Ikea Case
IKEA
Christopher A. Bartlett and Ashish Nanda
With a 1988 too much by attempting major new market entries simultaneously in two European countries (United Kingdom and Italy), the United States, and several Eastern bloc countries. Finally, there was widespread concern about the future of the company without its founder, strategic architect, and cultural guru, Ingvar Kamprad.
IKEA BACKGROUND AND HISTORY
In 1989, furniture retailing worldwide was a fragmented industry in which small manufacturers and distributors catered to the demands of their local markets. Consumer preferences varied by region, and there were few retailers whose operations extended beyond a single country. IKEA, however, had repeatedly bucked market trends and industry norms. Over three and a half decades, it had built a highly profitable worldwide network of furniture stores (see Exhibit 1).
COMPANY ORIGINS
IKEA is an acronym for the initials of the founder, Ingvar Kamprad, his farm Elmtaryd, and his county, Agunnaryd, in Smäland, South Sweden. In 1943, at the age of 17, Kamprad began his entrepreneurial career by selling fish, Christmas magazines, and seeds. Within a few years, he had established a mail-order business featuring products as diverse as the new ballpoint pens and furniture. It was in furniture, however, that he saw the greatest opportunity.
The postwar boom changed the traditional Swedish practice of handing down custom-made furniture through generations. But while consumers were interested in buying reasonably priced quality furniture, their ability to do so was impaired by cartels of Swedish manufacturers and retailers. Interassociation supply contracts and agreements on competitive practice raised barriers to new entrants and disciplined those who failed to follow industry norms, particularly on price. As a result, between 1935 and 1946, furniture prices rose 41% faster than prices of other household goods. Kamprad - an idealist as well as an
Christopher A. Bartlett and Ashish Nanda
With a 1988 too much by attempting major new market entries simultaneously in two European countries (United Kingdom and Italy), the United States, and several Eastern bloc countries. Finally, there was widespread concern about the future of the company without its founder, strategic architect, and cultural guru, Ingvar Kamprad.
IKEA BACKGROUND AND HISTORY
In 1989, furniture retailing worldwide was a fragmented industry in which small manufacturers and distributors catered to the demands of their local markets. Consumer preferences varied by region, and there were few retailers whose operations extended beyond a single country. IKEA, however, had repeatedly bucked market trends and industry norms. Over three and a half decades, it had built a highly profitable worldwide network of furniture stores (see Exhibit 1).
COMPANY ORIGINS
IKEA is an acronym for the initials of the founder, Ingvar Kamprad, his farm Elmtaryd, and his county, Agunnaryd, in Smäland, South Sweden. In 1943, at the age of 17, Kamprad began his entrepreneurial career by selling fish, Christmas magazines, and seeds. Within a few years, he had established a mail-order business featuring products as diverse as the new ballpoint pens and furniture. It was in furniture, however, that he saw the greatest opportunity.
The postwar boom changed the traditional Swedish practice of handing down custom-made furniture through generations. But while consumers were interested in buying reasonably priced quality furniture, their ability to do so was impaired by cartels of Swedish manufacturers and retailers. Interassociation supply contracts and agreements on competitive practice raised barriers to new entrants and disciplined those who failed to follow industry norms, particularly on price. As a result, between 1935 and 1946, furniture prices rose 41% faster than prices of other household goods. Kamprad - an idealist as well as an