...IKEA Invades America Summary of the Facts: Company background * IKEA was founded in 1943 by Ingvar Kamprad as a local catalog company. Initially, the company sold basic household goods at discounted prices. * In 1947, furniture was introduced into the IKEA product range. The furniture was produced by local manufacturers. * In 1951, the first IKEA furniture catalog is published by discontinuing all other products to focus directly on low-priced furniture. * IKEA began designing its own furniture in 1955 as the suppliers boycott IKEA due to pressure from IKEA’s competitors. * IKEA began testing flat packages, So that packages can be packed and assembled by the customers. Hence reducing their costs and transport damages. * IKEA opened its inaugural store in in 1958, in Almhult, Sweden, and it was the largest furniture display in Scandinavia at that time. * By the time IKEA opened its flagship store in Stockholm in 1965, it had become the favored furniture-shopping destination in Sweden. * By 2002, IKEA was the world’s prominent furniture retailer. And its revenues approached $12 billion. Statement of the problem or opportunity Major problems:- * Furniture Durability is low * Lesser number of stores in USA * Design for American’s daily lives * Product and Style selection is limited – matrix selection Major opportunities:- * Price sensitive target market, Especially college students * Educate...
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...Ikea invades America (1) Compare IKEA to a traditional furniture store I would like to compare IKEA and traditional furniture store in terms of the SWOT analysis: Strength: Ikea has established strong branding with wide range of stylish products. It focus on offering low-priced and affordable furniture. The furniture is easy to assemble and ship. It offers one-stop shopping and featured the amenities as playrooms for children and Swedish cafes, bank and enough parking spaces. It creates a friendly atmosphere and services to shop and design the store layout for a nice journey of shopping. It has strong global sourcing capabilities. Weakness: All of its furniture came unassembled and may be unappealing to certain group of consumers, it has relatively few shops in each city. The store layout is big and will be difficult to locate a particular item. The Swedish design does not look appealing to American customers in the beginning. The furniture are not built to last a life time and not durable. Opportunities: IKEA educate the US customer through advertising, like create the feeling of “it’s just furniture, change it”. As compared with traditional furniture, it has flexibility to create some high end label. The Traditional furniture have Hugh inventories, while IKEA have strong global procurement and can expand into other location in the world. Their stores are large as compared with traditional furniture, they have flexibility to create may stores with smaller size. Threats: ...
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...IKEA INVADES AMERICA INDUSTRY IKEA (an acronym for the initials of the founder, Ingvar Kamprad, his farm Elmtaryd, and his country, Agunnaryd, in Smaland, South Sweden.) was the brain child of Ingvar Kamprad who began his entrepreneurial career in 1943 by selling basic household goods at discount prices. In 1947,Kamprad began selling home furnishings. Six years later, he opened his first furniture showroom and two years later, IKEA began designing its own low-priced furniture. In 1958, IKEA opened its largest furniture display in Scandinavia with 6,700 square meters. In 2002, the IKEA Group was the world’s top and prominent furniture retailer. Ingvar Kamprad's leadership had played an important role in IKEAS’s success. Kamprad's vision was to improve the quality of daily life for the masses. Kamprad demonstrated from the very beginning a combination of salesmanship, practical business acumen, thrift, an identity with ordinary people, and an unconventional perseverance in the face of adversity. IKEA was known for its contemporary yet affordable furniture. Kamprad had long ceded day to day involvement in the company's activities, his vision and thoughts were deeply rooted in IKEA's culture. Kamprad's humble beginnings (he was the son of a farmer) had created a unique IKEA culture that was founded on respect for money and an innovative mindset. Kamprad was known for his frugal habits. This attitude trickled down to the co-workers, who would ensure minimal wastage...
