IKEA

Topics: IKEA, Ingvar Kamprad, China Pages: 10 (1643 words) Published: May 3, 2015
IKEA in China (Group Project Progress)
(Slide 1) Hello everybody! My name is Anastasiia and I am a presenter from Team 5. For our group project we chose IKEA Company and its market in China. (Slide 2) In today’s presentation I will talk about IKEA history and background, make an analysis of its current situation in the world and in China particularly, and then move to its current problem. (Slide 3) IKEA is a Swedish home products company that is perhaps best known for selling ready-to-assemble simplistic and stylish furniture such as beds , chairs, desks and bookshelves, appliances, kitchen cabinets and home accessories. IKEA was founded in 1943 by Ingvar Kamprad, when he was only 17 years old. 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 sold pens, wallets, picture frames, table runners, watches and jewelry - meeting needs with products at reduced prices. (Slide 4) IKEA’s history includes more than 70 years of work. During those years: In 1950’s the company started to design and sell home furnishings and its famous flat-packaging was introduced; In 1960’s IKEA is gaining popularity with their self-serve furniture shops and the first store outside the Sweden opens in Norway(1965) and in Denmark(1969) In 1970’s first store outside Scandinavia opens in Switzerland (1973), then Germany (1974), Netherlands (1979) and Canada (1976); In 1980’s IKEA continues its international expansion in Eastern Europe and opens its first store in the USA; In 1990’s the number of US stores reaches 12, new stores start to open in Asia, Russia, China and Iceland; In 2002 IKEA operates 154 stores in 22 countries.

(Slide 5) IKEA’s vision is to create a better everyday life for the many people. Its business idea supports this vision by offering a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. (Slide 6) At the present moment IKEA Group operates 315 stores located in 27 countries. It has 1,002 suppliers in 51 countries with 59% of production taking place in Europe. (Slide 7) During 2014 the company’s sales increased by 5.9% (compare to 2013) to reach $31.1billion revenues and more than $3.5 billion of net income. (Slide 8) This histogram shows IKEA’s total revenues during the last decade. We can see that in 2014 compared to 2003 total revenues more than doubled. (Slide 9) While Europe stays number 1 selling region, sales in Asia& Australia grew constantly with 1%p since 2011. (Slide 10) So, our team decided to focus on one of the Asian countries that IKEA entered in 1998 – China. Currently there are 16 IKEA stores in 12 different cities in China, with the biggest stores in Shanghai and Beijing. In the year 2014 China became one of IKEA’s top 10 markets by revenue ($9.5 million). (Slide 11)

Through the analysis of the available data our team found several reasons of IKEA’s successful growth in China: 1) Rapid growth of home ownership in the past 15 years (from practically zero to about 70 percent on average). Many new owners don’t have a good understanding of how to furnish or decorate a home, so IKEA educates consumers by presenting its unique home furnishings in Western-style showrooms that model bedrooms, dining rooms, and living rooms, and in China even balconies. (Slide 12)

2) Western-style brand furniture with affordable prices (The average cost of IKEA’s products has fallen 50 per cent in the past decade) (Slide 13) The IKEA success in China didn’t come as fast as the company forecasted. The company had to make several adjustments for Chinese market in order to ensure its growth and profitability. 1. Store locations:

- Stores in China have to have light-rail or metro links and won't be situated as far away from cities as is the case in the west, because the majority of people don’t have cars and still...
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