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(ase Study,l.4,}f.A 'IKEA - flat pack success!' IKEA continues to be a global phenomenon. Ingvar Kamprad founded IKEA in 1943. Today, Inter IKEA systems B.Y. is now the owner and franchiser of the IKEA concept. All IKEA stores opera te on a franchise basis. IKEA of Sweden AB is responsible for the IKEA product range; making sure all IKEA products are endorsed 'Design and Quality, IKEA of Sweden'. The IKEA Group is owned by a charitable foundation in the Netherlands.

350 suppliers in 50 countries which help supply its range of 9. The firm's mission is 'we shall offer a wide range of well-designed. Texas. specially trained kitchen planners can help plan and choose a person's ideal kitchen. A breakdown of some basic facts about IKEA can be seen in Table 14. © Inter Ikea Systems BV. The profile of its 9. . Competition comes from MFI. To many customers.7bn). The company employs 118. In 2007 IKEA had 264 stores in 36 countries. high quality at low prices. and a kitchen planning service. B&Q and small and medium-sized mail-order firms. These include books in bookcases. IKEA'scompetitors vary from country to country.IKEA introduced its first store in the UK in 1987. with mock room settings so that they can see products in context. part of IKEA's appeal is its Swedishness.8bn (f13. Using computer simulations. As can be seen. and many product ranges as IKEA Lakeside (UK). IKEA generates over 75% of its turnover from international business. the firm does as little as possible to tailor its ranges to local tastes.5 Distribution of IKEAsales. lamps on tables and fake fruit in fruit bowls! Many IKEA stores offer ahorne decoration service if customers wish to furnish an entire room or horne.500 products.com. 2007 (%) Sales (%) Europe North America Asia/ Australia 82 Purchasing (%) Workforce (%) 82 15 3 64 3 33 14 4 Source: www. Customers are able to self-select the products they want from pa1lets in the company's warehouse. IKEA sales to Europe comprise 82 % of its total sales and 82 % of its workforce are based in Europe. IKEA provides a comfortable environment for its customers. IKEA in Beijing.000 people worldwide and has 1. The company has 45 Trading Service Offices in 31 countries dealing with purchasing and whose job it is to monitor production quality and test any new ideas from the suppliers. lable 14. and then take these to the checkout for payment. However. Amenities include a restaurant. has the same concept. branding.5.ikea. preferring to opt for a standardisation approach. nearly a third of the purchasing from suppliers takes place in Asia/Australia. although no other furniture company in the UK operates with the same global success. Swedish food shop. However. functional horne furnishing products at prices so low that as many people as possible will be able to afford them'. children's play area and hotdog stall. Its sales for the financial year 2006/7 totalled €19. The IKEA group itself owns 234 stores in 24 countries while the rest are owned and run by franchises.500-product range is well-designed. IKEA is renowned for its innovative Swedish-designed furniture. The company provides free pencils and tape measures for making notes and checking dimensions. China. purchasing and workforce.

This ensures that 75% of a store's waste is reused. In order to avoid contributing to the devastation of intact natural forests in need of protection. By providing products in this format. trees from these forests are not used for the manufacture of its solid wood products. Items are easy to assemble. The company has ongoing environmental action plans. Ir also has IWAY. This is promoted locally with outdoor advertising. IKEA is able to reduce its costs in relation to manufacturing and distribution.OOOand three-bedroomed houses for :f150. In 2006/7. with a target of 75% by 2009. all employees wear staff uniform.A strong selling point to many people is the fact most of the products are flat packed. These reports tend to concentrate on environmental improvements within five areas: products and materials. goods transport and environmental work at the stores. forestry. Also included in the Environmental Action Plans is making the stores' energy consumption as efficient as possible. in 2006 IKEA terminated the contracts of 27 suppliers for failure to comply with its standards etc. which is available in store free of charge. For example. and information about the environment in general and environmental work within the IKEA Group. The company provides horne delivery for larger items. and certain stores in the UK are now open untillO pm weekdays to meet consumer demand for late-night shopping. A Waste Management Manual for the IKEA Group is established.000. which it hoped would offer housing at least 20% cheaper than comparable properties in the surrounding areas. In October 2007 IKEA introduced the UK's first BoKlok flatpack hornes in a joint venture with the Swedish construction company. It expected to seil f1ats at under :flOO. reclaimed or used in energy production in its stores and distribution centres reached 80% in 2006/7. making it easier for the buyer to transport. In order to portray a customer-orienta ted approach. Skanska. An example in the UK is the store based at Lakeside Retail Park in Essex. sort the five most common fractions of their waste. The company is mainly a business-to-consumer (B2C) organisation and therefore offers no trade discount for organisational purchasers.which is the 'IKEA way' of purchasing horne furnishing products from suppliers and is based on a code of conduct which incorporates international conventions on relationships between IKEA and its suppliers. as a minimum requirement. IKEA produces a catalogue of its product range. the percentage of waste recycled. although this is not included in the produet price. as indicated in its yeady Social and Environmental Responsibilities Report. environmental work at suppliers. whilst TV advertising continues to promote brand awareness. Stores are large. Similarly. Each store has its own environmental coordinator whose job includes organising and carrying out environmental training for the store's co-workers. and the tools required for assembly are sold with the furniture. Methods used are energy-efficient lighting. warehouse-style complexes located out of town. It means that all stores must. an understanding of. the proportion of renewable materials used in the production of its products rose to 70%. The aim of this training is to give people an insight into. for example. tests with alternative . recycled or used for energy production.

