History of IKEA Essay

Ingvar Kamprad founded IKEA in 1943. The name IKEA is formed from Kamprads initials (I.K.) plus the kickoff letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up (1). IKEA origin anyy interchange pens, wallets, picture frames, t equal to(p) runners, watches, and jewelry and nylon stockings. Known today for its article of article of furniture, IKEA did not rifle furniture sales until 1948. Kamprad saw opportunities for selling furniture on a large scale, distri buting the for the first time catalogue in 1951. In 1955, in the thick of a fierce toll war with a competitor, Kamprad as wellk his order a step further by yielding the first memory board showroom. The archetype behind this was that customers could now touch and look at IKEA home base furnishings originally they purchased, showing that quality did not withstand to be sacrificed for lower prices. With this beingness a success, Kamprad opened the first retentivity in Almhult, Sweden in 195 8. At its opening, the 6,700-meter store was the largest home furnishings store in S lowlifedinavia (1). Kamprad retired as IKEA conclaves president in 1986, with Anders Moberg becoming his successor.This brought ab verboten m both opposite changes for IKEA. offset in 1990, IKEA took interest in corporate social responsibility (1). The IKEA Group developed an environmental policy that would ensure the association and its co- cultivateers take environmental responsibility for all activities delivered within its business. Since then, they nurture become more susceptibility efficient by generating their own renewable readiness. They in any case work with their suppliers to barrack them to do the same. One example of this is each of their facilities is fully equipped with solar panels on the roof. They also take into consideration where and how they get their raw stuff and nonsenses. crank materials most important to the business and those that lease the highest potential e nvironmental or social impact are woodlandwind, cotton, palm oil, leather and food (3). winning wood, they are continually looking for personal manners to get the most out of the wood they use by designing their products to minimize the amount of material needed and increasing the efficiency of manufacturing. They also only use wood that comes from responsibly managed timberlands in an effort to safeguard wood supplies to protect the future(a) of their business, prevent de setation, and to support the livelihoods of those communities.In order to make sure these efforts bear on IKEA hired a fulltime forestry manager to secure sustainable use of forest resources (3). Upon Anders Moberg leaving IKEA in 1999, Anders Dahlvig became the President and CEO of the IKEA Group. This brought about more changes for the company by writing out a Code of Conduct. This code of conduct called The IKEA Way on Purchasing Home Furnishing Products (IWAY) defines what suppliers can expect from IKE A and specifies what IKEA expects from its suppliers in terms of legal requirements, working conditions, active prevention of child labor, out-of-door environment and forestry management (1). In addition, IKEA also introduced The IKEA Way on Preventing claw Labor in order to ensure that their suppliers and their sub-contractors use no child labor (1). IKEA has swelled rapidly since its founding. As of August 31, 2012, the IKEA Group has operations in 44 countries, including 30 service-trading offices in 25 countries. They also have 33 distribution centers and 11 customer distribution centers.The IKEA Group had 298 stores in 26 countries. They employ 139,000 co-workers, 99,000 in Europe, 18,000 in North America, 11,000 in Asia and Australia, and 11,000 in Russia. They send out over 212 million catalogues, which has increased their foot merchandise into the retail setting to 776 million visits. As technology use increases, so has their internet and app traffic with 1.1 billion visits to their website and over 5.7 million app downloads. With these increasing numbers, they have been able to open another 18 stores around the world in 2012 (5). IKEAs vision and business statement paraphrased is to put up quality furniture products at a low price for all. Their product has al ways been furniture and over the past few years, they have grown to a company that is healthful known among all ranges of income from, broke college students to wealthy senior executives of companies. They do provide quality products whose function and style rival all other products in their exertion. With those rival products, they also have prices that are lower than any of their competitors can afford to rival.How do they do it? IKEA is a very bell conscience company, where other companies will spend large sums of bills on employee accommodations, IKEA does not. They tell of an instance where employees were at a conference and instead of paying for them to stay in the nonpareil and only hotel in town, an overpriced Marriot, they had their employees catnap in their cars (6). They have recently adopted a new energy saving method for each of their stores, both bettering the atmosphere as well as cutting energy be. This mentality of saving, though extreme, has allowed the company to ready a business into an effort leader in quality and price that most companies are not able to touch, based on their spend habits. This has been the mentality of the company structure since day single. Kamprad grew up in a farm-based village where citizenry were not used to having quality products at an cheap price. From this, he developed the mentality and business structure that continues. The company has grown immensely due to their boilersuit understanding of cost cutting and real customer needs.The companies culture, as listed above, is all about saving money to provide a better company and product to the customer. One example of this is Kamprad had make company empl oyees sleep in cars on a business hinge on. Having not talked to an employee that was forced to sleep in their car, as opposed to a Marriot hotel bed, I cannot say how they feel toward the company. That being said, I could make two evidences. The first is that the employees were upset. They should be provided with the basic essentials of life when on a business trip and the company should be able and willing to provide