PingMA1N0232 Minh, NghiemVan MA1N0234 Chaipat JingjitraMA1N0238 Ly, Pham Hien MA1N0241 IKEA and...

PingPing MA1N0232MA1N0232Minh, NghiemVan Minh, NghiemVan MA1N0234MA1N0234Chaipat JingjitraChaipat Jingjitra MA1N0238MA1N0238Ly, Pham Hien Ly, Pham Hien MA1N0241MA1N0241

IKEA and ProFlowers:IKEA and ProFlowers:Reconfiguring Industry Value Reconfiguring Industry Value Chains to Create Competitive Chains to Create Competitive Business ModelsBusiness Models

• IKEA is a Swedish company registered in the Netherlands that designs and sells furniture (such as beds, chairs and desks), appliances and home accessories.

• Founded in 1943 by 17-year-old Ingvar Kamprad, who was listed as one of the world's richest people in 2013

• IKEA means Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, South Sweden).

• As of January 2014, IKEA owns and operates 349 stores in 43 countries.

I. INTRODUCTION

1.1 About IKEA

I. INTRODUCTION IKEAIKEAIKEA’s reconfigured Furniture Value Chain’s reconfigured Furniture Value Chain

I. INTRODUCTION IKEA

The reconfiguration value chain The reconfiguration value chain gives IKEA several distinct gives IKEA several distinct advantages:advantages:

Less cost of maintaining Less cost of maintaining manufacturing facilitiesmanufacturing facilities

Substantial savings from Substantial savings from the outsources and the outsources and delivery of furnituredelivery of furniture

Creates wide market Creates wide market segmentssegments

Unique features storesUnique features stores

1.1 About IKEA

ProFlowers is a major flower retailer in the United States.

ProFlowers is an E-commerce company that sells products shipped from growers, suppliers and its own distribution facilities to consumers.

ProFlowers is headquartered in San Diego, California. It is part of a larger entity, Provide Commerce., which is in turn part of Liberty Media.

I. INTRODUCTION

1.1 About ProFlowers

I. INTRODUCTION

ProFlowersProFlowers’s reconfigured Flower Value Chain’s reconfigured Flower Value Chain

I. INTRODUCTION

1.1 About ProFlowersThe reconfiguration value chain The reconfiguration value chain

gives gives ProFlowersProFlowers several several distinct advantages:distinct advantages:Reducing the time to deliver Reducing the time to deliver Flowers to customers from 7-12 Flowers to customers from 7-12 days to 3 days => supply fresher days to 3 days => supply fresher and higher quality flowers.and higher quality flowers.Offer wider selectionOffer wider selectionLess cost of the distributionLess cost of the distributionIncrease MarginIncrease Margin

II. Application QuestionsII. Application Questions

IKEA

ProFlowers

Question 1. Do you think that IKEA and ProFlowers have plans that Question 1. Do you think that IKEA and ProFlowers have plans that effectively describe what the firm offer to customers. How could these effectively describe what the firm offer to customers. How could these firm’s models be changed so they would be more appealing?firm’s models be changed so they would be more appealing?

IKEA and ProFlowers reconfigured the traditional value chain IKEA and ProFlowers reconfigured the traditional value chain effectively. They gained several advantages from changing the traditional effectively. They gained several advantages from changing the traditional model such as reducing cost of the distribution part, cutting cost of model such as reducing cost of the distribution part, cutting cost of maintaining manufacturing facilities, broadening market, increasing maintaining manufacturing facilities, broadening market, increasing profit…profit…

Therefore they have straightforward plan which is describing to their Therefore they have straightforward plan which is describing to their customers what they can get.customers what they can get.


• IKEA is offering stylish, modern IKEA is offering stylish, modern furniture for a competitive price for furniture for a competitive price for the customers who don’t mind the customers who don’t mind assembling that furniture. IKEA assembling that furniture. IKEA describe their products to Customers describe their products to Customers through display models. Customers through display models. Customers make their selections by looking at make their selections by looking at display models and then buy the display models and then buy the furniture, still in the box, to assemble furniture, still in the box, to assemble later on their own. Furniture have later on their own. Furniture have good quality with possibility to buy it good quality with possibility to buy it online and later change some parts of online and later change some parts of the furniture (color of the kitchen the furniture (color of the kitchen cupboard, glass board of the table cupboard, glass board of the table etc.)etc.)


• Pro Flowers are providing fresh flowers with wide range of choice for Pro Flowers are providing fresh flowers with wide range of choice for every occasion directly to your home(service cannot be better). They every occasion directly to your home(service cannot be better). They describe their product to customer mostly on their website with a lot of describe their product to customer mostly on their website with a lot of flower vase displays and various kinds of flowers. flower vase displays and various kinds of flowers.