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...segments: IKEA positions itself as a leading international furniture retailer that provides economical, well-designed and functional furniture. As IKEA’s biggest competitive advantage is the low price, IKEA tries all its best to lower the fixed cost and the variable cost, like building supplier relationships in developing countries to reduce labor and production cost; flat-packaging to reduce the freight fee; use materials in a cost-efficient way and in-house design also reduce the resign cost for IKEA. IKEA also differentiate itself with appealing shopping experience, self-service, as well as developing facilities like childcare, restaurants, and lounge rooms. The Scandinavian design and style is also a niche for IKEA. The target segments of IKEA is price-conscious people, who have tight budgets, like college students, younger adults and new families, who want to make the first furniture purchase, then the IKEA may be a very good choice for them due to its price advantage. Another target segment for IKEA is early adopters. For the modern design and unique shopping environment, people who like innovative things will likely to give it a try to IKEA’s furniture. Benefits & drawbacks to IKEA: The benefit that IKEA gains from its strategy: 1. Its price advantage is very obvious compared with other furniture retailers, which can attract large amount of price-conscious customers. 2. The hip Swedish design and appealing shopping experience is a niche for IKEA. 3. All the IKEA stores...
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...COMPANY HISTORY IKEA was founded in 1943 by Ingvar Kamprad. Its first store was opened in 1958 in Almhult, Sweden and its flagship store opened in Stockholm in 1965. By 1965, IKEA was a well loved household name in the home of many Swedes. The company’s corporate slogan was “‘Low price with meaning’” (Moon, 2008, p. 24). Its main objective was to challenge the status quo by producing a good product at a low price with the development of innovative and cost-efficient methods. Beginning in 1969, IKEA began to expand its business into additional foreign markets starting with Denmark. IKEA continued to provide its consumers with quality products by utilizing “high-quality materials on the furniture surfaces that were visible and …lower-quality materials on surfaces that were low stress and less visible to the consumer” (Moon, 2008, p. 23). This idea was well received by its consumers and helped IKEA maintain a competitive advantage within the furniture industry. By 1984, IKEA had expanded into 16 different countries with over 167 stores (IKEA Timeline, 1999-2008). IKEA made its debut appearance onto U.S. soil in 1985 with its first store in Philadelphia, PA. From 1997 to 2001, IKEA’s revenue had doubled in the United States from $600 million to $1.27 billion. By 2002, the United States was IKEA’s third largest market and housed 14 of IKEA’s stores (Moon, 2008, p. 27). IKEA’s goal is to have 50 stores in operation in the United States by 2013. SWOT ANALYSIS Strengths...
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...2004 YOUNGME MOON IKEA Invades America In 2002, the IKEA Group was the world’s top furniture retailer. With sales approaching $12 billion, IKEA operated 154 stores in 22 countries and serviced 286 million customers a year. (See Exhibits 1 through 4.) In the United States, IKEA had 14 stores, with plans to open as many as nine more in 2003. There were a number of factors that distinguished IKEA from other furniture retailers—its stores were strictly self-service and featured such amenities as playrooms for children and Swedish cafés, and all of its furniture came unassembled (customers were expected to put together the furniture on their own)—yet there was no question about the company’s success; when a new store opened, it was not unusual for thousands of shoppers to line up on the first day. Company Background IKEA was founded in 1943 when 17-year-old Ingvar Kamprad decided to start a local catalog company using some money his father had given him.1 Initially, the company sold basic household goods at discount prices; in 1947, however, Kamprad began selling home furnishings. Six years later, Kamprad opened his first furniture showroom, and two years after that, IKEA began designing its own low-priced furniture. In 1958, IKEA opened its inaugural store, in Almhult, Sweden; at 6,700 square meters, it was the largest furniture display in Scandinavia at the time. By the time IKEA opened its flagship store in Stockholm in 1965, IKEA had become the favored ...
