IKEA…A story of success

Suhair Mahmoud (8140150)

Areej Al Khatib (814160)
IKEA…A story of success
IKEA is a Swedish Company known as the world’s largest
furniture retailer.
Since it was founded in 1945, it grew rapidly and moved
with its expansion to reach the globe.

 It has over 300 hundred stores in 43 countries.

 Recognized for its Scandinavian style.
 Sells more than 10,000 furnishing products.
 Sales reached 386 Billion euros (2013).
 1.3 billion visits to their website.
 Their catalog was downloaded 10 million times.
 Owned and operated by nonprofit and profit
organizations. Its corporate structure divides into:
 Operations.
 Franchising.
 About IKEA

Name
Founder
Mission, Vision & Slogan
Core Values
Culture
IKEA Name

IK: Ingvar Kamprad (the founder name)

E: Elmtaryd (The farm where he grew up)
A: Agunnaryd (His hometown in Samland, South Sweden)

IKEA Founder

 Ingvar Kamprad started at age of six selling matches,

expanded his business to other villages at age of 10
selling Christmas decorations, pencils and fish.
 At age of 17, he founded IKEA.
 In 1974, he started his furniture business and in 1951
he discontinued all other products.
 Introduced flat-pack in 1953.
 His driving idea was that “ everyone should be able to
afford stylish, modernist furniture.
 Created a strong culture based on his Swedish roots.
IKEA Vision

“Is to create a better everyday life for the many”. This

includes not only providing a great home furnishing but
taking social and environmental responsibility toward
people and planet.

IKEA Mission
“ is to offer a wide range of well-designed, functional
home furnishing products at prices so low that as many
people as possible will be able to afford”

IKEA Slogan
“Is low price with a meaning”.
IKEA Core Values & Culture
IKEA culture derived from its following core values:

 Simplicity.
 Striving to meet the reality.
 Leadership by example.
 Daring to be different.
 Constantly being on the way.
 Togetherness and enthusiasm.
 Constant desire for renewal.
 Cost Consciousness.
 Willingness to accept responsibility.
 Humbleness and willpower.
IKEA Culture…
A culture of hearts

 IKEA created a corporate culture of norms and values

derived from Kamprad hometown and Swedish culture
of working hard as a team and being initiative and
innovative and taking responsibility to solve problems
and serving the customers.
 In IKEA stores all over the world, IKEA employees should
work all together as one team despite their backgrounds
and differences.
 IKEA engaged its top managers in a “breaking the
bureaucracy weeks” where managers every year will
work for a week in one of IKEA stores or warehouses to
make sure all employees are committed to IKEA goals
and values.
IKEA Culture….
Is formed by the shadow of it’s leader

 IKEA focused on simplicity, by providing simple designs

and products, employees despite their locations work
according to simple values and objectives of being
initiative and focusing on solving customer problems
before it even arise.
 IKEA created a culture where employees have to be
rotated between departments, get well training, being
rapidly promoted if they prove to demonstrate
enthusiasm and togetherness.
 IKEA created and established a Motivational Strategies
to motivate its employees so they can perform to their
best, such as promotions, above average pay, generous
store bonus system and personal well being.
 A code of conduct for Suppliers and Co-workers.
IKEA Growth
Regional
International
Global
IKEA Growth
Started Local

IKEA kept its operations local till 60s , and focused in

developing new products

Moved to Regional

After 20 years, IKEA headed to Scandinavian countries as a

way to grow, expands sales since the Swedish market is
small.

Expanded to International

In 1970s, IKEA started to spread in other parts in Europe

and opened stores in Switzerland, Germany, Netherlands,
Austria, and other markets in Canada and Australia.
IKEA Growth
Reached to Global

More markets were entered, IKEA opened more stores in

Europe in Croatia, Serbia, Slovakia, Poland, Hungary,
Spain, Russia, South Korea, China, India, Taiwan, Malaysia,
Thailand, Dominican Republic, Cyprus, Turkey, Puerto Rico,
Indonesia and other Middle Eastern Countries are in IKEA
map such as KSA, UAE, Qatar, Kuwait, Jordan, Egypt and
many others.

