Ikea Case Study

IKEA stands for Ingvar, Elmtaryd, and Agunnaryd, Kamprad. Kmaprad started his selling days by selling fish, Christmas Magazines and Seeds. A few years later he established a business of selling ballpoint pens and furniture. IKEA's strategy was to set up a range of different prices for its furniture. Ingvar Kamprad called it "our identity" (Page6) the vision was to illustrate a better everyday life for the majority.

1. What were the sources of IKEA’s successful entry in furniture retailing in Sweden?

The sources of IKEA’s success in Sweden were attributed to going against the grain. Kamprad ignored the 1973 oil shock. IKEA's had an overhead cost that was low, and most importantly the customer looked at value and did not focus on cost. IKEA's success was also a result of appealing to an older crowd, more affluent consumers who had focused on younger buyers.

2. How important was internationalization to IKEA? What challenges did IKEA face while expanding internationally, and how did it overcome them?

IKEA was accused of selling imitations which in 1951 the association forbidded the company from selling directly to customers. To off-set this IKEA started selling furniture to customers directly. Kamprad would have employees get customer information and then contact them at a later date. Another issue IKEA had was "the Trade Association complained, they stated, “Mobelfakta requirements of the Swedish Furniture Institute was below the minimum standards." (Page 3) As a result the courts put restrictions on how IKEA could use their seal. IKEA turned this set back around opening 10 more stores in West Germany over the next five years.

3. What were the management processes by which IKEA coordinated and controlled its Europe wide operations? How effective were they?

The process started with Kamprad he focused on turning problems into opportunities and showed how it is not dangerous to be different. He did not believe