From the course: Developing a Competitive Strategy
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Superior value-chain architecture
From the course: Developing a Competitive Strategy
Superior value-chain architecture
- Compare Ikea with a traditional furniture retailer. Let's say you want to buy a dining table and four chairs. Chances are that the price of the dining set at Ikea will be a fraction of what you would pay at most other furniture retailers. How does Ikea manage to do this? The difference starts with Ikea's approach to furniture design. Ikea's furniture typically consists of only, or mostly, flat pieces designed in such a way that all of the components of a chair, a table, a bed, desk, can be packed compactly in a flat cardboard box, and with included instructions, assembled my the customer to create the finished product. Self-assembly by the customer means that Ikea is able to completely eliminate the labor costs associated with assembling the furniture in the factory. Flat packing of the components also means that for Ikea, the costs of shipping the flat boxes across continents are minimal. As a result, Ikea can further ensure that irrespective of where the customers are based, the…