IKEA is a Swedish multinational group of companies that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. It has been the world's largest furniture retailer since at least 2008.
IKEA is a Swedish multinational group of companies that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. It has been the world's largest furniture retailer since at least 2008.
This case study is about a multinational company which sells ready to assemble furniture and home accessories. According to the economics records as at 2008 this is the world largest furniture retailer. (Forbes, 2013)
This report describes about the main strategies which IKEA use to approach to different markets with different consumers and with them IKEA has evolved into the largest furniture retailer in the world with approximately 300 stores in 38 countries and revenues topping $21.5 billion in 2009. Its top countries in terms of sales include Germany, 16 percent; United States, 11 percent; France, 10 percent; United Kingdom, 7 percent; and Italy, 7 percent. (Business week, 2005)
According to the final decision IKEA has made a different way of shop for furniture with the time develops and it has reach to the expectations of its customers according to their expectations.
Finally, in the conclusion of the report shows the final view of the researcher about the finding regarding to the IKEA strategies throughout the research and final judgment which make about the given case.
The presentation analyses IKEA's Business Model as a cost leadership. How can IKEA win over other furniture competitors to become one of leading companies and distribute their products all over all world ? Let's take a quick look
Ikea Invades India - Market Research report on entry strategy in IndiaManeesh Garg
Market Research Report on - Entry Strategy of IKEA in India based on case study "IKEA Furniture" by Harvard Cases.
To get a copy of this report, share your views about the presentation with your email id in Comments section... I keep on updating my presentations and documents. To ensure that you don't miss any update or new upload don't forget to press the "FOLLOW" and "LIKE" button. You can also mail me at manigarg21@gmail.com
This slide was prepared by me, for my term paper presentation on IKEA's operations management.
Slide comprises of a brief company overview with its mission & vision, global outlet locations, product lines, key aspects of operation functions, swot and conclusion.
All information were collected from secondary sources.
Comparison of Marketing Mix of IKEA in Four CountriesFatima Arshad
Report Contains Marketing Mix of IKEA. In this report there is comparison of 4Ps of IKEA in Four Countries i.e Sweden, UK, China and India.
This report is result of the efforts of four people.
This power point presentation will provide us the overall business aspects of IKEA around the world.How they were founded,the past of the organization, what the organization doing on present day & what will they do in the near future.
This case study is about a multinational company which sells ready to assemble furniture and home accessories. According to the economics records as at 2008 this is the world largest furniture retailer. (Forbes, 2013)
This report describes about the main strategies which IKEA use to approach to different markets with different consumers and with them IKEA has evolved into the largest furniture retailer in the world with approximately 300 stores in 38 countries and revenues topping $21.5 billion in 2009. Its top countries in terms of sales include Germany, 16 percent; United States, 11 percent; France, 10 percent; United Kingdom, 7 percent; and Italy, 7 percent. (Business week, 2005)
According to the final decision IKEA has made a different way of shop for furniture with the time develops and it has reach to the expectations of its customers according to their expectations.
Finally, in the conclusion of the report shows the final view of the researcher about the finding regarding to the IKEA strategies throughout the research and final judgment which make about the given case.
The presentation analyses IKEA's Business Model as a cost leadership. How can IKEA win over other furniture competitors to become one of leading companies and distribute their products all over all world ? Let's take a quick look
Ikea Invades India - Market Research report on entry strategy in IndiaManeesh Garg
Market Research Report on - Entry Strategy of IKEA in India based on case study "IKEA Furniture" by Harvard Cases.
To get a copy of this report, share your views about the presentation with your email id in Comments section... I keep on updating my presentations and documents. To ensure that you don't miss any update or new upload don't forget to press the "FOLLOW" and "LIKE" button. You can also mail me at manigarg21@gmail.com
This slide was prepared by me, for my term paper presentation on IKEA's operations management.
Slide comprises of a brief company overview with its mission & vision, global outlet locations, product lines, key aspects of operation functions, swot and conclusion.
All information were collected from secondary sources.
Comparison of Marketing Mix of IKEA in Four CountriesFatima Arshad
Report Contains Marketing Mix of IKEA. In this report there is comparison of 4Ps of IKEA in Four Countries i.e Sweden, UK, China and India.
This report is result of the efforts of four people.
This power point presentation will provide us the overall business aspects of IKEA around the world.How they were founded,the past of the organization, what the organization doing on present day & what will they do in the near future.
This presentation briefly will elaborate how IKEA has adopting Porter's Five Forces and Value Chain Analysis in order to maintain its competitive edges over its rivals in furniture market all over the globe by providing good quality furniture at a lower price tag. Hence by bringing in innovative design, improved functionality, low cost operating expenditures and offering excellent quality at lower prices, IKEA's has proved to be a success.
This paper discusses IKEA’s corporate and business level strategy and how these strategies are best supported by operations strategies of IKEA. It also discusses how IKEA differentiated itself from its competitors. Paper highlights various operational trade-offs done by company. Paper, on later stage focuses on how supply network contributed to achieving company’s objectives and strategies.
IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was founded in 1943. Today it is the world's largest furniture retailer, recognized for its Scandinavian style. The majority of IKEA's furniture is flat-pack, ready to be assembled by the consumer.
