Ikea Paper
IKEA
Business Analysis
Industrial Organization - Essay I
March 17, 2013
Word count: 3397
Introduction IKEA is a privately held, Swedish multinational company that is one of the world’s largest furnishings retailers. This international home products company designs and sells ready-to-assemble furniture such as beds, chairs, and desks, appliances, and home accessories. The company is the world’s largest furniture retailer. IKEA was founded in 1943 in the South of Sweden, and its name is an acronym of the initials of the founder’s name, Ingvar Kamprad and of Elmtaryd and Agunnaryd, the farm and village where Kamprad grew up. The company is known for its modern architectural designs on various types of appliances and furniture, often associated with a simplified eco-friendly interior design. In addition, the firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an average of two to three percent over the decade to 2010, while continuing its global expansion. As of October 2011, IKEA has 332 stores in 38 countries. Most of these stores are directly owned but some are managed under franchise by owners outside the company. By doing this, IKEA faces a higher chance of success than in a sole proprietorship. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009. In recent years, IKEA purchases from developing countries have grown from 32% in 1998 to 48% in 2003; 29% of its output comes from Asia, 67% from Europe and 4% from the USA (Arrigo, 2005). For a long time, Poland was the second supplier of raw materials after Sweden, but there was recently a giddy increase in China which, in 2004, accounted for 14% of total output, followed by Poland with 12%, Sweden with 8%, Italy with 7%, and Germany with 6% (IKEA.com). To achieve its goal of boosting
Business Analysis
Industrial Organization - Essay I
March 17, 2013
Word count: 3397
Introduction IKEA is a privately held, Swedish multinational company that is one of the world’s largest furnishings retailers. This international home products company designs and sells ready-to-assemble furniture such as beds, chairs, and desks, appliances, and home accessories. The company is the world’s largest furniture retailer. IKEA was founded in 1943 in the South of Sweden, and its name is an acronym of the initials of the founder’s name, Ingvar Kamprad and of Elmtaryd and Agunnaryd, the farm and village where Kamprad grew up. The company is known for its modern architectural designs on various types of appliances and furniture, often associated with a simplified eco-friendly interior design. In addition, the firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an average of two to three percent over the decade to 2010, while continuing its global expansion. As of October 2011, IKEA has 332 stores in 38 countries. Most of these stores are directly owned but some are managed under franchise by owners outside the company. By doing this, IKEA faces a higher chance of success than in a sole proprietorship. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009. In recent years, IKEA purchases from developing countries have grown from 32% in 1998 to 48% in 2003; 29% of its output comes from Asia, 67% from Europe and 4% from the USA (Arrigo, 2005). For a long time, Poland was the second supplier of raw materials after Sweden, but there was recently a giddy increase in China which, in 2004, accounted for 14% of total output, followed by Poland with 12%, Sweden with 8%, Italy with 7%, and Germany with 6% (IKEA.com). To achieve its goal of boosting
References: Arrigo, E. (2005). Corporate Responsibility and Hypercompetition. The IKEA Case. Symphonya, 2, pp. 37-57 Facts and figures, www.IKEA.com. Kotelnikov, V. (2005) Experimental Marketing. Retrieved from: http://www.1000ventures.com/business_guide/marketing_experiential.html Building a sustainable supply chain: An IKEA case study. The Times 100.