IKEA Strategy

 Cost Leadership by:

 Offering low cost products.
 Limited customer service (Sells packages of furniture
without assembling it).
 Self selection by customers (Explanatory catalogs,
few sales staff, customers have freedom to walk
around stores and try furniture.
IKEA Strategy

 Low manufacturing cost (100% sourcing supplies,

Strong relationships with suppliers, Have their own
plantation).
(2,300) suppliers in 70 countries)
 Modular furniture design (In-house designers).

 Complementary Service when customers wait for the

service delivery they can benefit from:
 Large & unique store.
 Supervised child play area.
 IKEA Restaurant and Café.

 Global Strategy:
 Customization for every country to suit the demands
of customers (US market demanded large beds and
closets).
IKEA Strategy

 Culture adaptation through their catalogs and

advertising (Women pictures were deleted from the
catalog when distributed in KSA market).
 Complexity by designing their products by
themselves and work with factories and suppliers to
ensure the efficient production.
 Focused on Social Responsibility and being part of
the lives of people.
 Environmental friendly that is engaged in forestry,
child Protection, carbon omissions, recycling.
IKEA Strategy

IKEA Main challenges are:

 Political
 FDI Policies.
 Labor Laws.
 Taxes.
 Environmental laws.
 Social
 Recycling.
 Environmental friendly.
 Lesser carbon footprints.
 Economic
 High entering barriers.
 Recession.
IKEA SWOT Analysis

Strengths
Weaknesses
Opportunities
Threats
IKEA SWOT Analysis
Strengths

 Customer Knowledge.
 Constantly using innovations to drive costs down.
 Supply Chain Integration.
 Brand Reputation and Market Presence.
 Diversified Product Portfolio.
 Environmental Friendly Business.
 Customers Satisfaction.

Weaknesses

 Negative Publicity.
 Low quality of products.
 Standard Products.
 Flagship stores are not located in city centers.
 Too many stores in certain markets.
 IKEA SWOT Analysis
Opportunities

 Further expansion into developing economies.

 Growing online Sales.
 Expansion to growing grocery market.

Threats

 Intensifying Competition.
 Growth of Average consumer income.
IKEA Future
IKEA Strategy for 2020
IKEA Future
IKEA Strategy for 2020

 Adopted “People & Planet” as a sustainability strategy

for 2020 which will bring:
 More innovation.
 Transform IKEA business.
 Shape IKEA investments.
 Unleash new opportunities.

 IKEA identified three change drivers that will transform

their business for the coming years.
 Developing and promoting products and solutions
that help customers to save or generate energy,
reduce or sort waste, use less recycle water, at the
lowest price.
IKEA Future
IKEA Strategy for 2020

 Promoting recycling and producing more renewable

energy than they consume.
 Extending their code of conduct throughout their
value chain.

IKEA strategy will be transformed into the following

actions:

 Expanding collaborations and partnerships with other

companies, suppliers, NGOs and UN bodies.
 Establishing long-term partnerships with local
communities.
 Advocating governmental policies that support positive
changes in society.
IKEA Future
IKEA Strategy for 2020

 Driving new technologies and new thinking.

 Encouraging co-workers to participate and engage in
local community activities and volunteering.
IKEA commitments for the next 5 years are:
 By FY17, 50% of projected wood volume will come from
preferred sources.
 By FY15, all cotton used will be produced in line with the
Better Cotton Initiative.
 By the end of FY15, all home furnishing materials will be
made of either renewable, recyclable, or recycled
materials.
 By the end of FY15, reduce carbon emissions from their
own operations by 50% and those of their supplies by
20%.
IKEA Future
IKEA Strategy for 2020

 By the end of FY20, IKEA Group will produce as much

renewable energy as they consume in their operations.
 Engage customers and IKEA co-workers in annual local
and global campaigns with donations to reach 20
million euros in FY20.
 By FY17, all of the leather used will be traceable and
produced according to standards.
Thank You