIT ANALYSIS

Systematic process Expressed in monetary terms 2 purposes: Sound Investment Decision Comparing Projects

PROCESS
List alternative projects List stakeholders Measure all cost/benefit elements Predict outcome of costs and benefits Convert all C&B into common currency Apply discount rate

PROCESS
Calculate NPV of project options. Perform sensitivity analysis. Adopt recommended choice.

TRADE MANAGEMENT

SUPPLY CHAIN

MANUFACTURING
Products and furniture designed in Sweden. Largely manufactured in developing countries. China accounts for about 2 times. Final assembly is performed by consumer.

CONTINUED.
Swedwood handles production wood-based products. Largest Swedwood factory located in Southern Poland. 16,000 employees, 50 sites, 10 countries. Hardwood alternative particle board and Hultsfred.

PROCUREMENT
Suppliers and good relationships. Purchasing co-workers. Efficient and reliable production, minimum waste. They create optimal conditions.

PACKAGING
Elements to be packed and their sequence.
Layout of the packing process. Number of packing workers. Speed of packing process.

BRAND MANAGEMENT

IKEAS KEY TO SUCCESS

Democratic Design Vertical Integration Strong Brand Image

DEMOCRATIC DESIGN
Balance of form, functionality, low price. Offer a wide range of home furnishings. The price tag is designed first

VERTICAL INTEGRATION
1300 suppliers and 27 distribution centers. Operations cover every step of production. Save cost at each step. High-quality at lower prices.

WHAT IS BRAND?
Set of tangible and intangible benefits. Sellers promise to deliver. Not same as products.

What is the Territory of the Brand?

WHY DO BRANDS MATTER?

BRAND MANAGEMENT

THE IKEA BRAND MESSAGE

IKEA has
everything you need to live and make a home

STRONG BRAND IMAGE

Cost-Consciousness Sensible Design Unconventionality Social/Environmental Awareness

TARGETS

POSH MARKETS
Uniqueness = Status. Imported designs. Changes frequently.

MID LEVEL
Small apartments.
Loves modular, easy to carry furniture. Moves to new cities for jobs.

0-1 kid if married.

Maximum population.

STUDENT
Functional designs. Budget furniture for reselling. Compact study table. Students moved to metros.

NEWLY WEDS
Quick furniture.
One stop shop for all interior products. More customized.

Relaxing and comfortable furniture.

PROMOTION STRATEGY

PROMOTION STRATEGY

PROMOTION STRATEGY

PROMOTION STRATEGY

PROMOTION STRATEGY

IKEA INITIATIVES
Charitable giving. INGKA foundation. Social initiatives (UNICEF and SAVE CHILDREN). Environmental impact.

GLOBAL HRM
Listed in 100 best companies. Flexible work scheduling Time off for new parents Employee friendly policies Generous benefits Equality to employees

GLOBAL HRM
Solving problems on the go Recruitment and selection Value driven assemble your future campaign

INCREASING EMPLOYEE KSA

Training Selection Compensation Internal promotion Incentive system Encouraging diversity at workplace

ENHANCING HRM PRACTICES

Grievance procedure Flexi-time Keeping co-workers informed Supporting work-life balance

IWAY STANDARD
Prevention of corruption Dialogue with unions Workers accident insurances Safe and healthy work environment.

Product Life Cycle

HIT US WITH YOUR QUESTIONS!!

Thank you!!!