IKEA Operations

IKEA operations are divided into three divisions – Franchise, Property and
Finance divisions, with Franchise Division being the core of the business. IKEA
follows de-centralization business strategy in running its global operations.
According to this strategy, regional managers are granted decision-making
autonomy taking into account unique aspects of their markets, local culture,
patterns of local consumer behaviour and other region-specific factors.
IKEA operates its stores under franchise agreements in 30 countries worldwide.
There are 11 franchisees operating IKEA stores in more than 50 markets. Ingka
Group, formerly IKEA Group, is the largest IKEA franchisee and it operates 367
IKEA stores in 30 markets employing 158,500 people. [4]
The majority of IKEA products are developed by IKEA Industry, the largest
producer of wooden furniture in the world. IKEA Industry consists of 40
production units in 10 countries: China, France, Hungary, Lithuania, Poland,
Portugal, Russia, Slovakia, Sweden, and the USA. [5]
The major source of value in IKEA operations relates to cost benefits. Specifically,
by locating the massive chunk of its manufacturing units in Eastern Europe and
China, the company saves on the cost of human resources to a significant extent.
Moreover, the home improvement and furnishing chain uses the latest and
sophisticated technologies in manufacturing processes with the positive
implications on operational efficiency.