IKEA and ProFlowers:
Reconfiguring Industry Value
Chains to Create Competitive
Business Models
Ping
Minh, NghiemVan
Chaipat Jingjitra
Ly, Pham Hien
MA1N0232
MA1N0234
MA1N0238
MA1N0241
I. INTRODUCTION
1.1 About
• IKEA
IKEA
is a Swedish company
registered in the Netherlands that designs
and sells furniture (such as beds, chairs
and desks), appliances and home
accessories.
• Founded in 1943 by 17-year-old Ingvar
Kamprad, who was listed as one of the
world's richest people in 2013
• IKEA means Ingvar Kamprad, Elmtaryd
(the farm where he grew up),
and
Agunnaryd
(his
hometown
in Småland, South Sweden).
• As of January 2014, IKEA owns and
operates 349 stores in 43 countries.
I. INTRODUCTION
IKEA
IKEA’s reconfigured Furniture Value Chain
I. INTRODUCTION
1.1 About
IKEA
The reconfiguration value chain
gives IKEA several distinct
advantages:

Less cost of maintaining
manufacturing facilities

Substantial savings from
the
outsources
and
delivery of furniture

Creates wide market
segments

Unique features stores
IKEA
I. INTRODUCTION
1.1 About
ProFlowers
 ProFlowers is a major flower retailer in
the United States.
 ProFlowers is an E-commerce company
that sells products shipped from growers,
suppliers and its own distribution
facilities to consumers.
 ProFlowers is headquartered in San
Diego, California. It is part of a larger
entity, Provide Commerce., which is in
turn part of Liberty Media.
I. INTRODUCTION
ProFlowers’s reconfigured Flower Value Chain
I. INTRODUCTION
1.1 About
ProFlowers
The reconfiguration value chain
gives ProFlowers several
distinct advantages:
 Reducing the time to deliver
Flowers to customers from 7-12
days to 3 days => supply
fresher and higher quality
flowers.
 Offer wider selection
 Less cost of the distribution
 Increase Margin
IKEA
II. Application Questions
ProFlowers
Question 1. Do you think that IKEA and ProFlowers have plans that
effectively describe what the firm offer to customers. How could these
firm’s models be changed so they would be more appealing?
IKEA and ProFlowers reconfigured the traditional value chain effectively.
They gained several advantages from changing the traditional model such
as reducing cost of the distribution part, cutting cost of maintaining
manufacturing facilities, broadening market, increasing profit…
Therefore they have straightforward plan which is describing to their
customers what they can get.
Question 1. Do you think that IKEA and ProFlowers have plans that
effectively describe what the firm offer to customers. How could these
firm’s models be changed so they would be more appealing?
•
IKEA is offering stylish, modern
furniture for a competitive price for
the customers who don’t mind
assembling that furniture. IKEA
describe their products to Customers
through display models. Customers
make their selections by looking at
display models and then buy the
furniture, still in the box, to assemble
later on their own. Furniture have
good quality with possibility to buy it
online and later change some parts of
the furniture (color of the kitchen
cupboard, glass board of the table
etc.)
Question 1. Do you think that IKEA and ProFlowers have plans that
effectively describe what the firm offer to customers. How could these
firm’s models be changed so they would be more appealing?
•
Pro Flowers are providing fresh flowers with wide range of choice for
every occasion directly to your home(service cannot be better). They
describe their product to customer mostly on their website with a lot of
flower vase displays and various kinds of flowers.
Question 1. Do you think that IKEA and ProFlowers have plans that
effectively describe what the firm offer to customers. How could these
firm’s models be changed so they would be more appealing?
 These models are revolutionary and innovative by changing the
traditional value chain both firms made them more appealing for the
customers.
 Both models made the services for the customers much easier and more
simple than it used to be.
Question 1. Do you think that IKEA and ProFlowers have plans that
effectively describe what the firm offer to customers. How could these
firm’s models be changed so they would be more appealing?


We need to understand best our
business situation, the progress of
supplying chain (Is our supplying
chain complicated or simple enough;
if we eliminate several links in chains,
is it better or worse?) and then decide
to make something new and innovate
for our supplying model.
Business environment and consumer
behavior tend to change so it is
important to follow them and adopt
business model to make the perfect
business fit.
Question 2:What is IKEA’s core competency? What are its strategic
assets? Is there anything about IKEA’s business model that makes what
the company is doing hard to replicate? Explain your answer.
• IKEA’s core competency is the Innovatively designed
furniture and Low-cost products.
• IKEA’s strategic assets are
 Out sourcing service: parts and assembly. Save first
investment capital to build and maintain components
manufacturers from outsourcing companies.
 Customers relationship management.
 Stores with best locations.
Question 2:What is IKEA’s core competency? What are its strategic
assets? Is there anything about IKEA’s business model that makes what
the company is doing hard to replicate? Explain your answer.
•
Company’s business model is unique, IKEA offers special customer service that
means: You can do it yourself, but you don’t have to.
•
IKEA’s business model is adopted by some other companies (Seamens, B&Q, John
Lewis, Argos) but for all of them it is hard to
be successful because in every industry
the most successful player would be
the one who invented a new value chain first
The Traditional Flower Industry Value Chain
(all, or most, steps completed by different companies)
Grower
Importer
(distributor)
Wholesaler
Retailer
Customer
ProFlower’s Reconfigured Flower Value Chain
(ProFlowers e-commerce platform enables the process)
Customer
Grower
Flowers delivered to customer via
FedEx or UPS
Business Model Motivation
• The customer
 Fresher
 Higher Quality
 Wider selection
• The grower (or supplier)
 Increased margins
 Broader customer reach
 Better inventory management
ProFlowers Approach
• The way ProFlowers has made its approach work is by
contracting with a global network of flower growers and
suppliers and ships it via FedEx or UPS
 This approach results in a considerable savings by eliminating
steps in the traditional flower value chain
The savings ProFlowers captures are in part passed along to its
customers through lower prices
Fast Flower Delivery & Easy Payment
• They offer overnight flower delivery for those who need it
quick. They even offer same day flower delivery. From the
second your order is placed, their team works quickly to
review and fulfill it.
• They also make buying flower easy. Send flowers with Paypal,
Visa, MasterCard, American Express, Discover Card, Diners
Club, and JCB.
“Freshness Factor”
ProFlowers freshness guarantee on deliveries is surpass other
competitors - It promises freshness for seven days after your
arrangement arrives or it will be replaced! That’s how serious
it is about bringing you freshness, quality and value.
Question 4. “How does Pro Flower” business models
motivate its customers and partners to participate in its
business
•
According to Business models of ProFlowers is quite motivated because ProFlowers
has become major flower retailer within US so their market share is big. In the long
run, ProFlowers also can make their business with the reputable grower which has
sufficient volume in their business.
•
In addition, ProFlowers now provides International shipping around the world and
new items such as Organic food.
So attraction for the partners would be 9 of 10