PingMA1N0232 Minh, NghiemVan MA1N0234 Chaipat JingjitraMA1N0238 Ly, Pham Hien MA1N0241 IKEA and ProFlowers: Reconfiguring Industry Value Chains to Create Competitive Business Models

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 1.1 About IKEA

I. INTRODUCTION IKEA IKEA ’s reconfigured Furniture Value Chain

I. INTRODUCTION 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 1.1 About IKEA

 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 1.1 About ProFlowers

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

II. Application Questions IKEA 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.) 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. 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) ProFlower’s Reconfigured Flower Value Chain (ProFlowers e-commerce platform enables the process) Flowers delivered to customer via FedEx or UPS FedEx or UPS Grower Importer (distributor ) WholesalerRetailer Customer Grower Customer

Business Model Motivation The customer The customer  Fresher  Higher Quality  Wider selection The grower (or supplier) 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 UPSThe 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 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.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. 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. 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