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...IKEA INVADES AMERICA. CASE STUDY Abstract Success is sometimes intriguing as it can be part of a combination of luck and hard work, or maybe one or the other, but IKEA’s unreadable formula for business success has been revealed; it’s simple: “great designs for the masses…” It is always easier to offer a unique product to those willing to spend any amount necessary, than to provide customers with complete solutions for little money. It is in the perfect combination that IKEA has found its niche, which has now apparently, spread globally. This case study examines IKEA’s role in the American market, its possible growth and everything else that could come ahead. IKEA Invades America IKEA is the world’s largest furniture retailer with sales approaching $12 billion with 154 stores in 22 countries. IKEA is a very unusual furniture retailer given the large physical size of the stores, the self-service features including self-assembly of furniture, limited product and style selection, but with customer amenities such as a playroom for children and a restaurant. Despite limitations, IKEA has been very successful and plans to open more store in the United States. In answering the questions for this case, DO NOT do any research on the company and its progress since the case was written. You must only use the information presented in the case. Adding outside information beyond what is in the case will reduce your grade! Questions What do you think of the company’s...
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...factors and the strategies that made IKEA to be one of the most successful furniture retailers in the market, there are some downsides that make the shopping experience for the customers inconvenient. The first and the biggest disadvantage to shopping at IKEA is that the furniture is not built to last a lifetime. Customers discovered that IKEA products fell apart after few years and had trouble with standing anything as disruptive as move to a new place. (Moon, 2004). The second downside is the store layout. It makes it difficult for customers who want to quickly buy a particular item and leave. Therefore they may experience some difficulty navigating through all store’s products in order to locate the product they are seeking. (James , 2011). Another drawback to shopping at IKEA is assembling and picking up the furniture with no help. It may be unappealing to certain groups of consumers who are left with complicated instructions alone. Experiencing all these downsides by the customers shows that IKEA’S strategy is not exactly aligned with its vision.IKEA’S vision statement seeks to create a better everyday life by building a partnership with its customers. (e.g., “IKEA," n.d., p.3). In one hand , it is building relationships with its customers 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. (Moon, 2004). But in the other hand, IKEA is not offering any additional service...
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...I. View Point II. Time Context In 1943, IKEA was established by Ingvar Kamprad. The company sold fish, Christmas magazines, and seeds from his family farm. In 1948, Kamprad added furniture to his product line. In 1949, IKEA published his first catalog distributed for free. In 1953, Kamprad could no longer use the milk truck to take goods to the train. As a solution in this problem, in the same year he bought an idle factory nearby Almhut and converted it into a warehouse. In 1956, IKEA developed a concept which is self-assembly furniture which later became an integral concept of IKEA. In 1957, IKEA started to exhibit and sell its products at home furnishing fairs in Sweden. In 1958, an expanded facility at the Almhut location became the first IKEA store. In early 1960, Polish-made goods were to be found on more than half of the IKEA catalog. In 1965, IKEA opened its first store in Stockholm, Sweden‘s capital. By 1973, IKEA became the largest furniture retailer in Scandinavia with nine stores. By the late 1980’s, IKEA met with considerable success, particularly in West Germany, where it had 15 stores. In 1985, IKEA opened its first United States store in Philadelphia. By the early 1990’s, the company found that things are not going well in America. Its European-style offerings did not always resonate with American consumers. To handle this situation, IKEA reemphasized design and started promoting the brand with a series of quirky hip advertisement aimed at younger...
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...MKTG 208 Case Study: IKEA invades America By: Juan Galang SID: 43055745 1. Situation Analysis Strengths (Internal) * Strong worldwide brand image * Value furniture (clever designs with a cheap price) * Consisted of strong core policies (electricity& product efficiency) * Hard to imitate their Scandinavian design * Managers able to determine what consumers wanted through their Price/Product Matrix * Engaged with customers (self service, had everything they needed from pencils to measuring tapes) * Provides amenities to customers (childcare, restaurants and big carparks) * Cost effective (use higher grade of wood in the outside but lower on the inside) * Form, function and affordability * Had good relationships with 1800 suppliers worldwide * Innovative designs (using a mixture of designers for products) * Niche furniture retailer * Strong market research applied (From $600 M - $1.2 B) * Flat packaging (more space for inventory) Weaknesses (Internal) * Furniture not built for longevity * When first entered the market had bad design * America was a different market that they needed to adapt too * Neither high nor low end furniture * Inconvenience for customer to build product * Different aspect compared to American standards (had different measurements and sizes to what the market was used too upon entry) * Ranked 14th in leading U.S. furniture retailers sales Opportunities (External) ...
