IKEA: Furniture Retailer
to the World
Introduction
IKEA is one of the world’s most successful global
retailers. In 2007, IKEA had 300 home furnishing
superstores in 35 countries and was visited by some
583 million shoppers. IKEA’s low-priced, elegantly
designed merchandise, displayed in large warehouse
stores, generated sales of €21.2 billion in 2008, up
from €4.4 billion in 1994. Although the privately
held company refuses to publish gures on pro t-
ability, its net pro t margins were rumored to be
approximately 10%, high for a retailer. The founder,
Ingvar Kamprad, now in his 80s but still an active
“advisor” to the company, is rumored to be one of
the world’s richest men.
Company Background
IKEA was established by Ingvar Kamprad in Sweden
in 1943 when he was just 17 years old. The edgling
company sold sh, Christmas magazines, and seeds
from his family farm. His rst business had been sell-
ing matches; the enterprising Kamprad purchased
them wholesale in 100-box lots (with help from his
grandmother who nanced the enterprise) and then
resold individually at a higher markup. The name
IKEA was an acronym: I and K his initials; E stood
for Elmtaryd, the name of the family farm; and A
stood for Agunnaryd, the name of the village in
southern Sweden where the farm was located. Before
long, Kamprad had added ballpoint pens to his list
and was selling his products via mail order. His
This case was prepared by Charles W. L. Hill, School of Business, University of Washington. Reprinted by permission.
C90
warehouse was a shed on the family farm. The cus-
tomer ful llment system used the local milk truck,
which picked up goods daily and took them to the
train station.
In 1948, Kamprad added furniture to his prod-
uct line; in 1949, he published his rst catalog, dis-
tributed then as now, for free. In 1953, Kamprad
was struggling with a problem: the milk truck had
changed its route, and he could no longer use it to
take goods to the train station. His solution was to
buy an idle factory in nearby Almhult and convert it
into a warehouse. With business now growing rap-
idly, Kamprad hired a 22-year-old designer, Gillis
Lundgren. Lundgren originally helped Kamprad do
photo shoots for the early IKEA catalogs, but he
started to design more and more furniture for IKEA,
eventually designing as many as 400 pieces, includ-
ing many best sellers.
IKEA’s goal over time was to provide stylish
functional designs with minimalist lines that could
be cost-ef ciently manufactured under contract
by suppliers and priced low enough to allow most
people to afford them. Kamprad’s theory was that
“good furniture could be priced so that the man with
a at wallet would make a place for it in his spend-
ing and could afford it.”1 Kamprad was struck by the
fact that furniture in Sweden was expensive at the
time, something that he attributed to a fragmented
industry dominated by small retailers. Furniture was
also often considered family heirlooms, passed down
across the generations. He wanted to change this: to
make it possible for people of modest means to buy
their own furniture. Ultimately, this led to the concept
of what IKEA calls “democratic design”—a design
 Case 7 IKEA: Furniture Retailer to the World
that, according to Kamprad, “was not just good, but
also from the start adapted to machine production
and thus cheap to assemble.”2 Gillis Lundgren was
instrumental in the implementation of this concept.
Time and time again, he would nd ways to alter the
design of furniture to save on manufacturing costs.
Gillis Lundgren also stumbled on what was
to become a key feature of IKEA furniture: self-
assembly. Trying to ef ciently pack and ship a long-
legged table, he hit upon the idea of taking the legs
off and mailing them packed at under the tabletop.
Kamprad quickly realized that at-packed furniture
reduced transport and warehouse costs, and dam-
age (IKEA had been having a lot of problems with
furniture damaged during the shipping process).
Moreover, customers seemed willing to take on the
task of assembly in return for lower prices. By 1956,
self-assembly was integral to the IKEA concept.
In 1957, IKEA started to exhibit and sell its
products at home furnishing fairs in Sweden. By
cutting retailers out of the equation and using the
self-assembly concept, Kamprad could undercut the
prices of established retail outlets, much to their cha-
grin. Established retailers responded by prohibiting
IKEA from taking orders at the annual furniture
trade in Stockholm. Established outlets claimed that
IKEA was imitating their designs. This was to no
avail, however, so the retailers went further, pressur-
ing furniture manufacturers not to sell to IKEA. This
had two unintended consequences. First, without
access to the designs of many manufacturers, IKEA
was forced to design more of its products in-house.
