Ikea Case Analysis
Jamie Richardson
BUSN204
21 March 2013
Ikea Case Analysis
IKEA was truly built from the ground up. It was started in 1943 by Ingvar Kamprad when he was 17 years old, from a shed on the family farm. In the beginning, the company sold fish, Christmas magazines, and seeds to eventually add pens, then furniture to its product list. In the beginning the company had used the milk truck as part of its delivery system to get orders to the train station. In 1953 when the milk truck changed it route, it was no longer available to get items to the train station. This motivated Ingvar to invest in a nearby idle factory and convert it into a warehouse. By this time, with the help of the free catalog which started back in 1949, the business was growing rapidly. Ingvar hired a designer, Gillis Lundgren, who had been the photographer for the catalog. He was also the furniture designer and had been designing more and more furniture for IKEA. Over time, IKEA had created its goal, to provide cost effective, stylish furniture with minimalist lines. At this time, furniture in Sweden was expensive and he wanted to make it possible for lower income families to be able to buy new furniture. This is where Mr. Lundgren was important. He designed the furniture to be able to adapt to machine production and would be easy to assemble. He would continually find ways to cut costs when designing, producing, packaging, and assembling furniture. The packaging was a key factor in keeping costs down. When they started making furniture ready to be assembled by the customer, this allowed them to package items flat which made things easier all the way around. Stock was easier to handle, shipping was cheaper, and damage was reduced in shipping. In 1957, IKEA took another step to expand by showing its products at home furnishing fairs. IKEA did not have a retailer, so it was able to undercut many of the competitor retail outlet prices. The retailers got frustrated and stopped IKEA from taking
BUSN204
21 March 2013
Ikea Case Analysis
IKEA was truly built from the ground up. It was started in 1943 by Ingvar Kamprad when he was 17 years old, from a shed on the family farm. In the beginning, the company sold fish, Christmas magazines, and seeds to eventually add pens, then furniture to its product list. In the beginning the company had used the milk truck as part of its delivery system to get orders to the train station. In 1953 when the milk truck changed it route, it was no longer available to get items to the train station. This motivated Ingvar to invest in a nearby idle factory and convert it into a warehouse. By this time, with the help of the free catalog which started back in 1949, the business was growing rapidly. Ingvar hired a designer, Gillis Lundgren, who had been the photographer for the catalog. He was also the furniture designer and had been designing more and more furniture for IKEA. Over time, IKEA had created its goal, to provide cost effective, stylish furniture with minimalist lines. At this time, furniture in Sweden was expensive and he wanted to make it possible for lower income families to be able to buy new furniture. This is where Mr. Lundgren was important. He designed the furniture to be able to adapt to machine production and would be easy to assemble. He would continually find ways to cut costs when designing, producing, packaging, and assembling furniture. The packaging was a key factor in keeping costs down. When they started making furniture ready to be assembled by the customer, this allowed them to package items flat which made things easier all the way around. Stock was easier to handle, shipping was cheaper, and damage was reduced in shipping. In 1957, IKEA took another step to expand by showing its products at home furnishing fairs. IKEA did not have a retailer, so it was able to undercut many of the competitor retail outlet prices. The retailers got frustrated and stopped IKEA from taking
Cited: Caglar, Deniz, Marco Kesteloo, and Art Kleiner. "How Ikea Reassembled Its Growth Strategy." Strategy Business. Booz & Company Global Management Consulting Company, 7 May 2012. Web. 24 Mar. 2013. <http://www.strategy-business.com/article/00111?gko=66b6e>. "Ikea." Wikipedia. Wikimedia Foundation, 23 Mar. 2013. Web. 24 Mar. 2013. <http://en.wikipedia.org/wiki/Ikea>. Zeveloff, Julie. "IKEA 's Controversial Founder Has A 'Final Gambit ' To Restore His Reputation." Business Insider. Business Insider, 27 Feb. 2013. Web. 24 Mar. 2013. <http://www.businessinsider.com/why-ikea-is-building-towns-in-europe-2013-2>.