By breaking this taboo area for advertisers. IKEA hopes to be able 10 improve the systems it uses to assess the environmental work of the freight companies it works with. Most IKEA packaging consists of what is probably the most environmentally friendly material of them all. which focused on price and range. IKEA has a complicated corpora te structure whereby profits can be channelled through a non-profit foundation. Until 1995 IKEA was promoted through tactical campaigns in the UK. with the 'Chuck out the Chint' campaign. Based on genuine market research. The link with St Luke's continues. with the advertising company being given a Silver World Medal for the work it had done for IKEA Germany in 2006. a non-profit organisation that prornotes corporate responsibility.350 IKEA suppliers in 54 countries manufacture the products that are marketed and sold in the IKEA catalogues and via the IKEA stores. This will encourage distributors to continue with their own environmental improvement initiatives. Like all multinationals. IKEA does not always receive positive promotion. which can tend to reduce IKEA's tax burden. Shortly after this campaign came an even more irreverent and 1Ongue-in-cheek series of ads. By measuring and monitoring the environmental impact of its transport activities. IKEA still refused in 2007 to sign up 10 the industry standard international 'Rugmark' which guarantees that child labour has not been used in the manufacture of its products. the furniture findings campaign went out on posters and TV nationally and stimulated a media debate about contemporary tastes in the UK. In 2007 the Berne declaration. A large proportion of IKEA products come from suppliers in countries where environmental work is. St Luke's won the highly competitive pitch for this project on the premise that further growth for IKEA in the UK could not be achieved without tackling the British preference for traditional furniture. corrugated cardboard with a high content of recycled material. highlighting the correlation between people's taste in furniture and their habits or lifestyles. The aim is 10 use a single material to make recycling easier. environmentally friendly solutions. formally criticised IKEA for its tax-avoidance strategies. but the firm also purchases products from countries where environmental work is less developed. Up 10 90% of the waste from IKEA stores worldwide goes 10 special ist companies for recycling. The chintz campaign generated an unusual amount of media attention in the months following its launch. on the whole. In 2007 approximately 1. IKEA works closely with both suppliers and packaging manufacturers to develop sensible packaging that offers effective. In addition. geothermal energy and energy from underground aquifers. the INGKA Foundation. IKEA decided in 2007 10 switch its entire UK company car fleet to hybrid vehicles by 2008 by replacing its Skoda cars with Honda Civic Hybrids. . the agency fuelled a cultural shift in favour of more modern tastes. which is currently being introduced as a comprehensive waste-sorting programme. For example. weil developed. IKEA currently employs the advertising agency St Luke's for its UK advertising campaigns. at the same time as it makes it easier for IKEA to select the right freight company.energy systems such as solar power.

_ 1 Conduet an environmental analysis ofthe eompany. 3 Seleet one of IKEA's main eompetitors and discuss wh at steps they ean take in order to try to eompete with IKEA. Reprinted with permission.com. Source: Adapted from www.ikea.This poliey eontinues even though ten years previously the eompany was eritieised in a TV doeumentary for eontinuing to exploit ehild labour in the Philippines and Vietnam. . 2 Diseuss a suitable market entry method for IKEA entering South Korea. © Inter Ikea Systems BV.