Second, Kamprad looked for a manufacturer who
would produce IKEA-designed furniture. Ultimately,
he found one in Poland.
To his delight, Kamprad discovered that furniture
manufactured in Poland was as much as 50% cheaper
than furniture made in Sweden, allowing him to cut
prices even more. Kamprad also found that doing
business with the Poles required the consumption of
considerable amounts of vodka to celebrate business
transactions, and for the next 40 years his drinking
was legendary. Alcohol consumption apart, the rela-
tionship that IKEA established with the Poles was to
become the archetype for future relationships with
suppliers. According to one of the Polish managers,
there were three advantages of doing business with
IKEA: “One concerned the decision making; it was
always one man’s decision, and you could rely upon
what had been decided. We were given long-term
C91
contracts, and were able to plan in peace and quiet. . . .
A third advantage was that IKEA introduced new
technology. One revolutionary idea, for instance,
was a way of treating the surface of wood. They also
mastered the ability to recognize cost savings that
could trim the price.”3 By the early 1960s, Polish-
made goods were to be found on more than half of
the pages of the IKEA catalog.
By 1958, an expanded facility at the Almhult
location became the rst IKEA store. The original
idea behind the store was to have a location where
customers could come and see IKEA furniture set
up. It was a supplement to IKEA’s main mail-order
business; but it very quickly became an important
sales point in its own right. The store soon started
to sell car roof racks so customers could leave with
at-packed furniture loaded on top. Noticing that a
trip to an IKEA store was something of an outing
for many shoppers (Almhult was not a major popu-
lation center, and people often drove in from long
distances), Kamprad experimented with adding a
restaurant to the store so that customers could relax
and refresh themselves while shopping. The restau-
rant was a hit, and it became an integral feature of
all IKEA stores.
The response of IKEA’s competitors to its suc-
cess was to argue that IKEA products were of low
quality. In 1964, just after 800,000 IKEA catalogs
had been mailed to Swedish homes, the widely read
Swedish magazine Allt i Hemmet (Everything for
the Home) published a comparison of IKEA fur-
niture to that sold in traditional Swedish retailers.
The furniture was tested for quality in a Swedish
design laboratory. The magazine’s analysis, detailed
in a 16-page spread, was that not only was IKEA’s
quality as good if not better than that from other
Swedish furniture manufacturers, the prices were
much lower. For example, the magazine concluded
that a chair bought at IKEA for 33 kronor ($4) was
better than a virtually identical one bought in a more
expensive store for 168 kronor ($21). The maga-
zine also showed how a living room furnished with
IKEA products was as much as 65% less expensive
than one furnished with equivalent products from
four other stores. This publicity made IKEA accept-
able in middle-class households, and sales began to
take off.
In 1965, IKEA opened its rst store in Stockholm,
Sweden’s capital. By now, IKEA was generating the
equivalent of €25 million and had already opened a
C92 Section B: Corporate Level Cases: Domestic and Global
store in neighboring Norway. The Stockholm store,
its third, was the largest furniture store in Europe
and had an innovative circular design that was mod-
eled on the famous Guggenheim Art Museum in
New York. The location of the store was to set the
pattern at IKEA for decades. The store was situated
on the outskirts of the city, rather than downtown,
with ample space for parking and good access roads.
The new store generated a large amount of traf c, so
much so that employees could not keep up with cus-
tomer orders, and long lines formed at the checkouts
and merchandise pick-up areas. To try and reduce
the lines, IKEA experimented with a self-service
pick-up solution, allowing shoppers to enter the
warehouse, load at-packed furniture onto trolleys,
and then take them through the checkout. It was so
successful that this soon became the company norm
in all stores.
