Ikea in Malaysia

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1. INTRODUCTION

1.1 Introduction of Malaysia Furniture Industry

Ranking the 10th largest exporter of furniture in the world, Malaysia exports around 80% of its production. With large markets in US, Japan and Australia, Malaysia's has a strong position in the global furniture industry. With tremendous growth in exports to UAE, Saudi Arabia, the Philippines and Russia, Malaysia is now eyeing on countries like Algeria, Greece, Puerto Rico and Libya. Malaysia has always been known for its wood based furniture, owing to its natural resources. The government has set an annual growth target of 6.5% for wood based furniture by year 2020. In recent years, the growth has shifted from producing general products towards designing its own in propelling Malaysia onto the international arena. Popular with overseas buyers of the middle to high category, foreign buyers look to Malaysia for manufacturers who can meet their high production demand. Despite numerous economic downturns, the industry is still supported by a strong global demand. Chinese and Vietnamese furniture pose strong competition with lowered price furniture, Malaysian furniture continues to set itself apart with original design that places importance on aesthetics as well as its good work ethics. The government also plays an important role in nurturing the industry. Providing Pioneer Status for tax exemption and Investment Tax Allowance, the pro-business environment makes doing business easier and faster.

1.2 Introduction of Ikea

The IKEA story begins in 1926 when founder Ingvar Kamprad is born in Småland in southern Sweden. He is raised on 'Elmtaryd', a farm near the small village of Agunnaryd. Even as a young boy Ingvar knows he wants to develop a business. In 1920, at the age of five Ingvar Kamprad starts selling matches to his nearby neighbors and by the time he is seven, he starts selling further afield, using his bicycle. He finds that he can buy matches in bulk cheaply in Stockholm and re-sell them individually at a very low price but still make a good profit. From matches he expands to selling flower seeds, greeting cards, Christmas tree decorations, and later pencils and ball-point pens. 1943, When Ingvar Kamprad is 17, his father gives him money as a reward for succeeding in his studies. He uses it to establish his own business. The name IKEA is formed from the founder's initials (I.K.) plus the first letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. IKEA originally sells pens, wallets, picture frames, table runners, watches, jewellery and nylon stockings - meeting needs with products at reduced prices. Year 1945, Ingvar Kamprad's business outgrows his ability to make individual sales calls, so he begins advertising in local newspapers and operating a makeshift mail-order service. He uses the local milk van to deliver products to the nearby train station. The furniture is produced by local manufacturers in the forests close to Ingvar Kamprad's home. The response is positive and the line expands. In Year 1951, IKEA founder sees the opportunity to sell furniture on a larger scale using a catalog. The IKEA catalog that we know today is born. 1953 is another important year for IKEA as the first concept show store had born. For the first time customers can see and touch IKEA home furnishings before ordering them. The showroom is born out of a price war with a main competitor of IKEA. As both companies lowered prices, quality was threatened. By opening the showroom, IKEA clearly demonstrates the function and quality of its low-price products. The innovation is a success; people wisely choose the products with the best value for money. This is the innovation that IKEA still maintain today and the show room of IKEA that we visit today is based on this idea. 1956, IKEA started to design furniture with flat packing and self-assemble due to pressure from competitor on supplier to boycott IKEA. Exploration of flat packaging...
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