ORIGIN OF NAMEThe IKEA name combines the initials of IKEA founder, Ingvar Kamprad, (IK) with the first letters from the names of the farm and village where he grew up- Elmtaryd and Agunnaryd (EA).

INTRODUCTION• IKEA is a multinational group of companies that

designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories

• January 2008, it is the world's largest furniture retailer

• Founded in Sweden in 1943 by then-17-year-old Ingvar Kamprad

• As of March 2016, IKEA owns and operates 384 stores in 48 countries

IKEA VISION“To create a better everyday life for the many people. We make this possible by offering a wide range of well-designed, functional home-furnishing products at prices so low that as many people as possible will be able to afford them.”

IKEA CULTURE”Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA Concept”

IKEA VALUES• Cost-consciousness• Togetherness and enthusiasm• Humbleness and willpower• Accept and delegate responsibility• Constantly being “on the way”

MAIN CONCEPT Designed around a "one-way" layout which leads

customers along "the long natural way” Stores always on major access roads Garage for petrol and van rental area At entrance, Crèche for small children Trolleys and blue plastic bags available Pencils, notebooks, paper measures At the end of children room located a Restaurant

FIRST TEMPTATION- IKEA CATALOGUE First published in Swedish in 1951 Initially distributed free to stores

locality In 2010, it featured proportion of 9500

products range (198 million copies, 27 languages for 38 countries)

CORE BUSINESS OF STORE• Store manager had two central tasks To turn as many visitors to customers To encourage customers to purchase• Customers at home got frustrated trying to follow the

instructions for their flat-pack furniture But still• In UK almost 10% of furniture spend was on IKEA goods• 3rd of UK population purchase something every single

year from IKEA• In 2009-10 2 Billion Meat balls were eaten in IKEA

Restaurant

HOT DOG STRATEGY• Edible hot dogs were available just after the

checkout counters • Sold for just 50 cents• Although profits were small but they sold

millions of them

MALLEN• Clip was IKEA successful product strategy • Designed to hold magazines in bathroom• Best part was they didn’t get wet• One of bestselling articles in Mallen Range• A journalist described the experience:• “ It had never occurred to you that you might want to hang

up magazines in your bathroom BUT IKEA had already decided that you would”

Combined aspects of IKEA concept and strategy ensured continued success

ORGANIC GROWTH-EXPANSION• IKEA pursued self-funded organic growth strategy• Initially focused on German speaking countries because

these were largest furniture market in Europe• In 1975, opened its First store outside Europe in Australia• Although they call itself a Global company but their

footprint was still European focused• In 2006, opened a store in Minneapolis, US-retailer Target

was headquartered• Staff from Target visited IKEA store everyday• Six months later, Target launched range of furniture

products at low price points ONLINE similar to IKEA

GLOBAL BRAND RECOGNITIONIn 2003, it was ranked 44 of all globally recognized brandsAttracts loyal customers due to

In 2010, re-invested 2.1 Billion Euro to build new stores and develop existing ones

Quality FurnitureLow pricesSpecial Promotions

• Forward Horizon Planning and solid revenues helped them to speed up its expansion plans

• In 2011, planned to open six stores in Bulgaria, Thailand, Serbia, Ukraine, Abu Dhabi and Denver

• Location experts began looking for appropriate sites in New Zealand and Philippines

But• Not all expansion went according to plan

CHALLENGES• Invested US$4 Billion in Russia while opening first store But • Russians created artificial obstacles for them• Kamprad told Swedish radio that Russian utilities had not

provided them electricity as promised• In 2007, decided to open store in India• IKEA management tried to pursued Indian government to

ease foreign investment restrictions on retailers so that to get ownership limit from 51% to 100%

• In 2009, IKEA finally quit its attempt and stores never materialized

GLOBAL STRATEGIES• So far they went on with same concept and culture where

ever they went but Adaption is still a question for IKEA???• Entering the US market, IKEA was forced to adapt

Furniture• Beds were measured in

centimeters rather than in King Queen

Drinking Glasses

• Drinking glasses were too small

DIVERSE CUSTOMER BASE• IKEA realized that they were missing Hispanic population

in US market• Designers visited homes of Hispanic staff • Discovered that Hispanics don’t like subdued palettes but

prefer bright colors with warmer hues• They also like dining tables more than two seated

PRICING• Price and volume were the essence of IKEA• Price levels were set 30-50 % below competitors• Pricing rule of thumb was One third to suppliers One third to purchasing company One third to the store

IN HOUSE DESIGN• In house designers based in Sweden• On average IKEA products took 2 years to develop• Each of 11 business section worked in Three year cycle• The cycle determine when meetings would take place and

who should attend• Each of their product is designed with a range matrix

system

DIVISION OF RANGES

Country

Scandinavian

Modern

Young Swede

DESIGN DECISION• Small town of Almhult, in southern Sweden • IKEA make design decision of their entire

product range of 9500 items• Almhult was not only spiritual heart of company

but the guardian of IKEA design• Every year in September management present

entire range to Kamprad for his approval on new items and design for next cycle

SUPPLY CHAIN MANAGEMENT • Integrated supply chain strategy• Alliances with 1000+ suppliers • In alliances they offer technical and financial support so

that they insure the quality• IKEA supplies alliances were not ownership agreements

but preferred, sourcing• IKEA purchasing strategy was to build long term

relationship with suppliers• 27 distribution center serve IKEA stores

COMPETITION AND IMITATOR • Its competitors were localized furniture retailers

but they could not match footprint of IKEA• In Denmark, BIVA, discount furniture chain were

close competitor• In US,TARGET created similar furniture range• US direct imitator was purchased by IKEA• In JAPAN, Nitori.Co offer low cost furniture

range• In FRANCE their was FLY

FUTURE CHALLENGES• As IKEA was in strong position but their were

some key question that need to be reflected?• Could IKEA continue to grow successfully?• Increasing search for raw material is also major

challenge • IKEA is a clear success story but could it

continue this in decades to come