Ikea Case Study Essay

1076 Words Feb 14th, 2015 5 Pages
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,

More about Ikea Case Study Essay