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Ikea
IKEA was founded in 1943 by Ingvar Kamprad in Sweden. It pioneered a business strategy focused on cost-consciousness through global sourcing of low-cost materials, flat-pack furniture kits, and do-it-yourself assembly. This allowed IKEA to sell furniture at much lower prices than competitors. Over time, IKEA expanded globally through new store openings and evolved its strategy and product offerings while maintaining a focus on simplicity, affordability, and accessibility for customers.
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Ikea
- 1. Edward Na Jun hee Kim Erdem Tokmakoglu
- 2. Contents I. Company Origins II.IKEA Strategy – Early Stages III. IKEA Strategy – Up to Recent Stages IV.New Directions and Future
- 3. Ingvar Kamprad, Management Philosophy and PracticesIngvar Kamprad, Management Philosophy and Practices
- 4. I ngvar K amprad Elmtaryd A gunnyard
- 5. IKEA Timeline 1943 IKEA founded by Ingvar Kamprad 1947 Furnitures introduced into IKEAs product range 1953 First showroom introduced in Älmhult 1955 Begin to design their own furniture 1963 First international expansion in Oslo (Norway) 1965 Flat packages and Knock-down kits introduced 1974 opened warehouses in Munich (Germany) and Zurich (Switzerland) 1976 First expansion outside Europe, Vancouver (Canada) 1986 Anders Moberg appointed 2° CEO 1997 Launch of website www.IKEA.com 2013 IKEA Group exceeds 100,000 co-workers operating in 44 countries.
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- 8. Ingvar Kampard, Management Philosophy and Practices ‘ To create a better everyday life for the majority of the people ’‘ To create a better everyday life for the majority of the people ’
- 9. Ingvar Kamprad “Only whilesleeping one makes no mistakes”
- 10. Testament of afurniture dealer 1. Product range, profile, quality – our identity 2. IKEA spirit. A strong and Living Reality 3. Profit gives us resources 4. To Reach Good Results with Small Means 5. Simplicity is a Virtue 6. The Different Way 7. Concentration of Energy – Important to our Success 8. To Assume Responsibility – A privilege 9. Most Things Still Remain to be done. A Glorious Future
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- 12. IKEA strategy –Early Stages Cost- consciousness Product range - finding low priced materials - matching products to capabilities - developing long-term relationships with suppliers
- 13. Excessive differentiation and wheel reinventions -> unnecessary expenses Greater coordination & standardization began to arise -> ex ) studios : standardized in-store display areas IKEA strategy – Early Stages
- 14. Ingvar Kampard, Management Philosophy and Practices
- 15. Designing Interactive Strategy(1993) ž Strategy is the art of creating value Global Competition Changing Markets New Technology “Qualitatively New Ways of Creating Value” Forecasts based on Projections Unreliable Harder More Opportunities More Uncertainties Greater Risk
- 16. Successful companies ž Not just add value, but reinvent it ž The focus of strategic analysis is not the company or even the industry but the value-creating system itself ž Create an ever-improving fit between competencies and customers ž Strategy as systematic social innovation;; the continuous design and redesign of complex business systems
- 17. IKEA: The Wealthof Realizing New Ideas ž IKEA’s transformation from a small Swedish mail-order furniture operation into the world’s largest retailer of home furnishings Simple Global Sourcing Customer self-service
- 19. The IKEA Effect:When Labor Leads to Love(2011) ž Labor is not just a meaningful experience – it’s also a marketable one. ž E.g.) Instant cake mixes ž Labor enhances affection for its results ž When people construct products themselves, they come to overvalue their (often poorly made) creations. ž Origami, they valued them as highly as origami made by experts
- 20. The limits ofIKEA Effect Ø Only when the labor is fruitful: when participants failed to complete an effortful task, the IKEA effect dissipated Ø Difficult enough to lead to higher valuation but not so difficult that customers can’t complete them
- 21. The Experimental Rootsof Revolutionary Vision (2006) ž A Process of deliberate formulation? ž A General Vision ž Both proactively developed a viable course of action and reactively adapted to the circumstances How did IKEA’s revolutionary strategy come about? Global product sourcing Customer self- service Plenty of Amenities Unusual shopping experience Well- designed furniture
- 22. Logical Incrementalism ž Actual strategic management practices have little resemblance to the rational and analytic approach to strategic planning ž In the real world, the processes are often fragmented, evolutionary and largely intuitive ž A general sense of direction is necessary to guide the organization and its employees
- 23. How IKEA’s StrategyWas Created ž Continuation of adaptation and improvement rather than deliberate strategy ž E.g.) Global Sourcing of products (50% lower) IKEA’s strategy consisted of selling furniture at much lower prices the Swedish retail cartel warned local manufacturers Looking for suppliers outside Sweden to overcome a boycott
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- 28. Concerns ž A-class sites žLess efficiency and less willing employees ž Risky investments as 4-6 stores every year ž Increasing median age and income level ž Standardization failures
- 29. Competition ž IntratypeCompetition — Crateand Barrel — Pier 1 — Pottery Barn — Furniture retailers utilizing similar store layouts ○ M.Jacobs ○ Ashley’s Home Furnishin gs ○ EthanAllen ž Intertype Competition — Home Improvement Stores ○ Home Depot ○ Jerry’s — Department Store’s ○ Meier & Frank ○ Macy’s — Discount Retailers ○ Wal-Mart ○ Fred Meyers
- 30. IKEA ž The reconfigurationvalue chain gives ü less cost of maintaining manufacturing facilities ü Cost savings from the outsources and delivery servic e ü Creates wide market segments ü Unique features stores
- 31. IKEA ž Cost Leadership& Product Differentiation — Ware-house sales so no delivery prices — self-service — flat-pack boxes — Unified Modern Design — Low price materials as pinewood — Matching products to capabilities — Monopoly created by economies of scale — Tax
- 33. Discussion Questions ž For the future, as IKEA expands further i nto new markets, will it be more benefici al for the brand to stick to consistent str ategy or to adopt more to local market? ž Would it make sense to extend the bran d towards a more upscale product line? 0-25 47% 25-35 32 35-45 14 45+ 7 Design 14% Price 44% Quality 3% Large assortment 16% Catalog 11% Recommendations 1% Guarantees 0 Others 11%