Ikea Case Study

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

Evaluating SWOT of IKEA, the company has developed a strong strength in the industry through effective global marketing strategy that would assist, and continue to help them gain more grounds globally as indicated in the outlined strength. The company has great future opportunities for business expansions in the market as well as developing nations; having said that, their weak point is quality, which is a concern as customers can discouraged because of poor quality, poor relationship with employees can be detrimental to efficiency, their competitive market strategy is low cost product, but create standardized products as such will attract

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.

The high level of customer involvement is one of the key features of the IKEA concept. With their unique self-serviced warehouses, customers are required to collect their flat-packed items before proceeding to checkout. Customers are also involved in the assembly of their purchases after transporting them home in their private car. Because the company’s furniture are designed to be shipped disassembled and sold to the customer flat-packaged boxes IKEA saves a lot on shipping costs. As one of the company’s mantras said; “We don’t want to pay to ship air”.

Ikea was successful in entering the furniture retail market in Sweden because it capitalized on good timing and original ideas. At the time of Ikeas initial phases, furniture prices in Sweden rose 41% faster than other household goods between 1935 and 1946. Ingvar Kamprad, the founder of Ikea Saw this as a great opportunity to offer quality furniture at a much lower price than other retailers, that the majority of people can actually afford. Ikea was also able to overcome adversity through creativity in business processes. When initially traditional retailers fought against Ikea’s ideas and banned them from selling at the Stockholm Trade Fair, the took orders or got names of customers in order to sell to them after the event. On another occasion, they overcame trouble with the retail cartel by establishing manufacturing sources in Poland instead of Sweden. This actually resulted in lower costs for Ikea and therefore allowed them to sell products at even lower prices than before. They also differentiated themselves from other companies not only through price but also through store design and location. Instead of locating in downtown hubs, Ikea set up its stores in areas with a lot of land to provide ample parking space which went hand in hand with their concept of cash-and-carry retailing. Furthermore, within the stores established many basic practices, such as wide

IKEA is the largest furniture retailer around the world. The current leadership position of the company provides considerable advantages in terms of the economies of scale and at the same time creating an entry barrier for new competitors. It is ready to achieve the target of EUR 50 billion annual sales by 2020.

IKEA is one of the most successful furniture retailer who dedicated to sell flat pack of furniture, accessories, and bathroom and kitchen items around the world. It is well-known as a global phenomenon and its famous statement that “Our vision is to create a better everyday life for the many people”. IKEA has a clear and consistent concept in providing low price, value for money furnishings with a full range of choice. Its philosophy in the core value of cost efficiency along with IKEA's competitive strategy, which influences the performance objectives of operations in company. IKEA shows an excellent performance in achieving cost competitive advantages

It all started in 1943, when Ingvar Kamprad opened his first commercial business in the name of IKEA, which derives from his initials and of Elmtaryd and Agunnaryd, the names of his family farm and the parish in which he grew up. At first, it was just a “mail-order business selling pencils, postcards, and other merchandise” (“Milestones”). When the company first introduced furniture as a complement to the general merchandise in 1948, it was an immediate success. As a result, the company “started exploring innovating solutions such as furniture design, self-assembly, and advertising” (“Milestones”).

IKEA is a furniture company which established in Sweden and It is world’s largest furniture retailer which designs and sells ready-to assemble furniture in more than 40 countries. IKEA was started by Ingavar Kamprad at his age of 17 in 1943, with the gift money received from his father for doing well in school. The company name formed using an acronym made up of his initials and the first letters of Elmtaryd and Agunnaryd, the farm and village in Sweden. After two years Kamprad began using milk trucks to deliver his goods in his business chain. In 1947, he introduced furniture (armchairs) in the product line under the same brand. He used the furniture which is made by the local craftsmen from the nearby forest. Soon IKEA products

IKEA’s history of formation and development is also associated with many events and outstanding achievements. It was the initiative that to change the furniture industry in 1952 - the flat-pack method which lets customers freely choose, transport and assemble products on their own. The initiative helped IKEA save transportation costs, traveling costs; especially with this business model, IKEA could make a significant cut of manpower and costs to solve customers’ questions or needs for repairing or switching goods. In 1953, Kamprad first held a private exhibition of IKEA furniture with more than 1,000 people lined up early to see the exhibition on the first day of exhibition.

1. IntroductionIKEA, the famous Swedish company, is the one of the largest furniture retailers in the world, which specializes in modern but inexpensive Scandinavian designed furniture. According to Echeat (2006), the IKEA had more than 175 stores spread over 31 countries at the end of 2002 and worldwide sales of about 12.8 billion euros in 2004. During the IKEA financial year 2001-2002, a total of 60,000 people are employed by IKEA worldwide and there are 323 million people visited IKEA stores around the world (Kronos, 2006).

Ikea have the product design, development, raw materials, processing, customer service five processes and sales flow. Ikea took control of the sales and product design of the two maximum links, at the same time ensuring service into the sales. Ikea has a comprehensive market survey that is conducted after every three years. The main purpose of the survey is to listen to the customer’s opinions regarding the products. Ikea strategy on reducing the cost is based on recycling raw materials to avoid deforestation. With the inception of the new technology, it has resorted to using composite plastics so as to reduce weight and save material with the purpose of increasing the rate of production. Ikea’s household products are split into assembly goods with products divided into separate designs and different modules. Ikea’s mode of marketing is to hold the psychology of the customer. Ikea does not introduce the

IKEA is a globally known home outfitting retailer. It has developed quickly since it was established in 1943. Today it is the world 's biggest furniture retailer, perceived for its Scandinavian style. The greater part of IKEA 's furniture is level pack, prepared to be gathered by the shopper. This permits a lessening in expenses and bundling. IKEA conveys a scope of 9,500 items, including home furniture and embellishments. This wide range is accessible in all IKEA stores and clients can arrange a great part of the range online through IKEA 's site.

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.