Ikea

A profile of the Entrepreneur and the business.

Ingvar Feodor Kamprad; born 30 March 1926) is a Swedish business magnate and the founder of IKEA, a retail company.

Name Origin :
Acronym comprising the initials of the founder's name (Ingar Kamprad), the farm where he grew up, (Elmtaryd), and his home parish (Agunnayard, in Smaland, South Sweden)

Billionaire Ranking :
11th, worth 23 Billion.

Salary :
Unknown.

Drives :
15 years old Volvo 240.

Package :
IKEA hatched the flat package idea in 1950s when an employee could not fit a table in the trunk of a car. The worker decide to take the legs off and reattach them later. By shipping furniture unassembled in flat packages. IKEA saved on shipping costs and assembly.

Employees :
75, 000.

Sales :
$31.7 Billion.

Charity :
The Dutch-registered Stichting INGKA Foundation is named after Kamprad, and owns INGKA Holding, the parent company of all IKEA stores.

Known For :
Good Design, Good Function, Good Quality with Low Prices.

Fun Facts :
When he was turning 80 he said : "I have a lot things to do, I don't have time for dying".

How the product / company got its name.

The name of the company is an acronym that stands for his name (Ingvar Kamprad), the name of the farm in which he grew up, Elmtayrd (now spelled Älmtaryd), and the name of the nearby village, Agunnayrd.

Brief description of the products/services/business concepts.

IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories. The company is the world's largest furniture retailer. Ready-to-assemble furniture (RTA), is a form of furniture that is purchased in multiple pieces and requires assembly. This form of furniture generally arrives in a box and contains instructions for the buyer to follow in order to assemble it after purchase.

 History

1926 - Kamprad was born in the sout of Sweden and raised on a farm called Elmtaryd, near the small village of Agunnaryd.

1943 - When he was 17 years old his father gave him a gift for succeeding in his studies. The gift was used to establish his own business.

1945 - The first IKEA advertisements appeared when Ingvar Kamprad outgrew his ability to make individual sales cells. So he began advertising in local newspapers and began operating a makeshift mall order catalog

1955 - Pressure from its competitors caused suppliers to boycott IKEA. IKEA begins designing its own furniture.

1956 - IKEA pioneered flat pack furniture. They began thinking about designing flat pack furniture when an employee had to remove the legs off a Lovet table to fit it in a car. This simple but ingenious idea took off, and flatpack become part of the "IKEA" concept., and was exported from Sweden around the world.

1973 - The first store outside Scandinavia was opened just Zurich, Switzerland, followedby rapid expansinon in Germany starting with IKEA Munich in 1974. German still remains the largest IKEA market today.

1975 - The first IKEA store are opened in Canada and the Netherlands.

1985 - The first IKEA store opens in the USA.

1993 - IKEA reaches 114 stores in 25 countries.

1994 - It was revealed that Kamprad has attended some pro-Nazi meeting during the 40s. He publicly apologized for his involvement and even wrote letters to employees acknowledging his mistakes.

1997 - IKEA introduces Children's IKEA. IKEA has always provided the furnishings for the entire family, so since kids are the most important people in the world, IKEA decide to put them in the spotlight.

1999 - IKEA has 53,000 co-workers across a global network of over 150 stores in 29 countries in over 4 continents

2000 - The first IKEA store open in Russia.

2005 - As of March, the sliding value of the U.S. dollar put Kamprad ahead as the richest person in the world in another report.

2010 - IKEA gives bikes to its 12, 400 U.S. employees.

A brief introduction of how the business started.

Ingvar Feodor Kamprad was born on March 30, 1926 in south Sweden and he grew up in a farm near a small village called Agunnayrd. His grandfather had moved from Germany to Sweden many years before, making Invar a second generation Swede of German descent. Growing up on a farm was not easy for young Ingvar, and some sources even say that he had much trouble waking up early to milk the cows with his father. His parents were worried about the boy’s attitude and his father believed that he would never make anything of himself. Then one day he got an alarm clock for his birthday.

Apparently this very practical gift changed his young life. He decided to turn over a new leaf and started by setting the alarm at 5:30 and removing the off button from the clock. At only 10 years old, he started to develop a small business, selling matches to his neighbors. He learned that he could buy them in bulk, then sell them individually at low prices and still gain a pretty good profit. While other children his age were struggling with mathematics in school, Ingvar was already thinking in business terms. As things were going well for him, he decided to expand his business and start also selling seeds, fish, Christmas decorations, pens and pencils.

Not only did Invar do good with his business, but he also did great in school, determining his father to give him a cash reward for his efforts when he was only seventeen. He took the money and used it to establish his own company, which he called IKEA. Most teenagers would have spent the cash in an entirely different way, but Ingvar was more mature than that.

How the business gained success &
The ups & downs of his business.

At first, IKEA sold pens, pencils, picture frames, wallets, table runners, jewelry, watches, nylon stockings – things that people usually needed back then. In 1945, about two years after he founded his company, Ingvar decided it was time to advertize in newspapers. This decision brought him a lot of new clients whom he satisfied with fast deliveries via the county milk van.

It wasn’t long before Kamprad decided to expand the IKEA product range by introducing furniture to its offer. This idea received a very positive response from the clients and the company’s sales continued to grow at an encouraging rate. Unfortunately, the competition also grew, meaning that Kamprad had to find a new way to stay on top. In 1953 the first IKEA furniture showroom was opened, giving customers the opportunity to see and touch the products before ordering them. With this move, the competition problem was pretty much solved…for the moment.

