...OVERVIEW OF IKEA HISTORY Ingvar Kamprad: The founder of IKEA, Ingvar Kamprad, began his business career as a young boy selling matches purchased in bulk individually for a profit to his neighbors near Agunnaryd. As his business grew, he expanded to selling fish, seeds, Christmas decorations and eventually, pencils and ball-point pens which were a new phenomenon in 1935. He was very clever in utilizing his resources - he delivered his goods by bicycle, and later used the local milk delivery vehicle to make deliveries. IKEA: In 1943, with a gift from his father, Ingvar established his business, using his initials, Ingvar Kamprad, the name of the farm on which he was born, Elmtaryd and the village nearby, Agunnaryd for the acronym. At this time, he was selling everything from pens and wallets to watches and nylon stockings by going door to door and selling directly to his customers. By 1945, the first advertisements for IKEA began showing up in local newspapers and he had developed a rudimentary catalog. IKEA Store: The first full IKEA store opened in Älmhult in 1958. With 6700 m2 (72,118 ft2), it was the largest furniture display in all of Scandinavia. In 1963, the first IKEA store outside Sweden opened near Oslo in Norway, followed by the flagship store in Stockholm - a whopping 45,800 m2 (492,987 ft2) circular store inspired by the Guggenheim Museum in New York City. The success of this store, and difficulties in serving customers due to an overfilled capacity led to...
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...REASON BEHIND SUCCESS 5 LITERATURE REVIEW 7 CONCLUSION 7 REFERENCE LIST 8 INTRODUCTION According to Richard Branson (2000) innovative business is one that live and breathes in out of box thinking and its not just good idea but combination of good ideas and motivated staff and good understanding of customer wants and needs. (Tidd et.al. , 2005) When we talk about IKEA , we start thinking of words like innovative furnishing , cheap , great quality , modern , good store . Ikea has been able to bring a cultural shift how furniture is purchased and who buys the furniture i.e. now middle income families and younger generation are also buying modern furniture as its cheap. Ikea is prime example of out of box innovation as they introduced things like flat pack furniture , furniture catalog , particle board furniture , restaurant in furniture store , and store layout ( ikea maze) where customers travel to all the departments of the store making people imaging their future homes which have previously never done by furniture store as only traditional furniture store were there with their expensive needed to be custom made. Main purpose of the report understand how innovation leads and supports entrepreneurship. This report also give brief history and knowledge of Ingvar Kamprad : the father of modern furnishing and how his idea caused the cultural shift in todays society and also factors leading to the success of his idea and...
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...IKEA CASE STUDY by Kasimir.v.k 1) In the early 1970s, IKEA became the largest retailer in Sweden. For the first time, a company changed the concept of furniture. They revolutionized the idea of simple-using furniture. This has been a market niche they entered during the early 1970s, which had an effective impact since furniture retailing did not work well. In addition, IKEA was able to offer the same quality or even better than other Swedish furniture manufactures for a much lower price. This was the first competitive advantage they had at that point; decent quality and low price. Another aspect that led to IEKA’s advantage was that at that point in time, Europe had a much smaller market, meaning it was easy to enter. The key success factors for IKEA were that they have been able to control the customer traffic at the checkouts and the merchandise pickup areas. This was allowing customers to pick up flat-packed furniture to so easily transport it to their homes, while saving maintenance costs. In addition, damage occurred during the transport minimized after flat-packing. The other key success factor was that they were able to compete with their prices in the market that turned them to a leading company in this business. 2) IKEA’s success of entering the European market was due to the low competition. Furniture organizations weren’t that developed and efficient, compared to IKEA. In addition, being part of Europe, the company had a good understanding of what the taste...
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...1. What factors account for the success of IKEA? The IKEAs success is derived from three factors. * Low price – 30% - 50% lower than market prices * Scandinavian design and style - good design and functional * Well-designed shopping area to be immensely appealing to customers– cheerful decorated model room, bright and inviting atmosphere, childcare centers, restaurant, etc. 2. What do you think of the product strategy? The product strategy of IKEA is to provide low price products but have meaning at well-designed shopping areas. In other words, IKEA provides cheap products with good design which will not make customers feel cheap at the place where they can enjoy shopping with their families. To provide cheap products, IKEA has global sourcing network. In addition, IKEA has a rigid cost saving culture. 3. Despite the success, what are Ikea downsides? * American Culture - Americans are notorious for their reluctance to buy new furniture. To expand in the US market, IKEA needs to sell product as much as possible and thus, IKEA needs to change the fix idea in the US. * Scandinavian design and style - There is no doubt that the Scandinavian design and style are attractive. However, IKEA needs to adopt some American style (Colonial American, American Country, Mission, Southwestern and Shaker) to meet American needs. * High-end Retailers – Competition with high-end retailers could be the downside factor. High-end retailers offer exclusive services...
