Business Model Reading Club: IKEA Case Study
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The author of this article is Fredo Chien, who currently works in the financial industry and also participates in the Business Model Reading Club after work. Thank you for your permission to publish. I would like to express my gratitude.
Input alone is not enough, reading clubs also need to know how to output
Participating in V University’s book club is a completely different feeling. What is different from ordinary book clubs is that in addition to book selection discussions, there are also opportunities to discuss and practice business models for different cases. To put it simply, “eating two fishes out of one” will gain more!
This time, because many members of the reading club work in furniture-related industries, we chose to discuss the business models of two furniture companies: IKEA and Scanteak Teak. Below, I would like to conduct a simple business model analysis of IKEA:
IKEA’s brand positioning and value communication
IKEA, committed to creating an aesthetic style of life
Following the framework provided by the book “Win-Win Method for Profitable Revolutionary Business Model”, we try to use left-brain and right-brain thinking to discuss business models. Thinking from the left side of the brain, IKEA on the one hand conveys the high CP value of furniture (reasonable price and good quality), as well as the message of sustainability and environmental protection.
On the other hand, from the perspective of soft emotional appeals that the right brain is good at, IKEA hopes to create a better quality of life for everyone every day. Such a brand concept is easy to identify and attracts specific customer groups, such as students or renters.
In addition, we also used the simple business model expression method mentioned in the book “[This is how popular products are created] (https://www.books.com.tw/products/0010513858)” to discuss the business profit model that IKEA may adopt.
In-depth observation of reading club members
The following points are the opinions raised by members during the discussion. I think they are very special, so I will simply record them and share them with you:
- IKEA uses cheap food (such as hot dogs, unlimited drink refills) or a few eye-popping ultra-low-price furniture to attract consumers to IKEA, but you will most likely buy more IKEA furniture as a result. The interesting thing is that these are not originally on your purchase list. This kind of unplanned purchase is often more lethal.
- IKEA has very high quality requirements for suppliers. If a customer complains about quality problems and returns the furniture, IKEA will punish the supplier and require them to pay several times the price of the furniture. Therefore, suppliers will be more careful about the quality of their own furniture.
- IKEA continues to innovate and find ways to be further ahead. For example, it brings together some designers and lets them brainstorm in a simulated Mars environment to figure out what kind of furniture will be needed if humans live on Mars in the future. There is also the use of AR (Augmented Reality) technology, which allows customers to simulate the feeling of placing furniture in their homes.
- IKEA also spares no effort in the management of corporate customers, such as overall B&Bs, restaurants, etc. They can provide overall consulting and design services.
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Extended thinking and competitive advantage
Extend your thinking and think about the success and failure of IKEA
During the discussion with the members of this group, I also discovered that in fact, not all IKEA has its shortcomings. Everyone also has different opinions on whether the price is really cheap. Or whether the furniture is still strong after assembly, which some people also have doubts about.
Where there is a gap, it means that there are still business opportunities in the market. In other words, there are likely to be places where other competitors will enter. Can IKEA maintain its competitive advantage? This is worth pondering.
If you also want to discuss your personal career blueprint or Business Model development with Vista, please feel free to [Contact] me (mailto:iamvista@gmail.com)!
★ Photo Credit: Sylwia Pietruszka
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