International Expansion
By 1973, IKEA was the largest furniture retailer in
Scandinavia with nine stores. The company enjoyed a
market share of 15% in Sweden. Kamprad, however,
felt that growth opportunities were limited. Starting
with a single store in Switzerland over the next
15 years, the company expanded rapidly in Western
Europe. IKEA met with considerable success, par-
ticularly in West Germany, where it had 15 stores by
the late 1980s. As in Scandinavia, Western European
furniture markets were largely fragmented and
served by high-cost retailers located in expensive
downtown stores, selling relatively expensive furni-
ture that was not always immediately available, for
delivery. IKEA’s elegant functional designs with their
clean lines, low prices, and immediate availability,
were a breath of fresh air, as was the self-service store
format. The company was met with almost universal
success even though, as one former manager put it:
“We made every mistake in the book, but money
nevertheless poured in. We lived frugally, drinking
now and again, yes perhaps too much, but we were
on our feet bright and cheery when the doors were
open for the rst customers, competing in good Ikean
spirit for the cheapest solutions.”4
The man in charge of the European expansion was
Jan Aulino, Kamprad’s former assistant, who was just
34 years old when the expansion started. Aulino sur-
rounded himself with a young team. Aulino recalled
that the expansion was so fast paced that the stores
were rarely ready when IKEA moved in. Moreover, it
was hard to get capital out of Sweden due to capital
controls; the trick was to make a quick pro t and get
a positive cash ow going as soon as possible. In the
haste to expand, Aulino and his team did not always
pay attention to detail. He reportedly clashed with
Kamprad on several occasions and considered him-
self red at least four times, although he never was.
Eventually the European business was reorganized,
and tighter controls were introduced.
IKEA was slow to expand in the UK, however,
where the locally grown company Habitat had built
a business that was similar in many respects to IKEA,
offering stylish furniture at a relatively low price.
IKEA also entered North America, opening 7 stores
in Canada between 1976 and 1982. Emboldened by
this success, in 1985, the company entered the United
States. It proved to be a challenge of an entirely dif-
ferent nature.
On the face of it, America looked to be fertile
territory for IKEA. As in Western Europe, furni-
ture retailing was a very fragmented business in the
United States. At the low end of the market were the
general discount retailers, such as Walmart, Costco,
and Of ce Depot, who sold a limited product line of
basic furniture, often at very low prices. This furniture
was very functional, lacked the design elegance asso-
ciated with IKEA, and was generally of a fairly low
quality. Then there were higher-end retailers, such as
Ethan Allen, that offered high-quality, well-designed,
high-priced furniture. They sold this furniture in full-
service stores staffed by knowledgeable salespeople.
High-end retailers would often sell ancillary services
as well, such as interior design. Typically these retail-
ers would offer home delivery service, including set
up in the home, either for free or a small additional
charge. Because it was expensive to keep large inven-
tories of high-end furniture, much of what was on
display in stores was not readily available, and the
client would often have to wait a few weeks before
it was delivered.
IKEA opened its rst United States store in 1985
in Philadelphia. The company had decided to locate
on the coasts. Surveys of American consumers sug-
gested that IKEA buyers were more likely to be peo-
ple who had travelled abroad, considered themselves
risk takers, and liked ne food and wine. These peo-
ple were concentrated on the coasts. As one manager
put it, “There are more Buicks driven in the middle
than on the coasts.”5
 Case 7 IKEA: Furniture Retailer to the World
Although IKEA initially garnered favorable
reviews, and enough sales to persuade it to start
opening additional stores, by the early 1990s, it was
clear that things were not going well in America.
The company found that its European-style offer-
ings did not always resonate with American con-
sumers. Beds were measured in centimeters, not the
king, queen, and twin sizes with which Americans
are familiar. American sheets did not t on IKEA
beds. Sofas were not big enough, wardrobe draw-
ers not deep enough, glasses too small, curtains too
short, and kitchens did not t American-size appli-
ances. In a story often repeated at IKEA, managers
noted that customers were buying glass vases and
using them to drink out of, rather than the small
glasses for sale at IKEA. The glasses were appar-
ently too small for Americans who like to add liberal
quantities of ice to their drinks. To make matters
worse, IKEA was sourcing many of the goods from
overseas, priced in the Swedish kronor, which was
strengthening against the American dollar. This
drove up the price of goods in IKEA’s American
stores. Moreover, some of the stores were poorly
located, and not large enough to offer the full IKEA
experience familiar to Europeans.
Turning around its American operations required
IKEA to take some decisive actions. Many products
had to be redesigned to t with American needs.
Newer and larger store locations were chosen. To
bring prices down, goods were sourced from lower-
cost locations and priced in dollars. IKEA also
started to source some products from factories in
the United States to reduce both transport costs and
dependency on the value of the dollar. At the same
time, IKEA noticed a change in American culture.
