IKEA has been able to reduce the price of its furniture by outsourcing production to low-cost regions like Eastern Europe and Asia. It maintains close relationships with over 1,400 suppliers, with the majority located in China and Poland. IKEA owns the rights to its product designs and minimizes costs through outsourcing all production activities while developing extensive supply chains abroad. It also established Swedwood as a subsidiary supplier with advanced production facilities, mainly in Eastern Europe, to further reduce costs. In China, IKEA planned to open 10 stores by 2010 to reflect Chinese apartment layouts and offer rare home delivery given low car ownership rates.

2. IKEA – THE GLOBAL TRAILER

9. ▲

12. IKEA – THE GLOBAL TRAILER

18. Price of Furnitures
200
100
0
IKEA could reduce the price of the Klippan
by some 40 % between 1999 to 2006.
IKEA gains competitive price.

26. Minimize Production Costs
through outsourcing
Main Components
Outsourcing
All Production
Activities
Development of
Supply Chains in
Low-Cost Regions
Maintain
Product Rights
Establishment of
Swedwood
Features
Est. supplier relationships in Eastern Europe (e.g.
Czech Republic, Romania, Hungary) and in Asia
(e.g. China, Indonesia, Malaysia)
App. 1400 suppliers(2009) -China(22%),
Poland(16%)
Ownership of product rights
Well switching and close relationships
Allowfunctioningsuppliers when necessaryw/
suppliers of IKEA(est. 1991)
Subsidiary
Evolved into a supplier with advanced production
facilities of its own, mainly in Eastern Europe
Source: Global Sourcing Development at IKEA – a Case Study Paper prepared for the 25th IMP
conference

27. Transnational strategy
: IKEA CHINA
 Planned 10 stores by 2010
 Reflected the layout of Chinese apt in IKEA stores:
Balcony
 Home delivery Service: Rare car ownership

30. IKEA – THE GLOBAL TRAILER