These models are revolutionary and innovative by changing the traditional value chain both firms made them more appealing for the customers.

Both models made the services for the customers much easier and more simple than it used to be.


We need to understand best our business situation, the progress of supplying chain (Is our supplying chain complicated or simple enough; if we eliminate several links in chains, is it better or worse?) and then decide to make something new and innovate for our supplying model.

Business environment and consumer behavior tend to change so it is important to follow them and adopt business model to make the perfect business fit.

Question 2:What is IKEA’s core competency? What are its strategic assets? Is there anything about IKEA’s business model that makes what

the company is doing hard to replicate? Explain your answer.

• IKEA’s core competency is the Innovatively designed

furniture and Low-cost products.

• IKEA’s strategic assets are

Out sourcing service: parts and assembly. Save first

investment capital to build and maintain components

manufacturers from outsourcing companies.

Customers relationship management.

Stores with best locations.

Question 2:What is IKEA’s core competency? What are its strategic assets? Is there anything about IKEA’s business model that makes what

the company is doing hard to replicate? Explain your answer.

• Company’s business model is unique, IKEA offers special customer service that

means: You can do it yourself, but you don’t have to.

• IKEA’s business model is adopted by some other companies (Seamens, B&Q, John

Lewis, Argos) but for all of them it is hard to

be successful because in every industry

the most successful player would be

the one who invented a new value chain first

The Traditional Flower Industry Value ChainThe Traditional Flower Industry Value Chain(all, or most, steps completed by different companies)(all, or most, steps completed by different companies)

ProFlower’s Reconfigured Flower Value ChainProFlower’s Reconfigured Flower Value Chain(ProFlowers e-commerce platform enables the process)(ProFlowers e-commerce platform enables the process)

Flowers delivered to customer viaFlowers delivered to customer via FedEx or UPSFedEx or UPS

GrowerImporter

(distributor)Wholesaler Retailer Customer

Grower Customer

Business Model Motivation

• The customerThe customer FresherFresher Higher QualityHigher Quality Wider selectionWider selection

• The grower (or supplier)The grower (or supplier) Increased marginsIncreased margins Broader customer reachBroader customer reach Better inventory managementBetter inventory management

ProFlowers Approach

• The way ProFlowers has made its approach work is by The way ProFlowers has made its approach work is by contracting with a global network of flower growers and contracting with a global network of flower growers and suppliers and ships it via FedEx or UPSsuppliers and ships it via FedEx or UPS

This approach results in a considerable savings by eliminating This approach results in a considerable savings by eliminating steps in the traditional flower value chainsteps in the traditional flower value chain

The savings ProFlowers captures are in part passed along to its The savings ProFlowers captures are in part passed along to its customers through lower pricescustomers through lower prices

Fast Flower Delivery & Easy PaymentFast Flower Delivery & Easy Payment

• They offer overnight flower delivery for those who need it They offer overnight flower delivery for those who need it quick. They even offer same day flower delivery. From the quick. They even offer same day flower delivery. From the second your order is placed, their team works quickly to second your order is placed, their team works quickly to review and fulfill it. review and fulfill it.

• They also make buying flower easy. Send flowers with They also make buying flower easy. Send flowers with Paypal, Visa, MasterCard, American Express, Discover Card, Paypal, Visa, MasterCard, American Express, Discover Card, Diners Club, and JCBDiners Club, and JCB. .

““Freshness Factor”Freshness Factor”

ProFlowers freshness guarantee on deliveries is surpass other ProFlowers freshness guarantee on deliveries is surpass other competitors - It promises freshness for seven days after your competitors - It promises freshness for seven days after your arrangement arrives or it will be replaced! That’s how serious arrangement arrives or it will be replaced! That’s how serious it is about bringing you freshness, quality and value.it is about bringing you freshness, quality and value.

Question 4. “How does Pro Flower” business models Question 4. “How does Pro Flower” business models motivate its customers and partners to participate in its motivate its customers and partners to participate in its businessbusiness

• According to Business models of ProFlowers is quite motivated because ProFlowers According to Business models of ProFlowers is quite motivated because ProFlowers has become major flower retailer within US so their market share is big. In the long has become major flower retailer within US so their market share is big. In the long run, ProFlowers also can make their business with the reputable grower which has run, ProFlowers also can make their business with the reputable grower which has sufficient volume in their business.sufficient volume in their business.

• In addition, ProFlowers now provides International shipping around the world and In addition, ProFlowers now provides International shipping around the world and new items such as Organic food.new items such as Organic food.

So attraction for the partners So attraction for the partners would be 9 of 10would be 9 of 10

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