CASE 6 Business Model and Competitive Strategy of IKEA in India.docxwendolynhalbert
CASE 6: Business Model and Competitive Strategy of IKEA in India
Syed Abdul Samad
IBS Center for Management Research (ICMR)
· “We are very determined but very patient at the same time. We started this journey six years ago. Things are finally moving and we are satisfied with the progress so far…
“I truly believe that the IKEA format is going to work. What is an IKEA store? An IKEA store has more than 9000 different articles for the entire family. We offer an experience for the whole family. Also remember, at IKEA we don’t sell products, we sell inspiration.”1
– Juvencio Maeztu, IKEA’s Country Manager for India, in 2013
After a year of lobbying and negotiating with and convincing the Indian politicos and bureaucrats, IKEA’s €1.5 billion investment proposal to set up its stores in India was finally accepted by the local government on May 2, 2013. However, as of July 2013, Juvencio Maeztu (Maeztu), IKEA’s Country Manager for India, found he still had a colossal task ahead of him.
IKEA, the Netherlands-based Swedish company, was the largest furniture retailer in the world with a presence in 44 countries around the globe—in countries like the US, the UK, Russia, the EU region, Japan, China, Australia, etc. However, it did not enter into the Indian market till 2013, though the company had had a presence in the country since the 1980s as a sourcing destination for its global stores. It had even opened its regional procurement office in Gurgaon, India, in 2007. In 2009, IKEA tried to enter the country to establish its stores, but its attempts were thwarted by India’s stringent Foreign Direct Investment (FDI) regulations. It again applied for permission for entry in June 2012, after India had made some changes in its FDI rules. However, IKEA had to wait another year, hitting many roadblocks on the way, before it was able to obtain the Indian government’s approval to establish its stores. The company also had to tweak its global store model to fit the Indian FDI and sourcing outlines and Indian consumer preferences.
While Maeztu was tasked with tapping the Rs.* 925 billion Indian furniture and furnishings market, analysts were keenly waiting to see what strategies the furniture giant would come up with to win the highly-fragmented, price-sensitive Indian market—as many Indian middle-class families preferred to have their furniture custom-made from small retailers or local carpenters. No two Indian homes had the same kind of furniture as Indians in general showed more of an affinity for unique woodwork and designs rather than flat geometric furniture. “Living room in India is different from any other country—a place for socializing and every activity is around the food. In some countries it is the kitchen and in some countries living room is used for sleeping,”2 said Maeztu. More important was the fact the Indian customer did not prefer the concept of do-it-yourself (where buyers had to assemble different pieces of the product themselves), a key part o ...
MinicaseInnovation at IKEARedecorating and renovating have becIlonaThornburg83
Minicase
Innovation at IKEA
Redecorating and renovating have become a popular international pastime. In a world facing persistent terrorist alerts and lagging economies, more and more people are opting to stay home and make their homes safe havens. This phenomenon has contributed tremendously to the success of IKEA, the Swedish home furniture giant. In monetary terms alone, that success is measured by sales for the fiscal year ending in 2016 totaling 28.5 billion euros—that’s a lot of furniture!
Much of IKEA’s success can be attributed to its founder, Ingvar Kamprad. Kamprad used graduation money to start IKEA in the small Swedish village where he was born. He started off selling belt buckles, pens, and watches—whatever residents in the small local village of Agunnaryd needed. Eventually Kamprad moved on to selling furniture. One day in 1952, while struggling to fit a large table in a small car, one of Kamprad’s employees came up with the idea that changed the furniture industry forever—he decided to remove the legs. IKEA’s flat-pack and self-assembly methodology was born, and it rocketed the company past the competition. “After that [table] followed a whole series of other self-assembled furniture, and by 1956 the concept was more or less systematized,” writes Kamprad.
Kamprad resigned from his role at IKEA in 2013, and for the seventy years he served at IKEA he was dedicated to maintaining the corporate culture he helped define since the company’s founding in 1943. Despite fabulous wealth he continues to be a simple and frugal man—his idea of a luxury vacation is riding his bike. He is fiercely cost conscious and, even though his personal wealth has been estimated in the billions, he refuses to fly first class. He values human interaction above all, and, even though retired, he still visits IKEA stores regularly to keep tabs on what is going on where the business really happens.
The culture at IKEA is a culture closely connected with Kamprad’s simple Swedish farm roots. It is a culture that strives “to create a better everyday for the many people.” IKEA supports this culture by
· Hiring co-workers (IKEA prefers the word co-workers to employees) who are supportive and work well in teams
· Expecting co-workers to look for innovative, better ways of doing things in every aspect of their work
· Respecting co-workers and their views
· Establishing mutual objectives and working tirelessly to realize them
· Making cost consciousness part of everything they do from improving processes for production to purchasing wisely to traveling cost-effectively
· Avoiding complicated solutions—simplicity is a strong part of the IKEA culture
· Leading by example, so IKEA leaders are expected to pitch in when needed and to create a good working environment
· Believing that a diverse workforce strengthens the company overall
542
What is it like to work at IKEA? Here’s how some IKEA employees describe the experience:
· “It’s about moving; we don’t need to run fast ...
IKEA - Brand Management
An Overview of what is in the IKEA store as you turn the pages. . .
Intro
Origin & Genesis
History & Last Decade
Business !dea
Structure and Corporate Management
Brand Portfolio with STP and Consumer Activations
IKEA and inter-market segmentation
4Ps & core competency
AD agencies and Strategic Brand Campaigns
Market Environment (Sectoral and Industrial Analysis)
IKEA value chain
PEST analysis
Porter's 6 forces
S.W.O.T.
TOWS metrics
Competitor Analysis
Industry Analysis
Costing and Pricing analysis of brand portfolio
Consumer Behavior & Brand Ambassadors
Brand repositioning campaigns
Rationalized improvement plan
Future of IKEA
Alternate options for IKEA
IKEA Trivia
IKEA Advertisements all over and AugmentedReality/QR content
CHAPTER6Design Thinking and InnovationWhat is design thinkin.docxchristinemaritza
CHAPTER6
Design Thinking and Innovation
W
hat is design thinking? How can it be used to create significant innovation? Are there steps that can be followed to implement design thinking on an individual or company basis? Are there good examples of the successful use of design thinking in an organization?
