Operations management

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You have read about achieving competitive dimensions through three primary operations strategies: Differentiation (better), cost leadership (low-price), and response (faster). These strategies are impacted by many different approaches and functions across the business, including the following:

Product
Quality
Process
Location
Layout
Human resources
Supply chain
Inventory
Scheduling
Maintenance
For this week’s Individual Project, select 1 of these pairs:

IKEA vs. Haverty’s Furniture
Toyota vs. Porsche
Zales vs. Tiffany & Co.
Research both companies in the pair you selected. Then, in a 3–5-page paper, answer the following:

Which of the three strategies (differentiation, cost leadership, or response) do you feel each company is using? Provide examples to support your decision.
Do you feel one or both of the companies are successful? Explain why they are or are not successful.
Provide an example of what you feel each company could do better.
Is the strategy that each of the companies you researched is using the best strategy for them? Why or why not?
You must use at least 2 references.

Sample Solution

IKEA vs. Haverty’s: A Comparative Analysis of Operations Strategies

This paper will analyze the operational strategies of IKEA and Haverty’s Furniture, two prominent players in the furniture retail market.

1. Strategic Positioning:

  • IKEA:

    • Cost Leadership: IKEA’s primary strategy revolves around cost leadership. They achieve this through:
      • Efficient Product Design: Minimalist, functional designs that are easy to manufacture and assemble.
      • Lean Manufacturing: Streamlined production processes, often utilizing low-cost labor and materials.  
      • Flat-pack Assembly: Shifting the assembly burden to the customer significantly reduces transportation and storage costs.
      • Strategic Sourcing: Sourcing materials from low-cost regions globally.
      • Large-format Stores: Showrooms double as warehouses, minimizing transportation costs and maximizing space utilization.  

       

  • Haverty’s:

    • Differentiation: Haverty’s focuses on differentiation through:
      • Higher Quality Materials: Emphasis on using higher-quality materials like solid wood and premium fabrics.
      • Stylish Designs: Offering a curated selection of stylish and classic furniture pieces.  
      • Personalized Service: Providing personalized service with knowledgeable sales associates and interior design consultations.
      • Strong Brand Image: Building a strong brand image associated with quality, comfort, and style.

2. Success:

  • IKEA:

    • Highly Successful: IKEA’s cost leadership strategy has been highly successful. They have achieved significant market share globally through their low prices, efficient operations, and innovative approach to furniture retail.  
    • Strong Brand Recognition: IKEA has built a strong brand identity synonymous with affordability, design, and self-assembly.  

  • Haverty’s:

    • Successful in its Niche: Haverty’s has successfully established itself as a premium furniture retailer. Their focus on quality, style, and personalized service has resonated with a specific segment of the market.

3. Areas for Improvement:

  • IKEA:

    • Enhance Sustainability: While IKEA has made strides in sustainability, further efforts in areas like circular economy practices, reduced packaging, and more sustainable sourcing could enhance their environmental impact and appeal to eco-conscious consumers.  
    • Improve Customer Service: While IKEA has a strong customer base, improving customer service, particularly with regards to assembly and delivery, could enhance the overall customer experience.

  • Haverty’s:

    • Expand Online Presence: While Haverty’s has an online presence, it could further enhance its online shopping experience, including 3D room visualization tools and improved online customer service.
    • Explore New Markets: Haverty’s could explore new market segments, such as younger, more budget-conscious consumers, by offering more affordable product lines or exploring subscription-based furniture rental models.

4. Suitability of Strategies:

  • IKEA: The cost leadership strategy is well-suited for IKEA, given their focus on mass production, efficient operations, and large-scale distribution.  
  • Haverty’s: The differentiation strategy aligns well with Haverty’s focus on quality, design, and personalized service, enabling them to command a premium price for their products.

5. Conclusion:

Both IKEA and Haverty’s have successfully implemented their chosen strategies within the competitive furniture market. IKEA’s focus on cost leadership has driven significant growth and market share, while Haverty’s has carved a niche for itself by offering high-quality, stylish furniture with personalized service. Both companies can further enhance their success by continuously innovating, adapting to changing market demands, and addressing the identified areas for improvement.

References:

  • IKEA.com
  • Havertys.com
  • Company annual reports and financial statements (available on company websites or through financial data providers)

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