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...IKEA WRITTEN REPORT SUMMARY Introduction:............................................................................................................................................ 3 First question: .......................................................................................................................................... 3 IKEA’s business model: ........................................................................................................................ 3 IKEA’s strengths and weaknesses:....................................................................................................... 4 IKEA’s competences: ........................................................................................................................... 5 Summary about IKEA’s successful: ...................................................................................................... 7 Conclusion: .......................................................................................................................................... 7 Second question: ..................................................................................................................................... 7 The drivers of their internationalization: ............................................................................................ 8 IKEA’s internationalization strategy: ................................................................................................... 9 IKEA’s...
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...Porter's Value Chain model help explain the source(s) of IKEA'S competitive advantage? Ikea is a Swedish global furniture retailer, established in 1943 by Ingvard Kampard. It is well known for it’s wide range of functional, uniquely designed, low-priced home furnishings that has 330 stores across 40 countries. With its annual turnover reaching 140billion USD many are wondering what the stores secret to success is. This report will take a strategic approach into analysing IKEA’s competitive advantage through Porter’s value chain model, which divides the actions of a firm into two categories: support activities that can assist businesses to become successful in the marketplace, in Ikea’s case these are Human Resource Management, firm infrastructure, procurement and technology development. The second category, which this essay will look closely at, are the primary activities such as inbound logistics, operations, and outbound logistics, marketing and sales and service. IKEA’s supply chain management has gone from decentralised to centralised planning of its network of suppliers, distribution centres (DCs), stores and forwarders. This has taken them from a fragmented management to a coordinated, centralised supply chain planning (Jonsson, Rudberg and Holmberg, 2013). With IKEA’s stakeholders demanding to know the origins of the supplier’s ethics towards their workers and the environment, IKEA are recognising that their supply chain must be sustainable, transparent and not opaque...
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...IKEA: Expanding globally Introduction……………………………………………………………………………….3 1. A learning organization: understanding the culture of learning and innovation….3 2.1 General concept of learning organization……………………………………3 2.2 IKEA – a learning organization in various market:………………………….4 2. IKEA’s internationalization strategy ……………………………………………..6 3.3 Internationalization strategy from 1974 onwards ……………………………6 3.4 From the perspective of internationalization theories: ………………………7 3. Issued considered in international market research and opportunity analysis: ….9 3.1The Japanese and Chinese market: ……………………………………………9 3.2 The Brazilian market: ………………………………………………………..9 4. IKEA’s entry mode strategy: …………………………………………………...12 5.5 Subsidiaries………………………………………………………………….13 5.6 Franchising………………………………………………………………….13 Summary Introduction Globalization is now playing an important role in the growth of economies across the world. The rapid growth of its process has led to social, economic, technical, cultural and ecological interdependence among nations. It also provides new and potentially profitable markets, increases firms’ competitiveness, facilitates access to new product ideas, manufacturing innovations. Thanks to its numerous advantages, the world is moving closer together and a great deal of organizations has great opportunities to expand their market to foreign ones. IKEA, the world’s largest furniture retailer, did not...
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...IKEA Analysis Report Many companies and corporations struggle daily to sustain a competitive advantage and build a strong values-based service. The core difficulty that these companies face is how to create value for their customers and stakeholders such as suppliers and coworkers. A values-based service company can be built and be effective, however, the framework has to be set to ensure success. IKEA group has implemented a framework for the international company and has succeeded in sustainability as a values-based service company. Values-based service consists of attracting and retaining customers to make profits while creating value for customers (Edvardsson, 2006). Customers in today’s society need value added to the customer shopping experience through brand and service (Edvardsson, 2006). The key factor in brands is to show the consumer or customer how one brand differentiates from another and how it can meet that customer’s needs (Edvardsson, 2006). For example, IKEA offers top quality furniture at affordable prices, which also does not lack style and design. The market that IKEA targets wants style, and quality without having to break the bank in which IKEA unquestionably provides to its consumers and stakeholders. Furthermore, service is rooted in a customer’s experience and can also add or decrease value to a brand. A firm can create a sound brand by implementing an efficient and sound branding image that caters to the needs of its targeted market. So how does...