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...Development Paper: IKEA * Joe Purdoff CMB 533 Human Resource Strategies June 18, 2012 IKEA is at the top of the world’s leading furniture retailers, and has set new standards for competitiveness in household furnishings. The company has achieved this position by redefining the roles and interactions between the firm and its customers. Founded in 1943 by a poor Swedish farmer named Ingvar Kamprad, IKEA is now one of the largest furniture retailers in the world. From its inception, Kamprad wanted to create cheap, quality furniture that everyone could afford. This formula led to IKEA’s early success in Sweden and has carried over until today. IKEA's positive HR policies have supported a strong and nurturing culture that promotes diversity and creativity. To its customers, IKEA is not just a store but a way of life, which is evident through the impressive customer loyalty the company has achieved. IKEA has also been able to build a solid labor force that has helped meet the demands of its shoppers and create products that meet those demands at a reasonable price. IKEA products are sold at unique stores that serve strategically important, geographic markets. This paper examines the factors that have made IKEA such a big success and offers some recommendations for future growth. Today, IKEA has 332 stores in thirty-eight countries. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009 (Wikipedia). Revenues for IKEA double every...
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...Scandinavian and American customers, and examine the growth strategy. At age 17, Ingvar Kamprad founded IKEA with money (a gift) from his dad for successfully completing his studies. In 1951, he published his first catalog. Two years later, he opened a showroom in Almhuit and soon thereafter began designing his own furniture. In 1956, IKEA started testing flat packages. They designed products that could be packaged flat, which greatly reduced company and customer costs. IKEA opened their first store in Almuit in 1958, followed by another in Stockholm in 1965. Between 1965 and 1973, they opened seven new stores in Scandanavia, capturing 15% of the Swedish market. Business was going great, and it was time to expand. In fact, Kamprad said, "It is our duty to expand," dismissing those who insisted that furniture retailing was a strictly local business (Ingvar Kamprad and IKEA, 1996). Moving full steam ahead, Kamprad purchased a faltering IKEA franchise in Canada in 1979. Within 3 years, the canadian store was a lucrative business, and the management team set their sights on the Unites States. By 2002, the IKEA Group was the world's leading furniture retailer (Ingvar Kamprad and IKEA, 1996). Their 154 stores, across 22 countries, and 286 million customers made up gross sales of $12 billion. IKEA's Culture, Philosophy, and Strategy IKEA's founder once said, "The true IKEA spirit is founded on our enthusiasm, on our constant will to...
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...Contents Executive summary: 2 Historical Background: 3 IKEA Viaion and Mission: 3 Production Strategy: 4 Promotion strategy: 4 IKEA Expansion worldwide 5 Expansion into Europe: 5 Expansion into North America: 5 IKEA’s Marketing Mix 6 Price 6 Products 6 Promotion 6 Place 7 Environmental Analysis 7 Issue identification, discussion and strategic alternatives 8 Why IKEA wanted to penetrate the US market? 8 Issue identification, the problem IKEA faced in America? 8 What caused these problems? Mistakes that IKEA made while entering the US market: 9 How do some of the American customers perceived IKEA and its marketing strategies? 9 How can IKEA solve its problem? What are the strategic alternatives? 9 Recommendation 11 Alternative Implementation 11 Conclusion 12 Appendixes 12 Executive summary: IKEA is a Swedish company which specializes in manufacturing furniture and selling them throughout the world. It has got large retail stores located on the outskirts of the major cities. IKEA is well known for attracting customers who are looking for modern designs at good value. IKEA is a Swedish furniture chain that has drawn large opening crowds to its stores as it has pushed into Europe, Asia, and North America. It has built something of a cult following, especially among young and price-conscious consumers. But the expansion was not always smooth and easy, for example, in Germany...
