In Partial Fulfilment
Of the Requirements for the Course
STRATEGIC MANAGEMENT ( BA 111-A)
1st Semester, AY 2013 – 2014
I. Background
IKEA is one of the most successful global retailers in the world today. It is an international company that designs and sells ready-to-assemble furniture and low-rpiced elegantly designed merchandise such as beds, chairs and home decors. It is found in Sweden in 1943 by Ingvar Kamprad, just only 17-years old by then. The company's name is an acronym made up of the initials of the founder's name, Ingvar Kamprad; Elmtaryd, the name of their family farm; and Agunnaryd, the name of the village where he grew up.
Although IKEA has been generally successful in the 1950s, IKEA continued to encountered several problems until the 1970s. Problems such as the changing of the milk truck’s route, prohibition of IKEA during the Furniture Fair, the rumors about IKEA’s low-quality products and finally in Stockholm, when they had longer lines and slower customer service. In 1985, IKEA opened in Philadelphia, United States. This was to see whether a European retail store such as IKEA could succeed in a massively different market. The consumers in America had a completely different preference. IKEA was then able to solve the problem by redesigning the furnitures, trasnferred their locaitons to reduce costs and they priced their products from Kronor to U.S. Dollars.
In 1980s, IKEA continued to enter new markets around the globe. Stores were opened in the Canary Islands, France, Iceland, Saudi Arabia, Belgium, Kuwait, United Kingdom, Hongkong and Italy. In terms with thei business model, IKEA’s target market is the young, mobile global middle class who are looking for attractively but low prices furnitures. Although the prices are low, IKEA made sure that the quality of its products is not being sacrificed.
The groups of companies that form IKEA are all controlled by INGKA Holding., a Dutch