Scenario: IKEA
Ingvar Kamprad was born in southern Sweden on March 30, 1926, and was raised on a farm called Elmtaryd near the small village of Agunnaryd. Even as a young boy, Kamprad had an entrepreneurial spirit. At the age of 5, he discovered a good profit could be made by buying matches cheaply in bulk in Stockholm and then individually reselling the matches to his neighbors in the country. He started by selling matches to his closest neighbors, but by the time he was 7, Kamprad put his growing match business on wheels, using his bicycle to sell matches to customers farther and farther from Elmtaryd. Gradually, Kamprad expanded his business offerings from selling only matches to also selling flower seeds, greeting cards, holiday decorations, pencils, and ballpoint pens.
In 1943, when Ingvar Kamprad completed school at the age of 17, his father gave him some money as a reward for doing well. Kamprad, the eternal entrepreneur, used this money to establish IKEA. The name IKEA was formed from his initials (I and K) and the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up. Initially, IKEA focused on the products Kamprad was already selling, but gradually the company expanded the product offerings to include wallets, watches, and jewelry. Within 2 short years, IKEA grew to such an extent that Kamprad could no longer make individual sales calls, and he launched a mail order service to continue meeting the growing customer demands for his products.
In 1948—just 5 years after starting IKEA—Kamprad introduced his first line of furniture using local manufacturers in the forests close to his home to supply the finished goods. The furniture line was a huge success, and Kamprad believed IKEA could become a large-scale furniture provider. In 1951, Kamprad decided to discontinue all other product lines in order to focus the company’s attention solely on producing furniture. He launched the IKEA catalog strategy, which today remains one of IKEA’s major advertising strategies. However, around this same time, IKEA became embroiled in a pricing war with its main competitor. As the two companies continued lowering prices, Kamprad became concerned about the quality of the furniture and the image customers would have of their quality. To address these concerns, in 1953 IKEA opened its initial furniture showroom to demonstrate the function and quality of IKEA’s low-priced products. Located in Älmhult, Sweden, this first showroom was well received by customers because, for the first time, they could see the products in real life before purchasing them. The showroom concept worked, and it became a competitive differentiator with custom ...
IKEA CASE STUDY SUMMARY QUESTIONS 1. How have IKEA’s.docxwilcockiris
IKEA CASE STUDY SUMMARY QUESTIONS
1. How have IKEA’s efforts to provide an environment of continued learning
positioned them to remain viable, given the trends of cost containment and speed
in market change described in our textbook?
2. How might IKEA’s “Partners for Growth” mentoring program provide them with an
effective knowledge management tool.
3. What are your feelings about IKEA’s “I Want Your Job” program? Is this
something that you would endorse as an HR practitioner? Why or why not?
4. Given what you know about the retail industry, what other ideas do you have
regarding strategic employee development at IKEA?
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ICMR Case Collection
ICFAI Center for Management Research
This case was written by Shirisha Regani, under the direction of Sanjib Dutta, ICFAI Center for
Management Research (ICMR). It was compiled from published sources, and is intended to be used as a
basis for class discussion rather than to illustrate either effective or ineffective handling of a management
situation.
IKEA’s Innovative Human Resource
Management Practices and Work Culture
H R O B 0 6 6
2005, ICFAI Center for Management Research. All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means- -
electronic or mechanical, without permission.
To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49,
Nagarjuna Hills, Hyderabad 500 082, India or email [email protected] Website: www.icmrindia.org
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HROB/066
IKEA’S INNOVATIVE HUMAN RESOURCE MANAGEMENT
PRACTICES AND WORK CULTURE
“Maintaining a strong IKEA culture is one of the most crucial factors behind the continued
success of the IKEA concept”.
-Ingvar Kamprad, founder of IKEA.1
“IKEA values the individual. We make people comfortable here and enable people to grow.”
- Jaime Martinez, Head of Human Resources at IKEA North America, in 2003.2
BEST EMPLOYER
In January 2005, Fortune, a prominent international business magazine, published its annual list of
the ‘100 Best Companies to Work For’. IKEA North America (IKEA), a major furniture retailer
and the American subsidiary of the Sweden-based IKEA Group, was 62nd on the list. IKEA won
points for its innovative human resource management practices that emphasized flexibility and
welfare while focusing on employee development. The company’s unique work culture that
supported coworkers (as employees were called at IKEA) and encouraged creativity and diversity
was also applauded.
Pernille Spiers-Lopez (Spiers-Lopez), IKEA’s President, said the company was thrilled at being
recognized as one of the best companies to work for. “We’re delighted to be among Fortune’s
‘100 Best Companies to Work For.’ At IKEA, we live by the philosophy .
IKEA’s Global Sourcing Challenge Indian Rugs and Child LaboLizbethQuinonez813
IKEA’s Global Sourcing Challenge:
Indian Rugs and Child Labor (A)
In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s
largest furniture retailer, and less than a year into her job as business area manager for carpets, she
was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While
such a move would disrupt supply and affect sales, she found the reasons to do so quite compelling.
A German TV station had just broadcast an investigative report naming the supplier as one that used
child labor in the production of rugs made for IKEA. What frustrated Barner was that, like all other
IKEA suppliers, this large, well-regarded company had recently signed an addendum to its supply
contract explicitly forbidding the use of child labor on pain of termination.