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...Is IKEA destined to succeed everywhere it cares to establish itself? Question 1 Using a standardized products strategy with universal assortment around the world was the key to IKEA's success. That is, it markets the same basic products in all of its stores; instead of tailoring furniture to regional tastes, it focuses on making furniture that is universally attractive (Rondcha, 2008). Some 90% of the product line is identical across more than two dozen countries. However, in order to adapt to certain countries such as America, IKEA needed to modify their concept whilst still maintaining their original formula. Modification was implemented as the European products conflicted with American tastes and preference (Tracy, 1986). Conflicts arose when it was found that most Americans keep a sofa longer than a car and change their spouse as often as their dining room table (about 1.5 times in a lifetime). America didn’t get IKEA; it was too unswervingly Swedish. (Lewis, 2005). Kamprad believes the word ‘impossible’ is absent from IKEA’s dictionary (Altomare, et al. 1999) and by sticking to this belief, adaption was made to America’s furniture. This included widening the chest drawers by an inch or two which led to an immediate increase in sales by 40%. Despite Kamprad’s belief, it is impossible that IKEA will succeed everywhere it establishes. In 1974, IKEA expanded into Japan as their first Asian market. It had to pull out in 1986 due to differences between culture, lifestyle and...
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...1. What factors account for the success of IKEA? There are several factors that can be accounted to IKEA’s success, however there is one factor that can be considered as the key factor: - The low cost approach which is demonstrated by the following: o IKEA corporate culture: even after the extreme success and growth that the company has achieved, its corporate culture of cost cutting sensibility remains the same. Employees and Managers are encouraged and reminded to cut cost by reducing unnecessary expenses. o IKEA designs it own low priced furniture which allow them to cut the middle man by removing the suppliers and in turn allow them to reduce cost which were then passed to their customers. o IKEA stores are strictly self-service which reduces the cost of having to hire additional personnel. o IKEA furniture comes unassembled and in flat packaging. The flat package not only allows customer to transport the products easier to their home, but also allows IKEA to ship more items in bulk and cargo as well as reducing the storage space required for the items. Also, labor costs are reduced as an assembly personnel is not longer necessary and cost related to transportation damages are less frequent due to the flat packaging. o IKEA’s corporate slogan, “Low price with meaning,” shows their commitment to offer attractive and cleverly designed products while maintaining their low cost. 2. What do you think of the company’s product strategy and product range? Do you agree...
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...Responding to Sears “Elements” Line of furniture Issue/Problem The Canadian furniture market has brought success to IKEA Canada due to the high quality and low priced “quick-assembly” furniture designed by IKEA’s European engineers. However, this success brought many imitators. Sears Canada has recently published a new catalogue that includes a new line of furniture called “Elements”. The new line of furniture very much resembles IKEA’s knock-down, self-assembled line. IKEA is facing an imitation threat and should tactically respond to minimize its effects. Recommendations IKEA is considered to be a low cost, high quality producer in the furniture industry, therefore it is important to spread that image among consumers. IKEA should expand its target market and reach out to more customers. This can be accomplished by increasing the number of catalogues published every year. In addition, IKEA should re-establish its mail ordering system and minimize its mail orders losses. This can be accomplished by adding a convenience fee which covers handling, shipping and packaging. Discussion Industry Analysis Canadian consumption of furniture accounted for $2 billion dollar in 1985 making the industry a mature one with 1,400 manufacturers. Retailers on the other hand are divided into three types: independent such as the Brick and Leaon’s, speciality chains such as IKEA and department stores such as Eaton’s and Sears. Canadian produced furniture typically followed American and...
