IKEA Company Background

      IKEA was founded in 1943 by a Swedish entrepreneur Ingvar Kamprad , who still has control over the company through the INGKA Foundation, based in the Netherlands. Swedish company IKEA was the world's largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design. Nowadays, the company operated in 55 countries with a workforce of 76,000. IKEA offered nearly 12,000 items to the home furnishings market worldwide. It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, Middle East and Australia. IKEA enjoyed high brand equity.

IKEA’s global strategy

    • The concept which IKEA calls “democratic”

      It is a main concept of design that, according to Kamprad, “was not just good, but also from the start adapted to machine production and thus cheap to assemble.”

    • A key feature of IKEA: self-assembly

      Kamprad quickly realized that flat-packed furniture reduced transport and warehouse costs, and damage (IKEA had been having a lot of problems with furniture damaged during the shipping process).   Moreover, customers seemed willing to take on the task of assembly in return for lower prices. By 1956, self-assembly was integral to the IKEA concept.

Obstacles that lead to the company powerful development

    • (Problem) Kamprad could undercut the prices of established retail outlet, much to their chagrin. Established outlet claimed that IKEA was imitating their designs. This was to no avail, however, so the retailers went further, pressuring furniture manufacturers not to sell to IKEA.

• (Solution) This had two unintended consequences. First, without access to the designs of many manufacturers, IKEA was forced to design more of its products in-house. Second, Kamprad looked for a manufacturer who would produce IKEA-designed furniture. Ultimately, he found one...