Even more difficult than this short-term decision was the long-term action Barner knew IKEA
must take on this issue. On one hand, she was being urged to sign up to an industry-wide response
to growing concerns about the use of child labor in the Indian carpet industry. A recently formed
partnership of manufacturers, importers, retailers, and Indian nongovernmental organizations
(NGOs) was proposing to issue and monitor the use of “Rugmark,” a label to be put on carpets
certifying that they were made without child labor. Simultaneously, Barner had been conversing
with people at the Swedish Save the Children organization who were urging IKEA to ensure that its
response to the situation was “in the best interest of the child”—whatever that might imply. Finally,
there were some who wondered if IKEA should not just leave this hornet’s nest. Indian rugs
accounted for a tiny part of IKEA’s turnover, and to these observers, the time, cost, and reputation
risk posed by continuing this product line seemed not worth the profit potential.
The Birth and Maturing of a Global Company1
To understand IKEA’s operations, one had to understand the philosophy and beliefs of its 70-
year-old founder, Ingvar Kamprad. Despite stepping down as CEO in 1986, almost a decade later,
Kamprad retained the title of honorary chairman and was still very involved in the company’s
activities. Yet perhaps even more powerful than his ongoing presence were his strongly held values
and beliefs, which long ago had been deeply embedded in IKEA’s culture.
Kamprad was 17 years old when he started the mail-order company he called IKEA, a name that
combined his initials with those of his family farm, Elmtaryd, and parish, Agunnaryd, located in the
2
forests of southern Sweden. Working out of the family kitchen, he sold goods such as fountain pens,
cigarette lighters, and binders he purchased from low-priced sources and then advertised in a
newsletter to local shopkeepers. When Kamprad matched his competitors by adding furniture to his
newsletter in 1948, the immediate success of the new line led him to give up th ...
2. IKEA Case Study
December 31, 2009
Table of Contents
About....................................................................................................................................................... 3
History ..................................................................................................................................................... 3
Corporate Structure ................................................................................................................................ 4
Vision and Mission .................................................................................................................................. 4
The IKEA Concept .................................................................................................................................... 5
IKEA Range .............................................................................................................................................. 5
IKEA Store................................................................................................................................................ 6
Design.................................................................................................................................................. 6
Location............................................................................................................................................... 7
Features .............................................................................................................................................. 7
Products .............................................................................................................................................. 8
Product names .................................................................................................................................... 8
Catalogue ............................................................................................................................................ 9
Loyalty Programme ............................................................................................................................. 9
Marketing .............................................................................................................................................. 10
Brand Management .......................................................................................................................... 10
The IKEA marketing mix .................................................................................................................... 11
Manufacturing ...................................................................................................................................... 11
Distribution ........................................................................................................................................... 11
Social and Environmental Initiatives ..................................................................................................... 13
Charitable Giving ............................................................................................................................... 13
Social Initiatives ................................................................................................................................ 13
Environmental Impact....................................................................................................................... 14
Facts and Figures................................................................................................................................... 15
2
3. IKEA Case Study
December 31, 2009
About
IKEA is a privately-held, international 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.
IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden and it is owned by a Dutch-
registered foundation controlled by the Kamprad family. The company which was originated in
Småland, Sweden, distributes its products through its retail outlets. As of August 2009, the chain has
301 stores in 37 countries, most of them in Europe, North America, Asia and Australia.
History
The IKEA Concept began when Ingvar Kamprad, an
entrepreneur from the Småland province in southern Sweden,
had an innovative idea. In Småland, although the soil is thin
and poor, the people have a reputation for working hard, living
frugally and making the most out of limited resources. So
when Ingvar started his furniture business in the late 1940s,
he applied the lessons he learned in Småland 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. The name IKEA comes from the initials of
Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the
farm and village where he grew up.
3
4. IKEA Case Study
December 31, 2009
Corporate Structure
Despite its Swedish roots, IKEA is owned and operated by a complicated array of not not-for-profit and
for-profit corporations. The IKEA corporate structure is divided into two main parts: operations and
divided
franchising. Most of IKEA's operations, including the management of the majority of its stores, the
design and manufacture of its furniture, and purchasing and supply functions are overseen by INGKA
Holding, a private, for-profit Dutch company. Of the IKEA stores in 36 countries, 235 are run by the
profit
INGKA Holding. The remaining 30 stores are run by franchisees outside of the INGKA Holding.
.
INGKA Holding is not an independent company, but is wholly owned by the Stichting Ingka
Stichting
Foundation, which Kamprad established in 1982 in the Netherlands as a tax exempt, not
tax-exempt, not-for-profit
foundation. The Ingka Foundation is controlled by a five member executive committee that is chaired
five-member
by Kamprad and includes his wife and attorney.
While most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation,
hile
the IKEA trademark and concept is owned by an entirely separate Dutch company, Inter IKEA
Systems. Every IKEA store, including those run by Ingka Holding, pays a franchise fee of 3% of the
pays
revenue to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated
and, ultimately, uncertain. Inter IKEA Systems is owned by Inter IKEA Holding, a company registered
in Luxembourg. Inter IKEA Holding, in turn, belongs to an identically named company in the
ng,
Netherlands Antilles that is run by a trust company based in Curaçao. The owners of this trust
company are unknown (IKEA refuses to identify them) but are assumed to be members of the
Kamprad family.
In Australia, IKEA is operated by two companies. Stores located on the East Coast including
Queensland, New South Wales, and Victoria are owned by INGKA Holding. Stores elsewhere in the
country including South Australia and Western Australia are owned by Cebas Pty Ltd. Like
elsewhere, all stores are operated under a franchise agreement with Inter IKEA Systems.
Vision and Mission
The IKEA vision, business idea and market positioning statement provide a framework for all IKEA
marketing communication worldwide.
The IKEA vision is "To create a better everyday life for the many
people." To meet this vision IKEA provides many wellwell-designed,
functional
functional products for the home. It prices its products low so that as
many people as possible can afford to buy them.
