Ikea Case Study

Topics: IKEA, Ingvar Kamprad, Älmhult Municipality Pages: 6 (1611 words) Published: August 27, 2013

IKEA is one of the world’s most successful global retailers. In 2007, IKEA had 300 home furnishing superstores in 35 countries and was visited by some 583 million shoppers. IKEA’s low priced, elegantly designed merchandise, displayed in large warehouse stores, generated sales of 21.2 billion in 2008, up from 4.4 billion in 1994. Although the privately held company refuses to publish figures in profitability, its net profit margins were rumored to be approximately 10% high for a retailer. The founder, Ingvar Kamprad, now in his 80s but still an active advisor to the company, is rumored to be one of the world’s richest men.

Company Background

IKEA was established by Ingvar Kamprad in Sweden in 1943 when he was 17 years old. The name IKEA was an acronym: I and K his initials; E stood for Elmtaryd, the name of the family farm; and A stood for Agunnaryd, the name of the village in southern Sweden where the farm was located. IKEA is a privately-held, home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company which pioneered flat-pack design furniture at affordable prices is now the world’s largest furniture retailer.

The IKEA concept began when Ingvar Kampard, an entrepreneur from southern Sweden, had an innovative idea. In their province the soil is thin and poor, the people have the reputation for working hard, living frugally and making most out of the limited resources. So when Ingvar started his furniture business, he applied the lessons he learned to the home furnishings market. Ingvar’s innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible except on ideas and quality.

1920s- The founder of IKEA, Ingvar Kamprad, is born
1940s- IKEA is founded by Ingvar Kamprad aged 17 years old in a small farming village in Sweden. The name IKEA was formed from the founder’s initials (I.K) plus the first letters of Elmtaryd and Aggunaryd, the farm and village where he grew up. Originally IKEA sold everything from pens and wallets to picture frames, watches and even lady’s stockings. 1950s- Production of the first IKEA catalogue in 1951 and the first advertisements appear in local newspapers. Ingvar distributed his products via the country milk van, which delivered them to the nearby train station then introduction of flat packaging. In the late 1950s Ingvar decided to stop selling everything except furniture items. IKEA as we know it today was born! The first IKEA store opened in Almhult, Sweden. 1960s- First IKEA stores opened outside Sweden in Norway and Denmark. 1970s- IKEA undergoes rapid expansion in the 1970s. First store opened outside Scandinavia in Switzerland and more followed in subsequent years in Germany, Australia, Canada, Austria and the Netherlands. 1980s- USA and UK opened first stores. In 1987, IKEA won the Excellent Swedish design prize. 1990s- Stores opened in Hungary, Poland, Czech Republic, United Arab Emirates, Spain and China. IKEA introduced its range in children. 2000s- Stores opened in Russia and Japan. By reducing use of other transport methods such as large trucks, IKEA has lowered its carbon dioxide emissions. IKEA’s vision statement is “To create a better everyday life for the many people.”

IKEA’s mission statement is “To offer 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.
IKEA’s market positioning statement is “Your partner in better living. We do our part, you do yours. Together we save money.” Objectives of IKEA:
* To produce cheap and affordable product for the public or customers. * Better life for those...
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