Americans were becoming more concerned with
design, and more open to the idea of disposable fur-
niture. It used to be said that Americans changed
their spouses about as often as they changed their
dining room tables, about 1.5 times in a lifetime, but
something was shifting in American culture. Younger
people were more open to risks and more willing to
experiment. There was a thirst for design elegance
and quality. Starbucks was tapping into this, as was
Apple Computer, and so did IKEA. According to one
manager at IKEA, “Ten or 15 years ago, travelling in
the United States, you couldn’t eat well. You couldn’t
get good coffee. Now you can get good bread in the
supermarket, and people think that is normal. I like
that very much. That is more important to good life
C93
than the availability of expensive wines. That is what
IKEA is about.” 6
To tap into America’s shifting culture, IKEA reem-
phasized design and started promoting the brand
with a series of quirky hip advertisements aimed at
a younger demographic: young married couples, col-
lege students, and 20- to 30-something singles. One
IKEA commercial, called “Unboring,” made fun of
the reluctance of Americans to part with their fur-
niture. One famous ad featured a discarded lamp,
forlorn and forsaken in some rainy American city. A
man turned to the camera sympathetically. “Many of
you feel bad for this lamp,” he said in thick Swedish
accent. “That is because you are crazy.” Hip people,
the commercial implied, bought furniture at IKEA.
Hip people did not hang onto their furniture either;
after a while they discarded it and replaced it with
something else from IKEA.
The shift in tactics worked. IKEA’s revenues
doubled in a four-year period to $1.27 billion in
2001, up from $600 million in 1997. By 2008, the
United States was IKEA’s second-largest market after
Germany, with 35 stores accounting for 10% of its
total revenues, or around $2.4 billion, and expan-
sion plans called for 50-plus stores in the United
States by 2012.
Having learned vital lessons about competing
in foreign countries outside continental Western
Europe, IKEA continued to expand internationally
in the 1990s and 2000s. It rst entered the UK in
1987, and by 2008, it had 17 stores in the country.
IKEA also acquired Britain’s Habitat in the early
1990s and continued to run it under the Habitat
brand name. In 1998, IKEA entered China, where
it had 4 stores by 2008, followed by Russia in 2000
(11 stores by 2008), and Japan in 2006, a country
where it had failed miserably 30 years earlier (by
2008 IKEA had four stores in Japan). In total, by
2008, there were 285 IKEA stores in 36 countries
and territories. The company had plans to continue
opening between 20 and 25 stores a year for the
foreseeable future. According to one manager, an
important limiting factor on the pace of expansion
was building the supply network.
As with the United States, some local customi-
zation has been the order of the day. In China,
for example, the store layout re ected the layout
of many Chinese apartments, and because many
Chinese apartments have balconies, IKEA’s Chinese
stores included a balcony section. IKEA also has had
C94 Section B: Corporate Level Cases: Domestic and Global
to adapt its locations in China, where car ownership
is still not widespread. In the West, IKEA stores are
generally located in suburban areas and have lots
of parking space. In China, stores are located near
public transportation, and IKEA offers delivery ser-
vices so that Chinese customers can get their pur-
chases home. IKEA has also adopted a deep price
discounting model in China, pricing some items as
much as 70% below their price in IKEA stores out-
side China. To make this work, IKEA has sourced a
large percentage of its products sold in China from
local suppliers.
The IKEA Concept and Business Model
IKEA’s target market is the young, upwardly mobile
global middle class who are looking for low-priced
but attractively designed furniture and household
items. This group is targeted with somewhat wacky,
offbeat advertisements that help to drive traf c into
the stores. The stores themselves are large ware-
houses festooned in the blue and yellow colors of the
Swedish ag that offer 8,000 to 10,000 items, from
kitchen cabinets to candlesticks. There is plenty of
parking outside, and the stores are located with good
access to major roads.
The interior of the stores is con gured almost
like a maze that requires customers to pass through
each department to get to the checkout. The goal
is simple; to get customers to make more impulse
purchases as they wander through the IKEA won-
derland. Customers who enter the store planning to
buy a $40 coffee table can end up spending $500 on
everything from storage units to kitchenware. The
ow of departments is constructed with an eye to
boosting sales. For example, when IKEA managers
noticed that men would get bored while their wives
stopped in the home textile department, they added
a tool section just outside the textile department, and
sales of tools skyrocketed. At the end of the maze,
just before the checkout, is the warehouse where cus-
tomers can pick up their at-packed furniture. IKEA
stores also have restaurants (located in the middle
of the store) and child-care facilities (located at the
entrance for easy drop off) so that shoppers stay as
long as possible.
