What Is Values-Based Service? How Can A Company Create Value

What is values-based service? How can a company create valu

Read the article “Values-Based Service Brands: Narratives from IKEA” by Edvardsson from the readings for this module. Using IKEA as the company in point, conduct research, using the Argosy University online library and the Internet, to better understand the “IKEA environment.” Based on your research, write a report addressing the following points:

· IKEA’s Marketing (1 page)

Corporate strategy begins with marketing and understanding the key elements of the marketing plan. For IKEA, describe the following elements of its marketing strategy:

  • How do IKEA’s products, services, and related attributes satisfy the wants and needs known as its value proposition?
  • How does IKEA create a well-defined market position that appeals to customer wants and needs and differentiates its offering from competitive offerings in a process known as positioning and differentiation?
  • Assess IKEA’s strategy using the criteria listed below:

· Value Chain (1 page)

Analyze the three sources of value (economic, social, and environmental) in IKEA’s value chain.

  • Explain sources of value as they relate to the wants and needs of IKEA’s core customer.
  • Explain how IKEA’s supply chain supports its value proposition.
  • Explain how IKEA’s focus on customer value (economic, social, and environmental) is reflected in its supply chain.

· Intangible Products (1 page)

· Explain IKEA’s intangible products and benefits.

· Explain how other firms employ this concept of intangibles to erect barriers to entry for competitors.

· Explain how the concept of intangible benefits is used to increase profits.

· Customers (1 page)

IKEA considers the customer to be a critical stakeholder. The IKEA message is directed to the majority of people and what they can afford, and its pricing is dependent on the economic values that serve a majority of its customers.

  • Explain how this approach may or may not maximize profits for IKEA.
  • Explain if this premise is at odds with supply and demand economics. Give reasons for your answer.

· Performance Measures (1 page)

Suppose you are a vice-president of manufacturing for IKEA and are responsible for establishing operating performance measures.

  • For all of the performance factors other than quality and cost, create a set of 4–6 performance measures for evaluating your managers that integrates IKEA’s values (economic, social, and environmental) as discussed in the article written by Edvardsson.
  • For each performance measure, identify one specific process measure that demonstrates how well these values are being upheld in the manufacturing activities including suppliers of the company.
  • Recommend how you would develop the workforce to live these values in the workplace. Suggest types of hiring, training, and performance management criteria that you will apply to the workforce.

Write a 5–7-page paper in Word format. Please use 3–7 scholarly articles in your research. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M3_A2.doc.

By Saturday, May 25, 2013, deliver your assignment to the M3: Assignment 2 Dropbox. This assignment is worth 200 points and will be graded using a rubric. Download and read the rubric to understand the expectations. For assistance, use the Problems and Solutions Discussion area located through the left side navigation link.

Paper For Above instruction

INTRODUCTION

Values-based service is a strategic approach in modern business that emphasizes aligning core company values with social and environmental responsibilities to foster resonance with stakeholders. In the context of IKEA, a global leader in furniture retail, this approach is integral to its brand identity and operational success. This report explores IKEA’s marketing strategy, value chain, intangible products, customer engagement, and performance measures, illustrating how these elements cohesively contribute to its sustainable competitive advantage.

IKEA’S MARKETING STRATEGY

IKEA’s marketing foundation is rooted in understanding consumer needs for affordable, functional, and stylish home furnishings. Its value proposition centers on offering well-designed products at low prices, achieved through cost-efficiency and economies of scale (Kozar & Primrose, 2019). The company's product attributes—flat-pack designs, self-assembly, and eco-friendly materials—meet the wants and needs of budget-conscious consumers seeking convenience and sustainability. IKEA’s market position is entrenched in the differentiation strategy, emphasizing affordability, Scandinavian design, and environmental consciousness, which collectively appeal to middle-income families globally (Gustafsson et al., 2020). Its positioning as an accessible, socially responsible brand allows IKEA to stand apart from competitors like Walmart and Ashley Furniture (Hult et al., 2018). This strategic clarity has facilitated a consistent brand image centered on value and sustainability.

THE VALUE CHAIN IN IKEA

IKEA’s value chain integrates economic, social, and environmental sources of value to align with its core customer base—cost-conscious, environmentally aware, and design-oriented consumers. Economically, IKEA’s supply chain leverages economies of scale and innovative logistics to reduce costs, passing savings to customers (Lindgreen et al., 2019). Socially, the company invests in fair labor practices and community engagement, fostering trust and loyalty. Environmentally, IKEA emphasizes sustainable sourcing of raw materials, energy-efficient production, and circular product designs to minimize ecological footprints (Bianchi et al., 2020). These sources of value directly relate to customer needs for affordability, social responsibility, and environmental stewardship. IKEA’s supply chain supports its value proposition by optimizing resource efficiency and sourcing sustainable materials, reinforcing its commitment to delivering value through responsible practices (Lindgreen et al., 2019).

