IKEA Case Study IKEA Case Study The founder of IKEA, Ingvar Kamprad, established the IKEA brand in Sweden when he was only 17 years old. It was 1943, and the IKEA brand started its enterprise journey by selling items such as seeds from Kamprad’s family’s farm and Christmas magazines. By 1948, the IKEA furniture line came to life. Kamprad’s concept was “good furniture could be priced so that the man with that flat wallet would make a place for it in his spending and could afford it” (Hill, 2013). Today, IKEA is one of the world’s largest furniture retailers. This essay will discuss the legal, cultural, and ethical challenges that confront IKEA; determine the various roles that the host …show more content…
Kamprad had a mission for IKEA, and it was to make life better for everyone. Those that worked for him also adopted his mission. Kamprad’s secret to good leadership was “love.” He viewed his team as an extending family. Government Roles In the early 1990’s, IKEA faced supply risks as an outcome of the “collapse of Communist governments in Eastern Europe after the fall of the Berlin Wall in 1989” (Hill, 2013). IKEA purchased at least 25 percent of their raw materials from manufacturers in Eastern Europe by 1991. Upon the communism collapse, new management came into facilities that had worked and developed technology with IKEA, and did not feel obligated to the IKEA relationship. This resulted in underinvesting in new technology and potential price increases. This resulted in IKEA looking at new alternatives to protect their supply base. IKEA purchased Swedwood, a Swedish manufacturer. This permitted them to purchase and operate furniture manufacturers across Eastern Europe. Swedwood enabled IKEA to grow with knowledge about processes of design and supplier relationships. This allowed IKEA to partner with suppliers and help drive their costs down. As an example, IKEA expanded their supply base in Vietnam to show support for their growing Asian presence (Hill, 2013). Another valuable side to IKEA is their decision to keep their company as a private firm. They did debate the advantages such as access to capital,
Value and image are equally important for being the biggest reasons for IKEA’s growth and popularity. Value is important because for the majority of people this is their main criteria. The value the people receive from IKEA are portrayed through the cost, quality, and style of the product. These three terms if done correctly will continually help IKEA’s growth and popularity. The image of IKEA is what helps IKEA stick out amongst its competitors. The image is one of a
It can also help them gain a temporary competitive advantage because other firms will not be able to imitate them to speak regarding IKEA’s strategy , IKEA’s strategy has continually been to style and develop product supported consumers’ everyday wants, keeping costs low and providing purposeful, engaging and reliable furnishings and solutions. property has been at the basis of IKEA’s strategy throughout its evolution. In 2012 it launched its folks and Planet Positive property strategy, that sets out the company’s approach to achieving positive social and environmental impacts. This property strategy brings all the weather of vision, values and mission along to drive innovation and rework the IKEA business. this may strengthen IKEA’s aggressiveness by securing long access to big raw materials and energy provides, maintaining and developing its provider base, developing relationships with co-workers and customers, and increasing market share
This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.
In 1951, to reduce product returns, he opened a display store in nearby Älmhult village to allow customers to inspect products before buying. It was an immediate success, with customers traveling seven hours from the capital Stockholm by train to visit. Based on the store’s success, IKEA stopped accepting mail orders. Later Kamprad reflected, “The basis of the modern IKEA concept was created [at this time] and in principle it still applies. First and foremost, we use a catalog to tempt people to visit an exhibition, which today is our store. . . . Then, catalog in hand, customers can see simple interiors for themselves, touch the furniture they want to buy and then write out an order.”2 As Kamprad developed and refined his furniture retailing business model he became increasingly frustrated with the way a tightly knit cartel of furniture manufacturers controlled the Swedish industry to keep prices high. He began to view the situation not just as a business opportunity but also as an unacceptable social problem that he wanted to correct. Foreshadowing a vision for IKEA that would later be articulated as “creating a better life for the many people,” he wrote: “A disproportionately large part of all resources is used to satisfy a small part of the population. . . . IKEA’s aim is to change this situation. We shall offer a wide range of home furnishing items of good design and function at prices so low that the majority of
* Finding new local alliances could allow IKEA to diversify and to put in place on new market segments. By finding good partner IKEA could expand into other market segments in which an IKEA competitor has established well.
IKEA's corporate strategy comes directly from their vision statement "To create a better everyday life for the many people". There strategy was to provide a low cost product for their customer. In order to achieve this goal they had a management process that stressed simplicity and attention to detail, a willingness to assume responsibility and to help as evidenced by the formaldehyde and the child labor issues. Because of their willingness to admit fault, IKEA stepped up to the plate to try to monitor and maintain the relationship with their supplier.
IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international
IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.
In this business report on the global retail business IKEA, it will cover the nature of business, influences on operations, operation processes, operation strategies and how the business can sustain competitive advantage. IKEA was founded in 1943 by Ingvar Kamprad in Älmhult, Sweden. The business established after and with the money his father awarded him for succeeding in his studies, Kamprad sustained a cash inflow by selling pens, wallets, watches, picture frames, table runners, jewellery and nylon stockings at reduced prices to customers. Although, later on in 1958, IKEA was introduced as a leader of Swedish Furniture Company as they started to produce local furniture by the Swedish local manufacturers, which gained positive attention from their customers. Eventually, developing flat packs of furniture for storage and self assembly, making their signature style of IKEA and turning the small business into a global sensation.
IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)
The stores have restaurant, childcare facilities and plenty of parking. Customers can drop off their kids at the playroom and have delicious meal when they are tired. All of these not only provide customer with a comfortable shopping environment but also let them make an ‘IKEA trip’ and enjoy the fun of buying. Besides, IKEA’s distinctive show rooms help creating differentiation. Products are strategically placed in different small spaces like rooms which allow customers imaging this furniture in their own home. This makes everything looks more attractive.
IKEA stayed in Russia during their economic downturn gaining respect from the Russian public and government. To say competitive IKEA has tried to lower cost without losing quality in their
Based on the case “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A)” we will build a modified SWOT analysis that will assess the company’s internal performance and determine the current position it’s facing, followed by
At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the
IKEA’s strategy towards its suppliers is that of a low production costs strategy. IKEA wants to sell its products at the lowest possible price therefore their