Challenges for the future

1. Challenges for the Future

Over another five years IKEA's strategy has been to keep expanding in the international markets which makes them to face new challenges, particularly with the distribution system. Such enormous growth urges the business constantly review its distribution structure and adapt it to the mandatory needs. Among the primary moves the business should do is to reallocate its distribution structure in a manner that the low-flow range will be stocked centrally for big regions and high-flows near to the appropriate market. Meantime, the company should work on increasing direct deliveries.

The other upcoming challenge that the business is dealing with is approximately organizing remote shopping over phone and Internet. Despite the fact that IKEA customers still prefer to visit the stores as it is a whole experience for the kids, however internet shopping and phone orders is on demand and to be able to meet this expectations the company should find new and flexible distribution solutions.

2. IT's impact on IKEA's success

As the globalization is increasing in the retail industry in terms of sales and supplies the importance of It really is rising substantially and is also playing a vital role in managing the complexity of retail operations. Major retail industry players are prepared to allocate larger amounts for this costs as they realize the value of its application available as it creates numerous advantages over the competitors and delivers value.

IT has played a great role in IKEA's success and this is because the business had not been merely integrating these systems into its operations but also coinciding them using its strategic goals. At the same time, IKEA was able to maintain successful in the market as it was evolving the IT systems in the company as the business was growing starting from simple and base systems to locating complex solutions to complex problems.

2. 1 Competitive advantages from IT's implementation

In this dynamically moving business environment this can be a challenge for companies and organizations to sustain their competitiveness. Today by integrating IT systems in its everyday operations, IKEA has empowered its grounds in the market as these systems provide best information that the company needs to do its task better. It has quick access to information and it minimizes the errors running a business transactions. At exactly the same time it serves as a robust competitive tool for IKEA to interact with its customers, supplier and employees in a powerful manner that contributes to a mutual benefit by making its stakeholders loyal to the company.

Today, because of its successful Supply Chain Management system IKEA can achieve cost benefits and offer reduced prices to its customers. At the same time the implementation of Supply Chain Management system in its global planning has given IKEA the opportunity to reduce its stock level and improve the service level. This in its turn plays a part in the overall satisfaction of the business clients and supplier. Contrary to its competitors, IKEA is able to detect and handle problems related to the supply chain at an early stage which helps the business to truly have a balanced chain. It also comes with an accuracy in its forecasts and better visibility and efficiency in its overall supply chain.

In summary, the IT implementation in various business functions gave number of competitive advantages and benefits to IKEA. Today the business has improved its overall operations in the market and runs the company with a better and global view. These IT initiatives gave the company long-run significant competitive advantages in the market that will contribute to improved profits.

2. 2 Lessons learned from IKEA's IT applications

IT systems became the heart of IKEA procedures and it plays an important role in alleviating pressure points in its business transactions. On the other hand, those companies who do not manage their IT systems effectively it becomes problems rather than solution, specially when a retail industry player has to deal with advanced planning and scheduling systems, merchandizing and inventory management systems. However, these systems play crucial role in retail procedures and when the company uses it effectively, it can improve efficiency and increase revenues.

In IKEA's example we learn that the company matched its IT systems to its existing culture and found success in its initiatives. Their objective was not to create a complex systems but systems that could promptly react to the employees', suppliers' and customers' specific needs.

One of the success factors that contain to be taken under consideration was that IKEA didn't compromise its corporate culture by using information technologies. The company was aware these systems exist to support people rather than the technologies. They understood that those tools shouldn't have negative impacts on healthy and powerful organizational culture as these tools are not capable to replace the nuances of the human experience.

Another important aspect that should be taken into account is the change management in IKEA, when implementing new IT projects. A lot of the IT systems integrated by IKEA have been implemented successfully as the business spent money and efforts to aid workers to adapt to methods and tools by creating awareness and interest among the employees, checking out the solutions and adapting to the change.

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