Products are designed to re ect the clean Swedish
lines that have become IKEA’s trademark. IKEA has
a product strategy council, which is a group of senior
managers who establish priorities for IKEA’s product
lineup. Once a priority is established, product devel-
opers survey the competition and then set a price
point that is 30% to 50% below that of rivals. As
IKEA’s Web site states, “We design the price tag rst,
then the product.” Once the price tag is set, design-
ers work with a network of suppliers to drive down
the cost of producing the unit. The goal is to identify
the appropriate suppliers and the least-costly materi-
als, a trial and error process that can take as long as
three years. By 2008, IKEA had 1,380 suppliers in
54 countries. The top sourcing countries were China
(21% of supplies), Poland (17%), Italy (8%), Sweden
(6%), and Germany (6%).
IKEA devotes considerable attention to nding
the right supplier for each item. Consider the com-
pany’s best-selling Klippan love seat. Designed in
1980, the Klippan, with its clean lines, bright colors,
simple legs, and compact size, has sold some 1.5 mil-
lion units since its introduction. IKEA originally
manufactured the product in Sweden but soon trans-
ferred production to lower-cost suppliers in Poland.
As demand for the Klippan grew, IKEA then decided
that it made more sense to work with suppliers in
each of the company’s big markets to avoid the costs
associated with shipping the product all over the
world. Today there are ve suppliers of the frames
in Europe, plus three in the United States and two
in China. To reduce the cost of the cotton slipcovers,
IKEA has concentrated production in four core sup-
pliers in China and Europe. The resulting ef ciencies
from these global sourcing decisions enabled IKEA
to reduce the price of the Klippan by some 40%
between 1999 and 2005.
Although IKEA contracts out manufacturing for
most of its products, since the early 1990s, a certain
proportion of goods have been made internally (in
2008, about 90% of all products were sources from
independent suppliers, with 10% being produced
internally). The integration into manufacturing was
born out of the collapse of communist governments
in Eastern Europe after the fall of the Berlin Wall in
1989. By 1991, IKEA was sourcing some 25% of its
goods from Eastern European manufacturers. It had
invested considerable energy in building long-term
relationships with these suppliers, and had often
helped them to develop and purchase new technol-
ogy so that they could make IKEA products at a
lower cost. As communism collapsed and new bosses
came in to the factories, many did not feel bound by
the relationships with IKEA. They effectively tore up
 Case 7 IKEA: Furniture Retailer to the World
contracts, tried to raise prices, and underinvested in
new technology.
With its supply base at risk, IKEA purchased a
Swedish manufacturer, Swedwood. IKEA then used
Swedwood as the vehicle to buy and run furniture
manufacturers across Eastern Europe, with the
largest investments being made in Poland. IKEA
invested heavily in its Swedwood plants, equipping
them with the most modern technology. Beyond the
obvious bene ts of giving IKEA a low-cost source
of supply, Swedwood has also enabled IKEA to
acquire knowledge about manufacturing processes
that are useful both in product design and in rela-
tionships with other suppliers, giving IKEA the
ability to help suppliers adopt new technology and
drive down their costs.
For illustration, consider IKEA’s relationship
with suppliers in Vietnam. IKEA has expanded its
supply base in Vietnam to help support its growing
Asian presence. IKEA was attracted to Vietnam by
the combination of low-cost labor and inexpensive
raw materials. IKEA drives a tough bargain with its
suppliers, many of whom say that they make thin-
ner margins on their sales to IKEA than they do to
other foreign buyers. IKEA demands high quality
at a low price. But there is an upside; IKEA offers
the prospect of forging a long-term, high-volume
business relationship. Moreover, IKEA regularly
advises its Vietnamese suppliers on how to seek out
the best and cheapest raw materials, how to set up
and expand factories, what equipment to purchase,
and how to boost productivity through technology
investments and management process.
