TECHNOLOGY MANAGEMENT &

TECHNOPRENEURSHIP (FPTT)

UNIVERSITI TEKNIKAL
MALAYSIA MELAKA

BRAND MANAGEMENT

BTMT 2113 SEMESTER II SESSION

BRAND NAME IKEA

DATE OF SUBMISSION
26/5/2023

PROGRAM 2 BTEC SEKSYEN 2

1. MUHAMMAD NOOR DANISH BIN HERMAN

NAME OF LECTURER PUAN MARIAM MIRI BINTI ABDULLAH

LECTURER SIGN & STAMP DATE:

TOTAL MARKS: / 10%

1.1 NET OPERATING PROFIT

The table below show the calculation of net operating profit by IKEA brand

Amount (Billion) Amount (Billion)

Net Revenues $710

Operating costs $3140

Net Operating profits $1034

Taxes ($930.6)

After-Tax profit $930.6

Assume the tax rate for IKEA brand in 2022 was 10%.

After-Tax Profit = $1034billion - ($1034 billion x 0.10)

After-Tax Profit = $1034 billion - $103.4 billion

After-Tax Profit = $930.6 billion

1.2 CAPITAL CHARGE

Assume the capital charge rate for IKEA brand in 2022 was 10%.

Capital Charge = Capital Invested x Capital Charge Rate

Assume the capital invested in the brand was $14 billion.

Capital Charge = $14 billion x 0.10

Capital Charge = $1.4 billion

The calculation below shows the economic profit :

Economic Profit = After-Tax Profit - Capital Charge

Economic Profit = $13.23 billion - $1.5 billion

Economic Profit = $11.73 billion

1.4 OVERALL BRAND VALUE

IKEA brand value in 2022 was $17.4 billion U.S dollars

Overall Brand Value = Brand Value + Economic Profit

Overall Brand Value = $17.4 billion + $14 billion

Overall Brand Value = $31.4 billion

1.5 BRAND EARNINGS

Economic profit that is calculated multiplied by the roles of brand to determine the branded

earning.

Assume that IKEA's brand percentage is 50%.

Branded Earnings = Economic Profit x Role of the Brand

Branded Earnings = $14 billion x 0.50

Branded Earnings = $7 billion

1.6 TOTAL VALUATION

Total valuation = Brand Value + Branded Earnings

Total valuation = $24.4billion

The total valuation for IKEA brand is $24.4 billion.

The role of the IKEA brand to society is "To create a better everyday life for the many
people." which is a vision that has been set by them to have a positive impact on society. This
is so that with the provision of products and services provided by IKEA, it is able to create a
better life for all communities.

This can be further reinforced by IKEA's own mission, which states "to offer a wide
range of well-designed and functional home furnishing products at prices so low that as many
people as possible can afford them." So, with that statement, it shows that the IKEA company
offers reasonable prices on high-quality items because they value positive feedback from
their customers.

An additional logo created by IKEA itself stating the withdrawal of the offer they are
highlighting to customers.The IKEA logo, which is blue and yellow, serves as a quick way to
identify the company. They also highlight our Swedish heritage and distinctiveness. The blue
tint of the IKEA brand makes the deal stand out by drawing attention to it.
STRENGHT ANALYSIS

Every product or company that has been branded must have its own strengths. Just
like the IKEA company, this company has its own strengths that have been successfully
identified by researchers.

The biggest strength that IKEA has is its clear vision, which is to add value to its
customers irrespective of market conditions. This has translated into an articulate and well-
defined business strategy and an approach to retailing that is pioneering in its simplicity,
deadly in its targeting of competitors, and effective in its positioning.

Another key strength of the company is its clear concept, which translates into an
array of products that can be assembled by the customers themselves, leading to huge cost
reductions that are then passed on to the customers. With its single-minded focus on cost
leadership, IKEA has emerged as the world’s leading retailer of furniture.

IKEA measures its strengths using the metrics provided by the KPIs, or key
performance indicators, that include increased use of renewable materials, smarter use of raw
materials, establishing and maintaining long-term relationships with suppliers, and leveraging
the efficiencies and synergies from economies of scale.

Among the strengths that have been successfully identified are in terms of market
research.IKEA must know the ins and outs of their customers. This is because if they do not
do so, the company will face difficulties in providing what their customers want. And what
their customers want is an affordable collection of furniture and homewares. So, by doing
research in advance, they can produce a set of furniture collections that are elegant but still
affordable.