Ikea Case Essay

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IKEA Case Write Up IKEA is the world’s largest furniture retailer and has established its global dominance in the furniture industry through low cost quality products and rapid international growth. A large part IKEA’s success is due to its innovations in the furniture business. One of these innovations was the production of low cost quality products, which was a founding principle. IKEA was entering a furniture market which was previously dominated by small individual firms who sold expensive high quality furniture. In order to compete in this market IKEA focused on a segment of younger less wealthy customers who were looking to furnish their first apartments. After establishing success as a startup IKEA expanded into other parts of Europe and in an effort to reduce costs stumbled upon another innovation. Traditional furniture retailers of the time would take orders and deliver within weeks. IKEA’s response was to manufacture their furniture as “knock-down kits”, which would allow them to have one display in their showrooms and save space by carrying a large amount as flat boxes in their warehouses. This also helped with product availability and made it easier for customers to transport furniture, despite having to assemble it themselves. As IKEA began expanding to other parts of Europe, they focused on developing and maintaining long term relations with suppliers. So much so that they invested in their suppliers to ensure that the production capabilities were maximized. One of the ingredients to IKEA’s global success was its philosophy and practices. IKEA’s strong focus on Swedish values of simplicity and cost consciousness shaped their views on product design. Their very conservative and modern approach on product design made their products widely accepted by different cultures, and approach can be seen in similar companies like Apple. Their widely accepted

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