Organization and Management
In many ways, IKEA’s organization and manage-
ment practices reflect the personal philosophy of
its founder. A 2004 article in Fortune describes
Kamprad, then one of the world’s richest men,
as an informal and frugal man who “insists on
flying coach, takes the subway to work, drives a
10-year-old Volvo, and avoids suits of any kind. It
has long been rumored in Sweden that when his
self-discipline fails and he drinks an overpriced
Coke out of a hotel mini bar, he will go down to a
grocery store to buy a replacement.”7 Kamprad’s
thriftiness is attributed to his upbringing in
Smaland, a traditionally poor region of Sweden.
Kamprad’s frugality is now part of IKEA’s DNA.
C95
Managers are forbidden to fly first class and are
expected to share hotel rooms.
Under Kamprad, IKEA became mission driven.
He had a cause, and those who worked with him
adopted it too. It was to make life better for the
masses, to democratize furniture. Kamprad’s man-
agement style was informal, nonhierarchical, and
team based. Titles and privileges are taboo at IKEA.
There are no special perks for senior managers. Pay
is not particularly high, and people generally work
there because they like the atmosphere. Suits and
ties have always been absent, from the head of ce to
the loading docks. The culture is egalitarian. Of ces
have an open plan and are furnished with IKEA fur-
niture; private of ces are rare. Everyone is called a
“co-worker,” and rst names are used throughout.
IKEA regularly stages antibureaucracy weeks dur-
ing which executives work on the store oor or tend
to registers. In a 2005 BusinessWeek article Andres
Dahlvig, the CEO, described how he spent time ear-
lier in the year unloading trucks and selling beds
and mattresses.8 Creativity is highly valued, and the
company is replete with stories of individuals tak-
ing the initiative; from Gillis Lundgren’s pioneering
of the self-assemble concept to the store manager
in the Stockholm store who let customers go into
the warehouse to pick up their own furniture. To
solidify this culture, IKEA had a preference for hir-
ing younger people who had not worked for other
enterprises and then promoting from within. IKEA
has historically tended to shy away from hiring the
highly educated, status-oriented elite, because they
often adapted poorly to the company.
Kamprad seems to have viewed his team as
extended family. Back in 1957, he bankrolled a
weeklong trip to Spain for all 80 employees and their
families as reward for hard work. The early team of
employees all lived near each other. They worked
together, played together, drank together, and talked
about IKEA around the clock. When asked by an
academic researcher what the fundamental key
was to good leadership, Kamprad replied “Love.”
Recollecting the early days, he noted that “When
we were working as a small family in Aluhult, we
were as if in love. Nothing whatsoever to do with
eroticism. We just liked each other so damn much.”9
Another manager noted that “We who wanted to
join IKEA did so because the company suits our way
of life. To escape thinking about status, grandeur and
smart clothes.”10
C96 Section B: Corporate Level Cases: Domestic and Global

As IKEA grew, the question of taking the company over the company as an advisor to senior manage-
public arose. While there were obvious advantages ment and as an ambassador for IKEA, a role he was
associated with doing so, including access to capital, still pursuing with vigor in 2008, despite being in
Kamprad decided against it. His belief was that the his 80s.
stock market would impose short-term pressures on
IKEA that would not be good for the company. The
Looking Forward
constant demands to produce pro ts, regardless of
the business cycle, would, in Kamprad’s view, make In its half century, IKEA had established an enviable
it more dif cult for IKEA to take bold decisions. At position for itself. It had become one of the most
the same time, as early as 1970, Kamprad started successful retail establishments in the world. It had
to worry about what would happen if he died. He expanded into numerous foreign markets (Exhibit 2),
decided that he did not want his sons to inherit the learning from its failures and building on its suc-
business. His worry was that they would either sell cesses. It had bought affordable, well-designed,
the company, or they might squabble over control functional furniture to the masses, helping them
of the company, and thus destroy it. All three of his to, in Kamprad’s words, achieve a better everyday
sons, it should be noted, went to work at IKEA as life. IKEA’s goal was to continue to grow by open-
managers. ing 20 to 25 stores a year for the foreseeable future.
