Ikea Svenska AB, founded in 1943 is the world's largest furniture retailer which specializes instylish but inexpensive Scandinavian designed furniture. It has 128 fully-owned stores in 26countries, visited by over 108 million people yearly, and worldwide sales of about $5.4 billionin 1994 (IKEA 1994). Ikea's success in the retail industry can be attributed to its vastexperience in the retail market, product differentiation, and cost leadership. The company is, perhaps, one of the World's most successful multinational retailing firms operating as a globalorganization based on its unique concept that the furniture is sold in kits that are assembled bythe customer at home. Refer appendix 1B for corporate performance.Ikea's mission is to offer a wide range of home furnishing items of good design and function,excellent quality and durability, at prices so low that the majority of people can afford to buythem (IKEA 1994). The company targets the customer who is looking for value and is willingto do a little bit of work serving themselves, transporting the items home and assembling thefurniture for a better price. The typical Ikea customer is young low to middle income family.(Olsson, 1996, p.1)Ikea does not have its own manufacturing facilities. Instead, it is using subcontractedmanufacturers all over the world for supplies. All research and development activities are,however, centralized in Sweden. In order to maintain low cost, Ikea shoppers are Pro-sumers -half producers, and half consumers (Normann, 1993, 70). In other words, they have toassemble the products themselves. To facilitate shopping, Ikea provides catalogs, tapemeasures, shopping lists and pencils for writing notes and measurements. Car roof racks areavailable for purchase at cost and Ikea pick-up vans/mini trucks are available for rental(Economist, 1994, 101). Ikea's success is based on the relatively simple idea of keeping thecost between manufacturers and customers down. According to Ingvar Kamprad, the founder of Ikea; "To design a desk which may cost $1,000 is easy for a furniture designer, but todesign a functional and good desk which shall cost $50 can only be done by the very best.Expensive solutions to all kinds of problems are often signs of mediocrity." (Chandler, 1993,12) Costs are kept under control starting at the design level of the value-added chain. Ikea alsokeeps costs down by packing items compactly in flat standardized embalages and stacking asmuch as possible to reduce storage space during and after distribution in the logistics process(Economist, 1994: 101).