Early history of ikea Started by Ingvar Kamprad in 1948 Worked out of his family kitchen selling pens, cigarette lighters, and binders Sent out a newsletter and did everything by mailing Started a store in 1951and sold furniture Used the idea of self-assembling furniture and sales skyrocketed By 1955, sales totaled ___?
Managing Suppliers Competitors teamed up and made it difficult for IKEA to survive. They found a supplier in Poland who became IKEA’s largest source for products Followed a principle that they should not own its means of production, but have a long term relationship with the supplier
Worldwide Expansion Expanded soon to Norway, Switzerland, and lastly Germany where it became IKEA’s largest market By 1994, IKEA had 114 stores worldwide http://www.iamcal.com/games/ikea/
Problems start to appear Formaldehyde – used as a binding glue in materials In the 1980s, Danish authorities passed a limit on the amount of formaldehyde allowed in products Tests showed IKEA emitted more than allowed and was fined Sales dropped __%? in Denmark
The Same problem again In 1992, a German newspaper came forth with an article titled “Deadly Poisoned Bookshelves” The lacquer on the bookshelves now contained too much formaldehyde Not counting the cost of lost sales and production, it cost IKEA ___?
Four Environmental Changes Adapting the product range Working with suppliers Transport and distribution Ensuring environmentally conscious stores
CHILD Labor! It was found that a supplier in Pakistan who made carpets had been using child labor. IKEA claims to have been caught completely off-guard
IKEA’s response If the supplier employed children under legal working age, the contract would be cancelled Appointed a third party agent to monitor child labor practices Rugmark Foundation
Child Labor Numbers Human Rights Watch’s estimate in India was between 60 and 115 million child laborers Children as young as 5 were working physical jobs An estimated 200,000 were working in the carpet industry
It happened again! One of their largest suppliers, Rangan Exports, was found using child labor in 1995. A documentary focusing on IKEA was going to be placed on TV IKEA was asked to come talk about the situation at hand