The Wonder from Sweden:

Is IKEA’s success

sustainable?

Alyssa Joi D. Alamar

BA 190 - Strategic Management

University of the Philippines

Prof. Mita Angela M. Dimalanta

About IKEA

• Smaland, Sweden 1943

• Ingvar Kamprad (17 years old)• IKEA comes from initials of Ingvar Kamprad, I and K,

plus the 1st letters of Elmtaryd and Agunnaryd, which are

the names of the farm and village where he grew up.

1951 1954 1967 1981 1983 up to present

BUSINESS

IDEA

“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

them”

The IKEA Concept:

The IKEA Product Range

Where the IKEA Concept comes

to life

You do your part.

We do our part.

Together we

save money.

Challenges faced by IKEA

External InternalIKEA’s decision to shift from an international

strategy toward a global standardizationstrategy

Discretion with regards to strategicdecisions lies on one person

Transition to new management

The company is privately held

Keeping costs low

- Standardized products

- Issue on wood

- Finding suppliers

Availability of new sources of supply tosupport more store openings

Bottleneck supply chain that led toslowed annual growth

Consumers becoming more sensitive tothe issue of deforestation

Competitor’s awareness of IKEA’ssuccess

Cultural differences across IKEA’smarkets

Walmart entered a period of difficulties after SamWalton stepped down. Do you anticipate IKEA havingthe same leadership challenge? Why or why not?

Did it surprise you to learn that both a developedcountry (US) and also emerging economies (i.e.,China and Russia) are the fastest growinginternational markets for IKEA? Does this fact poseany challenges in the way IKEA ought to competeacross the globe?

What can IKEA do to continue to drive growth

globally, especially given its strategic intent to

double annual store openings?

• E-commerce

• IKEA Café and Restaurants

• IKEA Click and Collect Stores worldwide

• Expanding the product line (high end product line, crockery products, interior

designing)

• Continuous product development

o Adapt country-based designs

o Collaborate with local artists

o Product customization by customers

Assume you are hired to consult IKEA on corporate social

responsibility. Which areas would you recommend the

company be most sensitive to, and how should these be

addressed to?

1. Environment

2. Workers

3. Suppliers

IKEA Group at a glance FY2015

TOTAL SALES FY15 €31.9 BILLIONTotal sales translated into Euro increased by 11.2% compared with FY14, to €31.9 billion.FY05: 14.9, FY14: 28.7, FY15: 31.9Billions of Euros

1.9 BILLION VISITS TO IKEA.COMIKEA.com had almost 1.9 billion visits during FY15, up 21% from FY14.

9,500 PRODUCTSThe IKEA range consists of approximately 9,500 products. Every year we renew our range, launching about 2,500 new products. We have 15 in-house designers and approximately 200 external designers via contracts.

IKEA GROUP HAS OPERATIONS IN 43 COUNTRIESAs of 31 August 2015, we had a total of 328 stores in 28 countries; 27 Trading Service Offices in 23 countries; 33 Distribution Centres and 15 Customer Distribution Centres in 17 countries; 43 IKEA Industry production units in 11 countries. In total, we have 978 suppliers, including external suppliers.

771 MILLION STORE VISITSIn FY15, IKEA Group store visits increased 7.7% over FY14.

978 SUPPLIERSIn FY15, the IKEA Group had 978 home furnishing suppliers in 50 countries.

155,000 CO-WORKERSEurope: 107,400, Americas: 20,000, Asia & Australia: 15,200, Russia: 12,400

213 MILLION CATALOGUES213 million catalogues printed in 32 languages.

328 IKEA GROUP STORESIn FY15, the IKEA Group opened 13 new stores in 9 countries. As of August 31, 2015, the IKEA Group had 328 stores in 28 countries.FY05: 196, FY14: 315, FY15: 328Number of IKEA Group stores

IKEA FOOD €1.6 BILLION YEARLY TURNOVERIKEA Food is comprised of the IKEA Restaurant, IKEA Bistro, IKEA Swedish Food Market and the IKEA co-worker restaurant.

References:

IKEA (2016). The Ikea Concept. Retrieved from Ikea:http://www.ikea.com/ms/en_ US/this-is-ikea/the-ikea-concept/index.html

IKEA (2016). Democratic Design. Retrieved from Ikea:http://www.ikea.com/ms/en_US/ this-is-ikea/democratic-design/index.html

IKEA (2016). People & Planet. Retrieved from Ikea:http://www.ikea.com/ms/en_US/this-is-ikea/people-and-planet/index.html

IKEA (2016). Key Figures. Retrieved from Ikea: http://www.ikea.com/gb/en/this-is-ikea/about-the-ikea-group/key-figures/

Rothaermel, F. (2015). Strategic Management. New York: McGraw-Hill Education.