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.

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
E lmtaryd
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.

6. Income Statement (12’)

7. Facts & Figures

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 while sleeping one makes no mistakes”

10. Testament of a furniture 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

11. Ödmjukhet

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 Wealth of 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 of IKEA 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 Roots of
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 Strategy Was 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

25. New Horizons
NewHorizons

26. Accelerated Expension
AcceleratedExpension

28. Concerns
ž A-­class sites
ž Less 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
— Crate and 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 reconfiguration value 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%