The solution to this dilemma created one of the Achieving that growth would mean expansion into
most unusual corporate structures in the world. In non-Western markets, including most notably China
1982, Kamprad transferred his interest in IKEA to a where it had recently established a beachhead. Could
Dutch-based charitable foundation, Stichting Ingka the company continue to do so? Was its competitive
Foundation. This is a tax-exempt, nonpro t legal advantage secure?
entity that in turn owns Ingka Holding, a private
Dutch rm that is the legal owner of IKEA. A ve- Exhibit 1 IKEA by the Numbers in 2008
person committee, chaired by Kamprad and including
his wife, runs the foundation. In addition, the IKEA IKEA Stores 285 in 35 countries
trademark and concept was transferred to IKEA
IKEA Sales €21.2 billion
Systems, another private Dutch company, whose par-
ent company, Inter-IKEA, is based in Luxembourg. IKEA Suppliers 1,380 in 54 countries
The Luxembourg company is, in turn, owned by
The IKEA Range 9,500 products
an identically named company in the Netherlands
Antilles, whose bene cial owners remain hidden IKEA Coworkers 127,800 in 39 countries
from public view, but they are almost certainly the
Kamprad family. Inter-IKEA earns its money from a Source: http://franchisor.ikea.com/showContent
.asp?swfId=facts9.
franchise agreement it has with each IKEA store. The
largest franchisee is none other than Ingka Holdings.
IKEA states that franchisees pay 3% of sales to Inter- Exhibit 2 Sales and Suppliers
IKEA. Thus, Kamprad has effectively moved owner-
ship of IKEA out of Sweden, although the company’s Top Five Sales Top Five Supplying
identity and headquarters remain there, and estab- Countries Countries
lished a mechanism for transferring funds to him-
Germany 15% China 21%
self and his family from the franchising of the IKEA
concept. Kamprad himself moved to Switzerland in United States 10% Poland 17%
the 1980s to escape Sweden’s high taxes, and he has
France 10% Italy 8%
lived there ever since.
In 1986, Kamprad gave up day-to-day control UK 7% Sweden 6%
of IKEA to Andres Moberg, a 36-year-old Swede
who had dropped out of college to join IKEA’s mail- Sweden 6% Germany 6%
order department. Despite relinquishing manage- Source: http://www.ikea.com/ms/en_GB/about_ikea/facts_
ment control, Kamprad continued to exert in uence and_figures/index.html.
 Case 7 IKEA: Furniture Retailer to the World
References & Reading
1. Anonymous, “Furnishing the World,” The Economist,
November 19, 1995, 79–80.
2. Anonymous. “Flat pack accounting,” The Economist,
May 13, 2006, 69–70.
3. K. Capell, A. Sains, C. Lindblad, and A. T. Palmer,
“IKEA,” BusinessWeek, November 14, 2005, 96–101.
4. K. Capell et al., “What a Sweetheart of a Love Seat,”
BusinessWeek, November 14, 2005, 101.
5. C. Daniels, “Create IKEA, Make Billions, Take Bus,”
Fortune, May 3, 2004, 44.
6. J. Flynn and L. Bongiorno, “IKEA’s New Game Plan,”
BusinessWeek, October 6, 1997, 99–102.
Endnotes
1. Quoted in R. Heller, “Folk Fortune,” Forbes, September
4, 2000, 67.
2. B. Torekull, Leading by Design: The IKEA Story (New
York: Harper Collins, 1998), 53.
3. Ibid.
4. Ibid.
5. J. Leland, “How the Disposable Sofa Conquered America,”
New York Times Magazine, October 5, 2005, 45.
C97
7. R. Heller, “Folk Fortune,” Forbes, September 4,
2000, 67.
8. IKEA Documents at www.ikea.com.
9. J. Leland, “How the Disposable Sofa Conquered
America,” New York Times Magazine, October 5, 2005,
40–50.
10. P. M. Miller, “IKEA with Chinese Characteristics,”
Chinese Business Review, July–August 2004, 36–69.
11. B. Torekull, Leading by Design: The IKEA Story (New
York: Harper Collins, 1998).
6. Ibid.
7. C. Daniels and A. Edstrom, “Create IKEA, Make Billions,
Take a Bus,” Fortune, May 3, 2006, 44.
8. K. Capell et al., “Ikea,” Business Week, November 14,
2005, 96–106.
9. B. Torekull, Leading by Design: The IKEA Story, 82.
10. B. Torekull, Leading by Design: The IKEA Story, 83.