that. My second inference would be that these employees made this decision for themselves as well as the company, for the overall benefit of the company. The company advertises that that they share values for each employee. They ask for a unique employee and they advertise that they are not filling jobs but quite a collaborating with people based on divided unique values.They compose and apprize these four- shared values as just a start to their list of shared values One togetherness, two cost-consciousness, three respect, four simplicity. With those, four shared values maybe being their foundations, it would be easy to say that all employees, if truly investing time and effort into these values, are happy to work together in a uniform effort to save money as well as re master(prenominal) simple and respect one another. This would imply that they all are happy to work together in a situation that is best for allone, as well as the company. IKEA is an industry leader when it comes to cutting costs and providing quality furniture at a price for everyone. In the marketplace personate, they have established themselves with their main private-enterprise(a) advantage to be price. They have done this in a way that most companies are not willing or would be too difficult for companies to rebuild their business model and thus they are an industry leader.IKEA has established their marketing strategy as a furniture store that provides its customers with stylish furniture at an affordable price. Its founder Ingvar Kamprad instilled this strategy/ m ental capacity of the company. Mr. Kamprads mission for IKEA is to offer a wide range of home furnishing items of good design and function, at prices so low that the majority of people can afford to buy them. Therefore, IKEAs focus is finding ways to lower prices yet still maintain the quality product they have been delivering, to its customers, for 70 years. This is their competitive advantage. IKEA maintains their competitive advantage by operating outdoor(a) the practices of the conventional furniture supplier. A typical furniture store has an open show floor, where customers can peruse at their own leisure. IKEA steers away from this by designing its store in a trail pattern. This forces the buyer to perish to the entire store and possibly find items they might not had intend on purchasing.Another thing IKEA does divers(prenominal)ly is, instead of providing delivery for every purchase, IKEA provides means of attaching containers on a customers car. This allows them to be abl e to take the furniture home the same day that they purchased it (7). The containers are ordinarily pods that strap onto the top of a car. Then the customer takes it home and brings it bandaging upon their next visit to IKEA. In addition, IKEA requires more of its customers than classic furniture stores. IKEA does not offer pre-assembled furniture. IKEAs furniture is easy to assemble furniture that customers can take home and quickly put together (7). They take gazump in the simplicity of their designed assembly. They also will not place a cumber many item that would need to be assembled in the store because it is neither cost effective nor customer friendly (7). IKEAs main strength comes from their value chain. Unique design capabilities, unique sourcing, and tightly authorizationled logisticsthey are able to produce products that are distinctive enough to provide market recognition, secure sourcing for long runs at profitable levels, and reduce inventory costs through regional warehouses which work impedely with stores (4).Meaning, IKEA is in complete obtain from furniture design to furniture delivery and storage. IKEAs main weakness, one could assume, would be the large operation that it is. IKEA now makes in 29 different countries with over 2,000 suppliers in over 50 countries. With the large span of products and countries involved, maintaining control and communication will pose as one of IKEAs biggest issues. The biggest scrap IKEA is facing would be wood. IKEA consumes 1% of total commercial wood, which amounts to over 13.5 million cubic meters (8). With all this considered, IKEA is launching a new campaign to operate in a more economic-friendly way by only treat wood that has been FSC certified. They are slowly incorporating new policies and plan to be forest positive by 2020 however, missed their 2012 goal of using 35% of their wood from FSC certified wood mainly because according to IKEAs CSO Steve Howard, only 7% of the worlds forest areas are currently certified to FSC standards (8).However, IKEA is not only meeting obstacles from the environment, certain countries bureaucratic powers are causing some difficulty for further advancement in the country. China is one of these countries. The Chinese government is imposing harsh restrictions on its real estate market, which has caused stores to close (9). IKEA continues to grow every year by saving money at their current locations through energy saving building and using renewable resources. With their corporate responsibility programs, they continue lead the way in their industry. They also continue to work toward a better future for children all over the world through their Child Labor initiatives. As they continue to hang on costs down, they will continue to expand all over the world. workings Cited1. About IKEA. History. N.p., n.d. Web. 10 Feb. 2013.2. Facts &Figures. Inter IKEA Systems B.V. N.p., Oct. 2012. Web. 16 Feb. 2013. 3. Canada, Newswire. IKEA Group releases 2011 Sustainability Report. Canada Newswire 15 Feb. 2012 regional descent News. Web. 16 Feb. 2013. 4. Grol, Paul, Christopher Schoch, and Michel Roger. Culture as a Competitive Advantage. Efbl.org. N.p., 16 Dec. 2010. Web. 13 Feb. 2013. 5. IKEA Group SWOT Analysis. IKEA Group SWOT Analysis (2012) 1-8. Business etymon Complete. Web. 16 Feb. 2013. 6. Lewis, Elen. Chapter 2 Ingvar Kamprad The Grand Designer. GBS Great IKEA. 28-45. n.p. Marshall Cavendish Limited, 2004.Business Source Complete. Web. 16 Feb. 2013. 7. The IKEAConcept. Inter IKEA Systems B.V. N.p., Oct. 2012. Web. 16 Feb. 2013. 8. Kelly, Annie. IKEA to Go forest Positive but Serious Challenges Lie Ahead. The Guardian. Guardian News and Media, 14 Dec. 2012. Web. 16 Feb. 2013. 9.WantChinaTimes.com. WantChinaTimes.com. N.p., n.d. Web. 16 Feb. 2013.