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...of IKEA in the Japanese market and Chinese markets Abstract Date Level Authors June 4, 2008 Master Thesis EFO705, 10 points (15 credits) Wannapa Chaletanone (05-11-1982, Thailand) Wanee Cheancharadpong (03-09-1983, Thailand) Internationalization of IKEA in the Japanese and Chinese markets Leif Linnskog Why did IKEA internationalize into Japanese and Chinese markets? And what factors did influence IKEA’s success in Chinese market but failure in the Japanese market of the first round? The aim of thesis is to understand the internationalization of IKEA in Asia by comparing between Japanese and Chinese markets. This master thesis based on qualitative approach in order to investigate the internationalization of IKEA in Asian markets as a case study since it is beneficial in understanding the observation and explanation of behavior in the certain cases. IKEA is considered as retailer internationalization who expands into Japanese market as a result of deregulation and asset-based advantage while internationalize into Chinese market because of supporting environments such as political, social and economic conditions as well as transaction advantage. To success and failure, psychic distance and learning, strategic decision making process, degree of adaptation of retail offer, entry strategy, characteristics of organization and management characteristics are the influencing factors on internationalization of IKEA in the Japanese and Chinese markets. Internationalization, IKEA, retailer...
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...------------------------------------------------- Leeds Business School ------------------------------------------------- Corporate Strategy Critically examine how the success of Ikea has been supported by its organisational culture Mona Thorvaldsen, Kate Mulvana, Joan Kawalewale, Tom A. Trosterud, Jodie Evans MA Public Relation Management & MA Business Studies Semester Two Module Leader: Lawrence Bellamy Contents Page No Chapter 1 – Introduction | 3 | | | | | Chapter 2 – Background | 3 | | | | | Chapter 3 - Appraisal | 4 | | | | | Chapter 4 – Analysis | 9 | | | | | Chapter 5 – Conclusion | 14 | | | | | Bibliography | 15 | Executive summary This report examines the corporate culture of the global furniture leader IKEA and discusses the link between Ikea’s culture and its performance. The cultural web is used as a device for breaking up the complexity of organisational culture and for demonstrating that Ikea enjoys a strong and consistent culture. The report identifies synergy between Ikea’s culture and strategy, arguing that culture has given the organisation competitive advantage. Furthermore it points to the complex set of factors influencing performance, and how Ikea’s culture is one of several components in its success-formula. 1.0 Introduction Organisational culture is built on the assumptions and beliefs that construct purpose, guidelines and collectivism. In effect...
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...specific countries. These methods can be applied bycompanies that aim to internationalise and so to define the right location(s) abroad interms of institutional as well as cultural fit and success opportunities. Correspondingly, concepts like this also provide insightful information for explaining the location choices which organisations have already made. One such framework isthe so called Diamond Model introduced by Michael Porter in 1990. This essay triesto determine its advantages and disadvantages as a tool for the examination of firm‟s home and host location decisions by focusing on two major MNEs: ikea and audi..Porter ‟s Diamond Model(1990: 73) argues that “nation‟s competitiveness dependson the capacity of its industry to innovate and upgrade and therefore is determined by a nation‟s level of productivity. From an organisational perspective this means that national competitive advantage depends on the nation’s ability to provide a home base for companies to sustainably improve their products and services in terms of quality, features, technology and so to successfully compete in highly productive industries internationally. Audi, a German automobile company, is a part of the Volkswagen group which is one the leading automobile manufacturers and the largest car maker in Europe. Ikea, Swedish furnishing companies known worldwide operating in 42 countries, started during the 1940, offer a wide range of well designed furnishing products at low prices making it affordable...
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...IKEA Analysis Repot Having a successful company takes a lot of work and researching. You see a lot of big successful firms go out of business after many years of being open due to lack of marketing and not being able to keep up with the rapid growing competition. It takes the integration of sales, marketing, front of the line staff and knowing your customers wants and needs to be successful for decades. Not listening to customer demands could be detrimental to your organization. Even if you are successful now, another competitor can rise and take away your market share. An organization should not only care about sales and revenue growth, they need to also be conscience about the environment and care about the working environment of their employees. IKEA is a Swedish company that dominates in the furniture industry and is very successful with their sales and marketing strategies. They are also very conscience about the external environment. They have been in the foreign market since 1973, they currently have stores in over 37 countries and are continuing to grow (most recently Asia). By following the traditional pattern of globalization, first operating in countries with similar cultures and then expanding to the foreign market, they were able to have great international success (Burt, Johansson & Thelander, 2011). We will discuss in detail why IKEA strategies are so effective and why other organization should learn from their current success. IKEA’s Marketing ...
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