However, in creating low prices IKEA is not willing to sacrifice its
principles. ‘Low price but not at any price’ is what IKEA says. This
means
means it wants its business to be sustainable. IKEA supplies goods
and services to individuals in a way that has an overall beneficial effect
on people and the environment. Customers all over the world have
responded positively to IKEA’s approach.
The business idea 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."
The market positioning statement is "Your partner in better living. We do our part, you do yours.
ner
Together we save money."
4
5. IKEA Case Study
December 31, 2009
The IKEA Concept
The IKEA Concept is based on 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. Rather than
selling expensive home furnishings that only a few can buy, the IKEA Concept makes it possible to
serve the many by providing low-priced products that contribute to helping more people live a better
life at home. The IKEA Concept guides the way IKEA products are designed, manufactured,
transported, sold and assembled. All of these factors contribute to transforming the IKEA Concept into
a reality.
IKEA Range
Fundamental activities such as eating, sleeping, storing items, socialising and so on create a demand
for furniture and practical products that solve essential human needs. The IKEA product range meets
these needs 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. The IKEA range includes products
for every part of the home.
Low Price Function Design Uniquely IKEA
1. Design- While most retailers use design to justify a higher price, IKEA designers work in
exactly the opposite way. Instead they use design to secure the lowest possible price. IKEA
designers design every IKEA product starting with a functional need and a price. Then they
use their vast knowledge of innovative, low-cost manufacturing processes to create functional
products, often co-ordinated in style. Then large volumes are purchased to push prices down
even further. Most IKEA products are also designed to be transported in flat packs and
assembled at the customer's home. This lowers the price by minimising transportation and
storage costs. In this way, the IKEA Concept uses design to ensure that IKEA products can
be purchased and enjoyed by as many people as possible.
2. Function- The many people have many needs. They live with kids. They need more storage.
They have to make the most out of a small space. So IKEA designers are always seeking
new ways to improve people's lives - without emptying their wallets. But how can good design
and function be combined with good quality, all at a low price? It starts with focusing on
what's important. Will an expensive finish on the back of a shelf or under a table-top improve
the function? Absolutely not. So IKEA designers do not do it, because a product is of no use
to the customer if it is not affordable.
3. Low Price- Low price is a prerequisite for the IKEA Concept to realise the IKEA vision - "to
create a better everyday life for the many people". As the IKEA Concept aims to serve "the
many people", the IKEA product range needs extremely low price levels. IKEA designers do
their part to keep prices low by using production capabilities from other areas in unique and
previously unimagined ways - like having a shirt factory produce furniture upholstery. Or using
leftover materials from the production of one product to create an entirely new one. IKEA
customers also contribute to keeping prices low. They select and pick up the products
themselves, transport them home and then assemble them themselves. And they can enjoy
them already later that day.
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6. IKEA Case Study
December 31, 2009
IKEA Store
Design
IKEA stores are usually very large blue buildings with few windows and
yellow accents. They are designed around a "one-way" layout which
leads customers along "the long natural way." This layout is designed to
encourage the customer to see the store in its entirety (as opposed to a
traditional retail store, which allows a consumer to go right to the section
where the goods and services needed are displayed) although there are
often shortcuts to other parts of the showroom.
The sequence first involves going
through furniture showrooms
making note of selected items. Then
the customer collects a shopping
cart and proceeds to an open-shelf
warehouse for smaller items
(Market Hall). Then the customer
visits the furniture warehouse (Self
Serve) where they collect previously noted showroom products in
flat pack form. Sometimes they are directed to collect products
from an external warehouse on the same site or at a site nearby.
Finally they take their products to the cashier's station to make
payment. Newer IKEA stores, make more use of glass, both for
aesthetic and functional reasons. Skylights are also now common
in the Self-serve warehouses. More natural light reduces energy
costs, improves worker morale and gives a better impression of
the product.
Whilst the original design involved the warehouse on the lower level and
the showroom and marketplace on the upper, today most stores globally
have the Showroom upstairs with the marketplace and warehouse
downstairs. Additionally, some stores are single level. Some stores
maintain separate warehouses to allow more stock to be kept on-site at
any given time, although this occasionally results in challenges in finding
the items, as well as a perception of having to queue in line twice.
Single-level stores are found predominantly in areas where the cost of
land would be less than the cost of building a 2-level store – examples
include the store in Saarlouis, Germany and Haparanda, Sweden. Some
stores also have dual level warehouses and machine controlled silos
which allow large quantities of stock to be accessed throughout the
sselling day.
Most IKEA stores offer an "as-is"
area at the end of the warehouse
just prior to the cashiers.
Returned, damaged and formerly
showcased products which are
not in new condition or taken out
of the IKEA product range are
displayed here, and sold with a
significant discount, but also with
a "no-returns" policy. Most IKEA stores communicate the IKEA
policy on environmental issues in the "as-is." In the United
Kingdom, this is referred to as "Bargain Corner."
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Location
The vast majority of IKEA stores are located outside of city centres, primarily because of land cost
and traffic access. Several smaller store formats have been unsuccessfully tested in the past (the
2
"midi" concept in the early 90s, which was tested in Ottawa and Heerlen with 9,300 m , or a
"boutique" shop in Manhattan).
Features
1. Timings- An important feature of many IKEA stores is their long opening hours. Many IKEA
stores are in operation 24 hours a day with restocking and maintenance being carried out
throughout the night. However, public opening hours tend to be much longer than most other
retailers, with stores open well into the evening in many countries. In the UK for example,
almost all stores are open past 8pm with opening times often around 9-10am. Ikea Croydon
has one of the longest opening hours worldwide being open from 10am 12 Midnight Monday
to Friday.