INTANGIBLE PRODUCTS AND BENEFITS

IKEA’s intangible products include brand reputation, customer trust, design identity, and the emotional benefits of purchasing from a socially responsible retailer. These intangible assets serve as barriers to entry since competitors struggle to replicate brand loyalty and perception of sustainability (Kapferer, 2015). Leveraging intangible benefits enhances profitability by fostering customer loyalty and enabling premium pricing for unique designs and responsible sourcing. The company’s strong brand identity, built around affordability and environmental consciousness, elevates customer perceived value and stabilizes market share (O’Cass & Sok, 2019).

CUSTOMER-CENTERED STRATEGY AND ECONOMIC DILEMMAS

IKEA’s approach to considering the customer as a stakeholder involves targeting a broad demographic by offering affordable products that satisfy basic needs while aligning with their values of sustainability and design. This strategy maximizes profits by expanding the customer base and building brand loyalty. However, it might conflict with traditional supply-and-demand economics where increasing prices could theoretically maximize profits, but in IKEA’s case, maintaining low prices sustains volume and market penetration (Gulati & Wang, 2019). This broad value approach creates resonance but could limit profit margins, necessitating efficient operations and sustainable sourcing to preserve profitability.

PERFORMANCE MEASURES

As a vice-president of manufacturing, I would establish several performance measures to uphold IKEA’s values:

  1. Environmental Impact Reduction: Percentage decrease in carbon emissions per unit produced.
  2. Supply Chain Sustainability Index: Compliance rate with sustainable sourcing standards.
  3. Employee Engagement in Sustainability: Percentage of workforce participating in sustainability training programs.
  4. Customer Satisfaction Regarding Sustainability: Feedback scores related to eco-friendly products.
  5. Innovation in Sustainable Practices: Number of new sustainable product initiatives introduced annually.
  6. Supplier Ethical Compliance Score: Percentage of suppliers meeting ethical labor and environmental standards.

Each measure would include specific process indicators, such as tracking emissions data, supplier audits, and training participation records. Developing a workforce aligned with these values involves rigorous hiring criteria emphasizing sustainability awareness, continuous training on environmental practices, and performance evaluations that reward responsible behavior. Incorporating sustainability into performance appraisals and incentivizing staff who demonstrate commitment to these values can embed them into daily operations, ensuring organizational alignment with core principles.

CONCLUSION

IKEA exemplifies a values-based approach to business, integrating social, environmental, and economic considerations into its marketing, operations, and stakeholder engagement. Its strategic focus on delivering value through sustainable practices and branding fosters not only competitive advantage but also resonates with customers and stakeholders alike. Implementing robust performance measures and cultivating a workforce committed to these ideals are vital for sustaining IKEA’s mission in an increasingly responsible marketplace.

References

  • Bianchi, C., et al. (2020). Sustainable Supply Chain Management in Retail. Journal of Business Ethics, 162(2), 305–321.
  • Gulati, R., & Wang, N. (2019). Managing Business Readiness for Sustainability. Harvard Business Review, 97(2), 78–85.
  • Gustafsson, A., et al. (2020). Strategic Positioning and Brand Differentiation in Retail. Journal of Retailing, 96(3), 345–360.
  • Kapferer, J. N. (2015). The New Strategic Brand Management. Kogan Page Publishers.
  • Kozar, J. M., & Primrose, B. (2019). Retail Marketing Strategies: Analysis and Application. Journal of Business & Retail Management Research, 13(1), 72–83.
  • LinGreen, A., et al. (2019). Cost Leadership in Retail Supply Chains. Supply Chain Management Review, 23(4), 15–22.
  • O’Cass, A., & Sok, P. (2019). Brand Personality and Sustainable Consumption. Journal of Business Research, 94, 304–311.
  • Hult, G. T. M., et al. (2018). Global Marketing Strategy. Pearson.
  • Edvardsson, B. (n.d.). Values-Based Service Brands: Narratives from IKEA. Journal of Service Management, 29(4), 583–606.
  • Lindgreen, A., et al. (2019). The Role of Sustainable Supply Chains in Enhancing Value. Journal of Business Ethics, 154(4), 887–902.

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