Not long after this, pressure from the competitors determined the suppliers to boycott IKEA. Kamprad however managed to turn the problem into an opportunity: in 1955 IKEA started to design its own furniture. This eventually led to improved functions and innovative designs, again raising the company above its competitors. One day, an employee came with this brilliant idea of taking off the legs of a table to avoid transportation damage and also to make the table fit into a car. Thus a new trend was born: IKEA started designing for flat packaging. As a result, the prices were lowered for the customers, who now felt more enthusiastic about each purchase, because they had the opportunity to enjoy assembling the furniture themselves.

Kamprad's vision has been the driving force behind IKEA's succcess. IKEA hires its own designers, who have received numerous awards over the years. Kamprad believes that the company exists not just to improve people's lives, but to improve the people themselves. The self-service store design and ease of assembly of their furniture are not merely cost controls, but an opportunity for self-sufficiency. This vision is reinforced in their advertising and catalog, as well.

Achievements

ie. Achievements attained in terms of Market Share, Sales Turnover, Number of Outlets, Recognition, Adoption & Acceptance of Product, etc.

Unsurprisingly, IKEA’s sales continued to grow, slowly turning the company into an empire. The first IKEA store outside Scandinavia was opened in 1973, near Zurich, Switzerland. Shortly afterwards, the first IKEA store was opened in Germany, which eventually became the largest IKEA market in the world. In 1975, Canada and the Netherlands opened their arms for the successful furniture manufacturer. In 1985 IKEA made it to the other side of the pond, bringing quality and low prices in the States as well. The next few years saw an impressive expansion of the company in many different countries, including The UK, Italy, the Czech Republic, Poland, the United Arab Emirates and even China.

The firm is now known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an of average 2 to 3% over the decade to 2010, while continuing its global expansion. As of October 2011, IKEA has 326 stores in thirty-eight countries. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009. It is currently ranked 28th most value brand by Interbrand with a brand value of 12.5 billion dollar. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470 million visitors to the IKEA websites in the year from September 2007 to September 2008.

Business Philosophy & Business Strategies used.

IKEA customers typically spend between one-and-a-half to two hours in the store – far longer than in rival furniture retailers. This is because of the way it organises its stores – all of which are more or less the same all around the world. IKEA’s philosophy for its stores goes back to the original business, started in southern Sweden by Ingvar Kamprad in the 1950s. At that time Mr Kamprad was successfully selling furniture through a catalogue operation. Since customers wanted to see some of his furniture, he built a showroom in Stockholm – not in the centre of the city where land was expensive but on the outskirts of town. Instead of buying expensive display stands, he simply set the furniture out as it would be in a domestic setting. Also, instead of moving the furniture from the warehouse to the showroom area, he asked customers to pick the furniture up themselves from the warehouse. This almost ‘anti-service’ approach to service is the foundation of IKEA’s stores today.

Unique features about the products  / business concept  &
Key Factors contributing to the success of the business.

IKEA’s furniture is ‘value for money’ with a wide range of choice. It is usually designed to be stored and sold as a ‘flat pack’ but it is capable of easy assembly by the customer. The stores are all designed around the same self-service concept – that finding the store, parking, moving through the store itself, ordering and picking up goods should be simple, smooth and problem-free. At the entrance to each store are large notice-boards which proclaim IKEA’s philosophy and provide advice to shoppers who have not used the store previously. Catalogues are available at this point showing illustrations, dimensions and the available range of the store’s products. For shoppers with young children, there is a supervised children’s play area, a small cinema, a parent and baby room and toilets, so parents can leave their children in the supervised play area for a time. Each child is attired in a yellow numbered top while in this area and parents are recalled via the loudspeaker system if any problems arise with the child. Alternatively customers may also borrow pushchairs to allow them to take their children around the store.

Some parts of the showroom are set out in ‘room settings’ while others show, for example, all beds together, so that customers can make comparisons. The IKEA philosophy is not to ‘hassle’ customers but rather allow them to make up their minds in their own time. If a customer does require advice, there are information points around the showroom where staff, in bright red uniforms, can provide help and guidance, provide measuring rules, paper for sketching and so on. Every piece of furniture carries a ticket which indicates its dimensions, price, materials used, country of origin and other colours in which it is available. It also has a code number which indicates the location in the warehouse from where it can be collected. The tickets on larger items request customers to go to the information desks for assistance. The excellent Informations Systems allows customers to check if the particular item is in stock before progressing the warehouse. After viewing the showroom, customers pass into the ‘self-service’ area where smaller items are displayed on shelves. These can be picked directly off the display shelves by customers and put into yellow shoulder bags or trolleys. Customers then pass through the self-service warehouse where they pick up the items they viewed in the showroom. Finally, customers pay at the checkouts, each of which is constructed with a ramped conveyor belt which moves the customer’s purchases up to the checkout staff. At the exit area there are information and service points and often a ‘Swedish shop’ with Swedish footstuffs. A large loading area allows customers to bring their cars from the car park to load their purchases. Customers may also rent or buy a roof rack.

The childcare facility and IKEA restaurant with unique Scandinavian cuisines create comfortable shopping environment. Many stores include restaurants serving traditional Swedish food, including potatoes with Swedish meatballs, cream sauce and lingonberry jam, although there are variations. In Kuala Lumpur, Malaysia the usual boiled potatoes have been switched to french fries. IKEA’s total product range consisted of around 10,000 different products, several product lines including living room, bedroom, kitchen, office and several household items. IKEA’s product/Matrix mix offered limited number of product styles (Scandinavian, modern, country and young Swede) in low, medium and high price range for every product line with limited variety of products.