Ikea Case Study

1780 Words8 Pages
History and StrategyIKEA is a Swedish company that produces low cost home furnishing and accessories. The company was founded in 1943 by Ingvar Kamprad as a mail order catalog in 1954 to a display store in 1951. IKEA later dumped the idea of being a mail order catalog and started developing stores their modern concept in stores today in the early 1950. They had grown tremendously from 2 stores in 1964 to 114 stores in 1994 in 26 countries (Exhibit 1). The concept that lead to IKEA‘s success is the result of its founders opening store in 1951 to allow customers to inspect products before buying them, using a catalog to tempt people to visit an exhibition. Its key feature of providing self-assembled furniture starting from 1953 significantly cut transport and storage costs. Kamprad had noticed the oligopoly of furniture makers that kept prices high. He stated, “A disproportionately large part of all resources is used to satisfy a small part of the population… IKEA’s aim is to change this situation. We shall offer a wide range of home furnishing items of good design and function at prices so low the majority of people can afford to buy them… we have great ambitions.” Kamprad viewed the situation as both a business opportunity and a social problem. He forged a cost saving strategy by selling pieces that requires home assembly and self transportation. The savings were passed to the consumer in lower prices and developed a low cost strategy. Due to the influence of competitors IKEA developed its own supply chain by convincing factory owners to develop IKEA brand furniture while their factories would otherwise be idle due to the seasonal shut downs. This was done in countries where labor costs were lower and in a partnership or relationship that involved not only supply contracts and technology transfers but also loans at reasonable rates that were paid back by future

More about Ikea Case Study

Open Document