Effects of Globalization on Ikea

Only available on StudyMode
  • Download(s) : 112
  • Published : March 19, 2013
Open Document
Text Preview
Market analysis and effects of globalization on IKEA

IKEA is a home products retailer with its branches spreading internationally and is privately owned. It sells furniture, Bathroom and Kitchen items and accessories in flat packs. IKEA is the world’s largest furniture sellers due to its unique concept of the furniture sold in flat packs, affordability and at home assembling by the costumer.

Immense retail experience, product diffentiation and reasonable prices are the key for IKEA s success. It is the world’s most successful multinational retailers.
In 37 countries IKEA has 301 stores (31 August 2009). Last year a total of 286 million people visited the IKEA Group’s stores around the world, most of them in Europe, North America, Asia and Australia.

Its catalogue is printed in 118 million copies in 45 editions (23 languages).History

IKEA is owned by a Dutch registered foundation and is controlled by Kamprad Family. It was founded by Ingvar Kamprad in 1943 in Smaland, Sweden when he was only 17 years old. He started with an innovative concept for the economically stricken but hard working people of Smaland. He first started his company with 15 co workers. His concept mainly based on cost cutting solutions which do not affect the quality of the product and thus offering the sale in a much lesser price than his competitors. He never compromised on the quality but he scrapped from everything else. The word IKEA comes from the first initials of his first and last name and the farm and the village he came from (Elmtaryd and Agunnaryd)

Corporate Structure

IKEA is owned and operated by convoluted groups of profit and nonprofit corporations.
The corporate structure of IKEA has two major parts:

Operations

Franchising.

Management of various stores is the IKEA Operations responsibility. INGKA Holding is a private Dutch company which is owned by Stichtting INGKA Foundation which was established in 1982 in Netherland as a tax exempt non profit foundation. The design and manufacture of its furniture, purchasing and supply functions are overseen by INGKA. In 36 countries 2,235 stores are run by INGKA Holding, the rest 30 stores are run by franchises. The INGKA Foundation is controlled by a five-member executive committee that is chaired by Kamprad and includes his wife and attorney.

The IKEA trademark and concept is owned by Inter IKEA Systems, registered in Luxembourg, which is an exclusive Dutch company and its ownership is very complicated and uncertain but believe to be owned by Kampard Family members. All IKEA stores including ones run by the INGKA Holding pays a fee of 3% of the total profit to Inter IKEA systems.

All the stores are operated by Inter IKEA Systems under a franchise agreement. In Australia however IKEA is operated by two companies: Eastern Coast Stores including Queensland, New South Wales and Victoria are under the owner ship of INGKA Holding. Stores in the South and Western Australia are owned by CEBAS Pvt. Ltd.

The suppliers acquire a long term contract with IKEA transferring technical advice and leased equipment from the company. IKEA keeps the rights of exclusion and also for low prices.
Vision and Mission

“To create a better everyday life for the many people."

This vision provides the structure of a Marketing message to all IKEA businesses worldwide. This message reflects the working and idea behind IKEA's well designed and functional products of home ware. Also keeping the product affordable for encompassing as many people possible to purchase in turn providing a remarkable profit.

Compromising the price doesn’t include compromise in the quality of the product or of the company’s principles. As they say “Low price but not at any price”.
This promise is the key factor for their sustainable and flourishing business. IKEA’s approach was positively appreciated worldwide as the good and the services are beneficial for both the costumers and the...
tracking img