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...IKEA IKEA ავეჯის მწარმოებელი შვედური კომპანიაა. სწორი მენეჯერული გათვლების და სტრატეგიის არჩევის საფუძველზე ამ კომპანიამ ერთი პატარა მაღაზიიდან დიდ, მსოფლიო მაშტაბის ქსელამდე მოახერხა გაფართოება. IKEA დაარსდა 1943 წელს 17 წლის ინგვარ კამპარდის მიერ. მან გადაწყვიტა გაეყიდა საყოფაცხოვრებლო ნივთები, რომლებსაც მომხმარებლებს კატალოგის საშუალებით სთავაზობდა. მალე მან დაიწყო მარტო ავეჯის გაყიდვა, რომლის ფასი იქნებოდა ძალიან დაბალი. მან იცოდა, რომ ის ბაზარი, რომელშიც შესვლას აპირებდა იყო ძალიან კონკურენტული, ის თავის ბიზნესს წითელ ოკეანეში იწყებდა, ამიტომ ინგვარმა გადაწყვიტა თავისი პროდუქტის სხვისგან განსხვავება დაბალი ფასებით მოეხდინა. კამპარდმა დაისახა კონკრეტული სტრატეგია, დაბალი ფასები. დღესაც სწორედ ამ სტრატეგიას იყენებს კომპანია. IKEA-თვის ავეჯს ადგილობრივი მწარმოებლები აკეთებდნენ და კომპანია არანაირ მონაწილეობას არ იღებდა ავეჯის დიზაინის შექმნაში. მაგრამ მალე ადგილობრივი მწარმოებლები აჯანყდნენ (სხვა კომპანიები ავეჯის წარმოებაში უფრო მაღალ ანაზღაურებას სთავაზობდნენ). ამის საპასუხოდ IKEA–მ დაიწყო საკუთარი ავეჯის დიზაინის შექმნა, კომპანიას მიეცა შესაძლებლობა თავად შეერჩია ავეჯის დიზაინი და ამასთან მოეხდინა ხარჯების მინიმიზაცია. ეს იყო ერთგვარი მოულოდნელი ინოვაცია კომპანიისთვის (unexpected occurrences). 1956 წელს IKEA-ს ერთ-ერთმა თანამშრომელმა მაგიდის გადატანის გასაადვილებლად, მას ფეხები მოხსნა და ისე მიიტანა დანიშნულების ადგილამდე. ესეც მოულოდნელი ინოვაცია იყო IKEA-თვის. სწორედ ამის მერე დაიწყო კომპანიამ “flat packing”. ეს გვიჩვენებს არა მარტო იმას, რომ ინოვაცია შეიძლება შემთხვევით...
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...IKEA 1. What factors account for the success of IKEA? IKEA was founded in 1943, with an initial purpose of only selling basic household goods and furnishing at discount prices. 60 years later, in fiscal year 2003, the “IKEA group was the worlds top furniture retailer, operating 154 stores in 22 countries and servicing 286 million customers a year”(Moon, 2004). Despite the fact that IKEA has acted upon several smart actions in the past, there are certain factors that can account for their success today. These include their unique Scandinavian design, their low cost products or mentality, their broad segmented market, and their product strategy. As IKEA was founded in Scandinavia, the inspiration for design comes from their heritage comes through among IKEAs products. The designs are simple, yet unique, which allows IKEA to keep their promise to bring forth low priced, yet functional furniture. “Many competitors try to copy one or two of these things”(Moon, 2004), but “the difficulty is when you try to create the totality of what we have”(Moon, 2004). Not being able to imitate IKEA, makes its unique design and economies of scale a core competency that puts their company at a competitive advantage, stealing market share from their competitors. Another factor that has contributed to IKEAS success is their low pricing strategy by being cost efficient. The two major players that help maintain expenses down for IKEA is the self-service component and “flat packaging”. Customers...
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