2. Restaurants- Many stores include restaurants
serving traditional Swedish food such as
potatoes with Swedish meatballs, cream sauce
and lingonberry jam, although there are
variations. Besides these Swedish staples, hot
dogs and drinks are also sold, the latter for
around 5 SEK (approx $1 USD), along with a
few varieties of the local cuisine, and
beverages such as lingonberry juice. Also
items such as Prinsesstårta — Princess cake
are sold as desserts. Refills of coffee, tea, and
soft drinks are free of charge, even in countries
where this is uncommon in other restaurants.
3. Grocery Store- Many stores also have a mini-
shop selling Swedish-made, Swedish-style groceries,
such as Swedish meatballs, packages of gravy and
various Scandinavian cookies and crackers, as well as
salmon and salmon roe.
4. Child Care- Many stores have a play area, named
Småland, for children aged 3 to 10 years (may
vary). The service is offered completely free of
charge. Parents drop off their children at a gate to
the playground, and pick them up after they arrive
at another entrance. Parents are also given free
pagers by the on-site staff; the staff will set off these
pagers should a child need his/her parents sooner
than expected. The area mostly features things
such as slides, seesaws, cartoons, a ball pit, etc.
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8. IKEA Case Study
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Products
Much of IKEA's furniture is designed to be
assembled by the consumer rather than being sold
pre-assembled. IKEA claims this permits them to
reduce costs and use of packaging by not shipping
air; the volume of a bookcase, for example, is
considerably less if it is shipped unassembled
rather than assembled. This is also a practical point
for many of the chain's European customers, where
public transport is commonly used; the flat-pack
distribution methods allow for easier transport via
public transport from the store to a customer's
home for assembly.
IKEA contends that it has been a pioneering force
in sustainable approaches to mass consumer
culture. Kamprad refers to the concept as
"democratic design," meaning that the company
applies an integrated approach to manufacturing
and design. In response to the explosion of human
population and material expectations in the 20th
and 21st century, the company implements
economies of scale, capturing material streams and
creating manufacturing processes that hold costs
and resource use down, such as the extensive
use of particle board. The intended result is
flexible, adaptable home furnishings, scalable
both to smaller homes and dwellings as well as
large houses. IKEA has also expanded their
product base to include flat-pack houses, in an
effort to cut prices involved in a first-time buyer's
home
Product names
IKEA products are identified by single word names. Most of the names are Swedish in origin.
Although there are some notable exceptions, most product names are based on a special naming
system developed by IKEA in conjunction with Colin Edwards (international naming expert and
furniture enthusiast).
• Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs:
Swedish placenames (for example: Klippan)
• Beds, wardrobes, hall furniture: Norwegian place names
• Dining tables and chairs: Finnish place names
• Bookcase ranges: Occupationss
• Bathroom articles: Scandinavian lakes, rivers and bays
• Kitchens: grammatical terms, sometimes also other names
• Chairs, desks: men's names
• Materials, curtains: women's names
• Garden furniture: Swedish islands
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9. IKEA Case Study
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• Carpets: Danish place names
• Lighting: terms from music, chemistry, meteorology, measures, weights, seasons, months,
days, boats, nautical terms
• Bedlinen, bed covers, pillows/cushions: flowers, plants, precious stones
• Children's items: mammals, birds, adjectives
• Curtain accessories: mathematical and geometrical terms
• Kitchen utensils: foreign words, spices, herbs, fish, mushrooms, fruits or berries, functional
descriptions
• Boxes, wall decoration, pictures and frames, clocks: colloquial expressions, also Swedish
place names
For example, DUKTIG (meaning: good, well-behaved) is a line of children's toys, OSLO is a name of
a bed, BILLY (a Swedish masculine name) is a popular shelf, DINERA (meaning: (to) dine) for
tableware, KASSETT (meaning: cassette) for media storage. One range of office furniture is named
EFFEKTIV (meaning: efficient), SKÄRPT (meaning: sharp or clever) is a line of kitchen knives.
Because IKEA is a worldwide company working in several countries with several different languages,
sometimes the Nordic naming leads to problems where the word means something completely
different to the product. While exotic-sounding names draw attention, e.g., in anglophone countries, a
number of them call for a snicker. Notable examples include "Jerker" desk and "Fartfull" workbench.
Also, the most recent new product, Lyckhem (meaning bliss). The products are generally withdrawn,
probably after someone pointed at blunders, but not before generating some news.
Company founder Ingvar Kamprad, who is dyslexic, found that naming the furniture with proper
names and words, rather than a product code, made the names easier to remember.
Catalogue
IKEA publishes an annual catalogue. First published in
Swedish in 1951, the catalogue is now published in 55 editions,
in 27 languages for 36 countries, and is considered to be the
main marketing tool of the retail giant, consuming 70% of the
company's annual marketing budget.
The catalogue is distributed both in stores and by mail. Most of
the catalogue is produced by IKEA Communications AB in
IKEA's hometown of Älmhult, Sweden where IKEA operates the
largest photo studio in northern Europe at 8,000 square metres
in size. The catalogue itself is printed on chlorine-free paper of
10-15% post-consumer waste.
Loyalty Programme
IKEA has launched a loyalty card programme called "IKEA Family." The
distinctive orange card is free of charge and can be used to obtain
discounts on a special range of products found in each IKEA store. In
particular, it gives 25% off the price of commissioned ranges of IKEA
products on presentation of the card. The card also gives discounts on
food purchased in the restaurant and the Swedish Food Market. In
conjunction with the card, IKEA also publishes and sells a printed
quarterly magazine titled IKEA Family Live which supplements the card
and catalogue. The magazine is already printed in thirteen languages
and an English edition for the United Kingdom was launched in
February 2007. It is expected to have a subscription of over 500,000.
