Unit3 IKEACaseStudy Neitzel 1334152509
In the early 1970s IKEA had established itself as the largest furniture retailer in Sweden. What was the source of its competitive advantage at that time?
Although there were competitive advantages in the furniture industry, the company had a tough time placing themselves and once the company was established, Kamprad began participating in Stockholm, Sweden 's yearly furniture trade fair. IKEA’s products were not accepted by other retailers and as a result they were banned from selling directly to the customer, so orders were taken by the company. The following year, more complaints pursued and the company was then banned from taking orders, so the employees took down names and numbers of interested customers to contact them at a later time. The success of the company just continued to rise due to its affordable offering which frustrated the other manufactures of furniture, resulting in preventing together to try and pressure manufacturers to avoid selling to the company anymore. IKEA was actually benefitted with this movement as independent Swedish furniture makers and sources in Poland by Kamprad, which actually reduced its costs allowing for even lower prices for its customers.
A factory was turned out into a first ware house showroom by IKEA in 1953 and then the company had a turnover of 80 times that of the average furniture store within eight years. By 1965, IKEA opened another store in Stockholm on the outskirts of the city. By 1973, IKEA opened seven more stores in Scandinavia. Since there were people in Sweden who were younger and looking for less expensive, but stylish furniture to furnish their apartments so, the company was highly successful as it appealed to a different set of customers (Bartlet & Nanda, 1996). IKEA had looked beyond the typical customer within the furniture industry and made its competition irrelevant. Kamprad found an untapped group of customers and decided the company would not try to beat the competition, but rather change the
Although there were competitive advantages in the furniture industry, the company had a tough time placing themselves and once the company was established, Kamprad began participating in Stockholm, Sweden 's yearly furniture trade fair. IKEA’s products were not accepted by other retailers and as a result they were banned from selling directly to the customer, so orders were taken by the company. The following year, more complaints pursued and the company was then banned from taking orders, so the employees took down names and numbers of interested customers to contact them at a later time. The success of the company just continued to rise due to its affordable offering which frustrated the other manufactures of furniture, resulting in preventing together to try and pressure manufacturers to avoid selling to the company anymore. IKEA was actually benefitted with this movement as independent Swedish furniture makers and sources in Poland by Kamprad, which actually reduced its costs allowing for even lower prices for its customers.
A factory was turned out into a first ware house showroom by IKEA in 1953 and then the company had a turnover of 80 times that of the average furniture store within eight years. By 1965, IKEA opened another store in Stockholm on the outskirts of the city. By 1973, IKEA opened seven more stores in Scandinavia. Since there were people in Sweden who were younger and looking for less expensive, but stylish furniture to furnish their apartments so, the company was highly successful as it appealed to a different set of customers (Bartlet & Nanda, 1996). IKEA had looked beyond the typical customer within the furniture industry and made its competition irrelevant. Kamprad found an untapped group of customers and decided the company would not try to beat the competition, but rather change the
References: Bartlet, C.A. & Nanda, A. (1996). Ingvar Kamprad and IKEA. Harvard Business School Publishing. De Kluyver, C. A. & Pearce, J. A. (2011). Strategy: A view from the top (4th ed.). Upper Saddle River, NJ: Pearson Education, Inc. IKEA. (2012). Facts & Figures. Retrieved from http://www.ikea.com/ms/en_US/about_ikea/facts_and_figures/facts_figures.html. Kim, W.C. & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston, MA: Harvard Business School Publishing.