How Ikea revolutionized the furniture market by entering global markets and dominated market share of DIY furniture- SA/PA/DA/PA

1. Case Study
SA/PA/DA/PA
ANALYSIS

2. Ingvar Kamprad redesigned
the furniture industry by
introducing knock-down
kits that customers could
take away from the store
and assemble themselves
allowing IKEA to offer a wide
range of well-designed,
functional home furnishing
products at very low prices.
The IKEA vision is “to create
a better everyday life for the
many people”.
A small, private Swedish furniture
retail established by Ingvar Kamprad
1943
433 IKEA stores worldwide
50 IKEA e-commerce markets
EUR 41.3 Billion Revenue FY19
2019
IKEA is a successful multinational
business with a highly differentiated
product into a traditional industry
2020
Then & Now

3. Situation
Analysis
As the IKEA business was expanding in the early 1980s, IKEA Founder
Ingvar Kamprad was looking for a way to grow the company
internationally while maintaining its entrepreneurial spirit and
safeguarding the underlying IKEA Concept - “to create a better everyday
life for the many people”.
It aimed at offering 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 while remaining true to its basic philosophy.
While providing carefully designed and more stylish products than
bargain do-it-yourself competitors and ensuring differentiation strategy.
It wanted to move from its Scandinavian base to being a strong regional
player in Europe, and ultimately compete successfully in the global arena.
The challenges associated with Internationalization were to be overcome
in order to emerge as a successful multinational business.

4. Problem
Analysis
Differentiate itself from other local bargain do-it-yourself competitors
in the frosty furniture industry.
Cost associated with setting up of manufacturing, storage and retail
units.
Efficient procurement of materials and production of component on a
large scale to meet global demand.
Cost associated with transportation of materials to and from its
various production units and its retail stores.
The challenges associated with assembly and delivery of sold units at
buyers’ end.
Surviving Imitators in the market.
The Problems associated with Internationalization

5. Decision
Analysis
IKEA revolutionized the frosty furniture shopping task to an overall
‘experience’ by adding children’s playpens, nurseries, and cafés in the
and provided carefully designed and more stylish products than bargain
do-it-yourself competitors to differentiate itself
It adopted sub urban culture to avoid high rents in urban areas and also get
ample space.
Outsourced production of standardized components to groups of key
suppliers around the world to reduce costs associated with setting up
manufacturing units across the world
Introduced knock-down DIY kits that customers could take away from the
store and assemble themselves to reduce labour costs associated with
assembly at buyers’ end.
Ensured tight control over product design and quality to maintain its brand
name and the distinctive identity to survive competition.

6. Potential
Analysis
IKEA’s revolutionary decision of mixing entertainment with mundane
furniture shopping, turned a task into an overall experience and
inclusiveness of children enhanced footfall of families in retail units
which ultimately led to IKEA’s sales growth.
Adopting sub urban culture ensured it could spend more on the
quality and functionality of its products instead of rent. So, customers
received higher quality products at lower prices.

7. Potential
Analysis
Outsourcing of production helped achieve reduction of costs on
setting up of facilities and at the same time created of jobs and bulk
orders for the subcontractors building up community sustainability.
DIY kits allowed efficient storage and transportation of its products
thus reducing inventory costs and also involves customers
participation in the value chain which leaves a lasting and memorable
impression on the customer.
Ensuring tight control over design and quality, protected its brand
image and allowed wider customer acceptance which resulted in
global growth.

8. Thank You
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