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Marketing
Brand Management
The IKEA brand is the sum total of the emotional and rational
values that consumers associate with the IKEA trademark
and the reputation of our company. The brand image is the
result of over 50 years work by IKEA co-workers at all levels
all over the world.
Marketing Communication
The overall task of IKEA marketing communication is to build the IKEA brand and inspire people to
come to the stores. The IKEA concept builds on a relationship with the consumer. Nine key messages
are used within the IKEA marketing communication to build this relationship. These are
• The IKEA concept is based on the market positioning statement. "We do our part"
focuses on their commitment to product design, consumer value and clever solutions.
By using inexpensive materials in a novel way and minimising production, distribution
and retail costs, their customers benefit from low prices.
• The IKEA product range is developed to be extensive to have something that appeals
to everyone and to cover all functions in the home. The products are modern not trendy
so they are practical enough for everyday use.
• IKEA is the home furnishing specialist- IKEA products are functional and appealing;
they enable people to improve their home life through practical solutions to everyday
problems.
• Low price is not appealing unless it represents good value for money. This is where
IKEA is able to make a real difference. IKEA is committed to having a good relationship
with our suppliers and so we are able to purchase good quaility, economically produced
designs that are bought in bulk to keep costs down. By making all their furniture flat
packed they cut down on transportation and assembly costs.
• Function - IKEA products are based on a functional approach to design. IKEA design
means products that are attractive, practical and easy to use. They don't have
unnecessary features, they give genuine solutions for specific home furnishing needs
and are made of the most suitable materials for their purpose.
• The right quality- IKEA products are subjected to rigorous tests to make sure that they
meet national and international safety standards.
• Convenient shopping- The IKEA store offers "everything under one roof", most of it
available for immediate take-away. IKEA offers service where they need it, but allows
customers to make most of the decisions themselves. This means that they need to
make it easy to choose the right products by displaying them correctly, describing them
accurately and having a simple returns policy.
• A day out for the whole family- IKEA aim to look after thier customers by planning for
their needs. Not only do they provide inspiration and ideas, but they also encourage
people to touch, feel and use the products on display to see how they would fit into their
own home. They have new products arriving all the time, seasonal themes, play areas
for children, special events and a great value family restaurant.
• Swedish IKEA, - The key IKEA messages all have their roots in the Swedish origin of IKEA.
Swedish furniture is light and fresh yet unpretentious. The warm welcoming Swedish style has
become a model of simplicity, practicality, and informality that is now world renown.
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The IKEA marketing mix
IKEA has a long tradition in marketing communication focusing primarily on printed media which has
proven its values and success to the company over the years. Other media now being used to an
increasing degree include TV, radio, and internet based communication.
The IKEA marketing mix consists of 4 different areas of focus.
1. The IKEA product range is our starting point. All other marketing communication is used to
amplify the product range.
2. The store is the IKEA retailer’s primary medium for presenting and communicating the range,
its low price and the IKEA concept.
3. The IKEA catalogue is the main marketing tool with around 70% of of the annual marketing
budget being spent on this alone. It is produced in 38 different editions, in 17 languages for 28
countries. 110 million catalogues were circulated last year - three times higher than that of the
Bible, with 13 million of these being available in the UK.
4. The IKEA advertising, PR and other types of communication are complements to the
IKEA range; store and catalogue are used to spearhead the penetration of our target market.
Manufacturing
Although IKEA household products and furniture are designed
in Sweden, they are largely manufactured in developing
countries to keep down costs. With suppliers in 50 countries,
roughly 2/3 of purchasing is from Europe with about 1/3 from
Asia. A small amount of products are produced in North
America. Comparatively little production actually takes place
in Sweden, though it still remains the fourth-largest supplier
country (behind China, Poland and Italy). China accounts for
about 2.5 times as much supply as Sweden. For most of its
products, the final assembly is performed by the end-user
(consumer).
Distribution
For IKEA, distribution is an important part of the equation of creating home
furnishing articles at prices which are as low as possible. Today
approximately 10,000 IKEA products are manufactured by 1,600 suppliers
and transported to 186 IKEA stores around the world, often via one of the
company’s 27 centra l warehouses and distribution centres. At IKEA,
distribution is all about making the route from the manufacturer to the
customer as short as possible.
In the early days of IKEA, the “warehouse” was a shed on Elmtaryd Farm in
the south of Sweden where the founder of the company, Ingvar Kamprad,
lived with his parents. In those days products were despatched from Elmatryd
with the help of the county milk van that visited the farm each day. Things have changed a bit since
then, however. Today IKEA operates 27 distribution centres in a total of 16 countries. From here IKEA
products are delivered to 186 stores around the world – 165 IKEA Group stores and a further 21
stores operated by other franchisees.
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Large volumes + flat packs = low costs
IKEA works in various ways not only to rationalise and simplify distribution, but also to minimise the
impact this part of the business has on the environment. The secret is to calculate as exactly as
possible how many products will be needed to satisfy demand. This eliminates any unnecessary costs
for production and warehousing.
The hallmarks of IKEA distribution are:
• A global distribution network
• large volumes
• flat packages
• Low costs.
The aim, of course, is to make sure that the right products are always available at the store when the
customers wish to buy them.
Better efficiency means lower prices
The fact that IKEA products are sold packed fl at means that they can be transported with greater
efficiency. By minimising “wasted space” it is possible to transport and store more packages at a time.
And by increasing what is known as “the filling rate” in containers etc. (in other words, reducing the
amount of wasted space), the cost of transporting each item goes down. One good example of this is
HOTT kettle. Making better use of the available space by stacking some of the kettles upside down
makes it possible to fit ten kettles into a box instead of just six. As a result, less packaging materials
are needed and distribution costs are kept lower.
