Exam on Business Essay Example | Topics and Well Written Essays - 2250 words

Exam on Business - Essay Example The research was based on the premise that both the layout and location of Ikea stores were indeed intentional, but only in so far as they serve the function of operations management to advance the strategic thrust of the firm. The strategic goal of Ikea is to provide quality furniture at reasonable cost; its target market includes people of all walks of life, particularly those who could not afford the high cost of conventional, ready-made furniture. Its product design employs knocked-down assembly type furniture which may be stored in compressed flat packs. The product design and manufacturing process are all intended to serve the principal philosophy behind Ikea – to reduce production costs while maintaining quality, and engaging the customer in the production process by leaving the assembly of the furniture to them. The location and layout of Ikea stores are but an extension of the production strategy. The flat pack design of the furniture assembly kits enables their stora ge in compressed areas; a system that facilitates quick location and identification of particular products supports the warehouse-type storage area adjacent to the show area. The store layout is consistent with the firm’s self-service philosophy, so customers decide on their choice of purchases in the show area and locate their own goods in the storage area. As mentioned in the report, the principal complaint of consumer groups is that Ikea’s layout forces customers to go through their entire display and entices them to make impulse purchases against their intentions. Research fails to substantiate this allegation, however. Customers who do not wish to buy anything are certainly not forced or intimidated into doing so. It just happens that visitors to Ikea usually find something else that they decided they needed or wanted. The layout therefore facilitates customers’ view of Ikea products to enable them to find what they may not have intended to purchase at the beginning, but which they considered they wanted to buy anyway. The layout helps customers decide what to purchase, it does not compel them to purchase – at least, not any more than any other store that markets retail merchandise. In the choice of location, principles of operations management require the consideration of the following factors: adequacy of market potential, accessibility to customers, potential for growth, business interception, attraction to customers, compatibility with surroundings, minimisation of competition, and site economics. Of these, the principal complaint of competitors has to do with the minimisation of competition. That this has been accomplished by Ikea’s entry into the locality is not disputed; the question is, whether it has been done ethically or not. Whether unethical practices were employed in getting local administrators to permit Ikea to open at their locations is not supported by proof, and to decide in this direction is prejudici al not only to the company but moreso to the local authorities. As far as the research uncovered, Ikea’s location in the locality afforded the immediate community or city significant advantages in terms of employment and access to reasonably priced goods and services. The location of