Ikea Case Study Essay

IKEA was founded in Sweden in 1943 by Ingvar Kamprad. IKEA is a home furnishings retailer unlike any other. It was founded on the basis of low cost and it offers modern and stylish furniture for all types of people at affordable prices. IKEA’s unique way of shopping, store layout, and do-it-yourself approach continues to help maintain their popularity.

IKEA is a world famous furnishing company known for selling Scandinavian-style furniture and other home-based goods. The company has over 230 stores, with operations carried out in over 42 countries with well over 70 000 employees. The stores themselves can occupy 410 million shoppers per year. It is a Swedish based company built on the idea of offering a wide range of well-designed, functional home furnishing products such low prices, that a majority of people will be able to afford them. The IKEA group is currently solely owned by the INGKA Foundation through a holding company, unlisted on any stock exchange.

IKEA is an internationally known home-furnishing retailer, with over 300 stores in 40 countries, that specializes in products

”The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few.” *http://www.ikea.com/ms/en_GB/this-is-ikea/the-ikea-concept/index.html

This means that Ikea is always close to its suppliers, which is one way to creating good business relations between the companies involved. The trading service office’s employees can make frequent visits to suppliers and follow the production process closely, enabling new ideas to be tested and regular quality controls to be made. These persons are also responsible of monitoring working conditions, social conditions and external environment around factories.

IKEA is the worlds largest furniture retailer (in 2002), with sales approaching 12 billion dollars. They operate in 22 countries and have 154 full service distribution stores. IKEA is a highly differentiated service and product provider, emphasizing high-quality product at the lowest prices via non-traditional positioning strategies. In order to provide these low costs, the product came with virtually no customer service and ‘put it together ' and ‘transport yourself ' directions. In addition to these "strictly self-service" outlets, IKEA offered various amenities including, Swedish cafes and playgrounds for kids.

IKEA has marketed its products well and has dealt with all the problems easily. But there have been some constraints that came in the way of IKEA and alternative strategies have to be developed for them. These strategies are as follows:

IKEA then decided that it made more sense to work with suppliers in each of the company’s big markets to avoid the costs associated with shipping the product all over the world. IKEA prefers to locate complete value chains in selected countries, including raw materials, components, and finished products, although in some product areas, for example, solid wood furniture, this is not always possible because of the uneven global distribution of raw materials and the preferred locations of finished goods’ production. In 2008, almost two-thirds of IKEA’s global purchasing was in Europe, one-third in Asia, and 3% in America. The top countries included China (21%), Poland (17%), Italy (8%), Sweden (6%), and Germany (6%). As in many other industries, low production costs have contributed to increased purchasing from China, expanding from 14% of IKEA’s global sourcing in 2003. However, China’s increasing importance has recently stagnated due to rising production costs and longer lead times for finished products. Instead, IKEA has increased the share of products obtained from Europe, where Polish suppliers

IKEA is known as one of the world’s largest furniture retailer that focuses highly on cost control, operational process and product development. IKEA differentiates itself from most furniture retailers by offering a wide range of well designed array of home furniture at very attractive prices that remain affordable to a large group of diverse customers. There are some unique features of IKEA as compared to most furniture retail stores (IKEA, 2012)

and Spice” in Seattle. The partners named the company in honor of Starbuck, the coffee-loving

Based in Denmark, IKEA International A/S is one of the world 's top retailers of furniture, home furnishings, and housewares. The company designs its own items, and sells them in the more than 140 IKEA stores that are spread throughout approximately 30 different countries worldwide. The company also peddles its merchandise through mail-order, distributing its thick catalogs once a year in the areas surrounding its store locations. IKEA is characterized by its efforts to offer high-quality items at low prices. To save money for itself and its customers, the company buys items in bulk, ships and stores items unassembled using flat packaging, and has customers assemble many items on their own at home. The company is owned by

Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that as many people as possible can afford to buy them (www.ikea.com)

IKEA is a manufacturer of home and business furnishings who offer interior furnishing products to consumers in several countries across the globe. Before IKEA plans on expanding and entering any new market, they are required to obtain a clear understanding of what consumer behaviour and requirements are in that particular market. There are basically two types of Markets which include Consumer Market and Business Market.

IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,

In 1995, IKEA met a problem that its main supplier, Indian rugs, used the child labor to produce products, although they had signed an attachment of the contract to ban employing child labor. In addition, a German documentary maker was about to broadcast the problem of child labor on German television and also invited an employee from IKEA to have a live discussion in the TV program. Marianne Barner, the leader of IKEA, must find a great solution to this serious issue to both save her business and the corporation’s brand image. In this issue, IKEA was not the one who produced products, so they might not realize the use of child labor in the process of production. In addition, child labor