More deliveries by rail in future
Today 60 percent of all IKEA freight is transported by road, 20 percent by rail and 20 percent by sea.
Less than one percent is air freighted. The aim is to constantly increase the proportion of goods
transported by rail. Within the next three years 40 percent of all IKEA freight within Europe will be
moved by rail. For some years now, all the freight companies working with IKEA have been required
to provide statistics for a so called “Environmental Performance Sheet” that details how their
operations impact on the environment. This enables IKEA to keep a check on these companies’
environmental work and to monitor what measures they are introducing to reduce the use of fuel and
minimise emissions.
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Social and Environmental Initiatives
Charitable Giving
The INGKA Foundation is officially dedicated to
promoting “innovations in architecture and interior
design.” With an estimated net worth of $36 billion, the
foundation is unofficially the world’s largest charitable
organization, beating out the much better known Bill and
Melinda Gates Foundation, which has a net worth of
approximately $33 billion.
Despite its enormous wealth, the Ingka Foundation
does very little charitable giving. Detailed information
about its grantmaking is unavailable, as foundations in
the Netherlands are not required to publish their records.
But IKEA has reported that in 2004-2005, the Ingka
Foundation's donations were concentrated on the Lund
Institute of Technology in Sweden, and the Lund
Institute reported the receipt of $1.7 million grants from the foundation during both of those years. By
way of comparison, the Gates Foundation made gifts of more than $1.5 billion in 2005.
Notwithstanding the Ingka Foundation's lack of concerted philanthropic activity, IKEA is involved in
several international charitable causes, particularly in partnership with UNICEF. These include:
• In the wake of the 2004 Boxing Day Tsunami, IKEA Australia agreed to match dollar for dollar
co-workers donations and donated all sales of the IKEA Blue Bag to the cause.
• After the Pakistan earthquake of 2006, IKEA gave 500,000 blankets to the relief effort in the
region
• IKEA has provided furniture for over 100 "bridge schools" in Liberia.
• In the 2008 Sichuan earthquake in China, IKEA Beijing sold an alligator toy for 40 yuan
(US$5.83, €3.70) with all income going to the children in the earthquake struck area
IKEA also supports American Forests to restore forests and reduce pollution.
Links with Education In 2008 IKEA was a supporter of the Design Wales Ffres Awards, providing a
creative brief for undergraduate design competition.
Social Initiatives
In September 2005 IKEA Social Initiative was formed to
manage the company’s social involvements on a global level.
IKEA Social Initiative is headed by Marianne Barner. The
main partners to IKEA Social Initiative are UNICEF and Save
the Children.
On the 23rd of February 2009 at the ECOSOC event in New
York, UNICEF announced that IKEA Social Initiative has
become the agency’s largest corporate partner, with total
commitments of more than 180 million USD.
Examples of involvements:
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14. IKEA Case Study
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• IKEA through IKEA Social Initiative contribute €1 to UNICEF and Save the Children from each
soft toy sold during the holiday seasons, raising a total of €16.7 million so far.
• IKEA Social Initiative provided soft toys to children in cyclone affected Myanmar.
• Starting in June 2009, for every Sunnan solar-powered lamp sold in IKEA stores worldwide,
IKEA Social Initiative will donate one Sunnan with the help of UNICEF.
Environmental Impact
In 1990, IKEA invited Karl-Henrik Robèrt, founder of The Natural Step, to address its board of
directors. Robert's system conditions for sustainability provided a strategic approach to improving the
company's environmental performance. This led to the development of an Environmental Action Plan,
which was adopted in 1992. The plan focused on structural change, allowing IKEA to "maximize the
impact of resources invested and reduce the energy necessary to address isolated issues." The
environmental measures taken, include the following:
• Replacing polyvinylchloride (PVC) in wallpapers, home textiles,
shower curtains, lampshades, and furniture—PVC has been
eliminated from packaging and is being phased out in electric
cables;
• minimizing the use of formaldehyde in its products, including
textiles;
• producing a model of chair (OGLA) made from 100% post-
consumer plastic waste;
• introducing a series of air-inflatable furniture products into the
product line. Such products reduce the use of raw materials for
framing and stuffing and reduce transportation weight and
volume to about 15% of that of conventional furniture;
• reducing the use of chromium for metal surface treatment;
• using wood from responsibly-managed forests that replant and
maintain biological diversity;
• using only recyclable materials for flat packaging and "pure"
(non-mixed) materials for packaging to assist in recycling.
• introducing rental bicycles with trailers for customers in Denmark.
More recently, IKEA has stopped providing plastic bags to customers, but
offers reusable bags for sale. The IKEA restaurants also only offer
reusable plates, knives, forks, spoons, etc. Toilets in some IKEA restrooms have been outfitted with
dual-function flushers. Most stores only offer paper plates and plastic knives, forks, and spoons. IKEA
has recycling bins for compact fluorescent lamps (CFLs), energy saving bulbs, and batteries. In 2001
IKEA was one of the first companies to operate its own cross-border freight trains through several
countries in Europe. In August 2008, IKEA also announced that it had created IKEA GreenTech, a
€50 million venture capital fund. Located in Lund (a college town in Sweden), it will invest in 8-10
companies in the coming five years with focus on solar panels, alternative light sources, product
materials, energy efficiency, and water saving and purification. The aim is to commercialise green
technologies for sale in IKEA stores within 3–4 years.
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Facts and Figures
Turnover (million EURO)
22498 22713
20685
17658
15213
13570
4396
1216
1 25 169
1954 1964 1974 1984 1994 2004 2005 2006 2007 2008 2009
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