Research Paper
On
IKEA
MAZHARUL HOSSAIN KHAN
MGT-601
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TABLE OF CONTENTS
1. introduction 2
2. Product Design and Development 3
3. organizational Structure 4
4. Supply Chain Management 5
4.1. Supply Chain Design 5
4.2. Supply Chain integration6
4.3. Reverse logistic 7
4.4. Supply Chain Sustainability 8
5. Conclusion and recommendation 9
6. Appendix 10
7. References 12
Mazharul Hossain Khan
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1. introduction:
IKEA is a multinational group of companies that design and sells ready-to-assemble furniture,
such as bed, sofa, chair, desk etc. as well as appliances and home accessories. The name IKEA is
an acronym, which is a combination of its founder’s .rst letter of his .rst and last name with
the .rst le/er of the farm Elmtaryd, where he grew up, and .rst le/er of the village Agunnaryd,
where he born.
The company was founded in 1943 in Sweden as a mostly mail-order sales business. It started to
sell furniture a2er .ve years of its inception. The .rst IKEA store was opened in Almut smaland,
Sweden, in 1958, and IKEA’s .rst store outside was opened in Norway in 1963. As of FY 2014,
with 12 new stores, there are currently 315 IKEA Group stores in 27 countries. Additionally,
there are 40 IKEA stores run by franchises, and it is planning to increase its stores to 500 by
2020. There are 41 IKEA stores in the US. In FY 15, IKEA Group had 716 million visitors to the
stores and 1.5 billion visitors to IKEA.com. website. In 2014 .scal year IKEA group’s net income
amounted to $3.7 billion, with continued market improvement and strong performance in
China, North America, and Europe. IKEA’s sales increases 5.9% compare to its FY 2013, which
amounted around 28.7 billion Euros, and reason behind this is, mastering in selling high volume
of inventory at constantly low price in vastly different market places, languages and cultures.
Last year IKEA launched a series of exciting new design collection and introduce over 2000 new
products, and develop their e-commerce offer. IKEA is very good at reducing operating cost that
effect the products prices eventually, and every year it reduces its operating costs and thus
products price by some degree, such as last year it reduces its products prices by an average of
1%. IKEA is owned by the IKEA Group of companies (INGKA Holding B.V. and its controlled
entities), which has an ownership structure that ensures independence and a long-term
approach. The key person of IKEA at present is Peter Agne9äll, President and CEO.
The vision of IKEA is “to create a be/er everyday life for the many people”, and business idea is
“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 values underlie that the
brand can be categorized as economic, social, and environmental. These values differentiate the
IKEA brand from other furniture company. IKEA is providing excellent value to its customers
since its inception. Low-cost structure, Do-It-Yourself Approach, and added amenities such as,
childcare services during shopping time and in-store restaurant also added value to IKEA’s store
and its growth. IKEA is able to exude an image of relaxed, informal, yet eGcient service in every
store. The IKEA image is a light, natural wood, which is crisp white. Signature colors are yellow
and blue are ubiquitous. IKEA’s brand image is built on associations with cost-consciousness,
design sensibility, unconventionality and environmental awareness.
From the beginning, IKEA was founded on di;erent principles that are frugality and low cost.
The IKEA concept works to build customer relationships. Today the no-frill frugality is the corner
stone of the IKEA cachet and the reason for its popularity.
Mazharul Hossain Khan
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As a global leader in retail furniture industry IKEA needs constant focus on its product design
and improve quality by maintaining low cost, supply chain management, and the corporate
culture of the company. How they are doing them is what I am going to discuss.
2. Product Design and Development:
Product design and development is the most important part of a manufacturing company to
sustain in the business. To design a new product, a company .rst need to analyze which product
should be introduce, which is product selection. Product selection is very important for a
company to sell to the consumers it intend to. Next is product design, product that is going to
introduce in the market needs to be functional and usable to consumers. Product development
is the process of designing, creating and marketing new products or services to bene.t
customers. IKEA is master in understanding those key factors in introducing a new product.
Moreover, IKEA understands where di;erent country and culture intersect. The reasons behind
popularity of style and design of IKEA products are –
Intensive research before designing a product and introduce to the market. To .nd out what
people really need and dream about, employees of IKEA and anthropologists visit home all over
the world. They talk with people and try to know problems, geIng ideas, measure things. A2er
gather all the valuable information they put their expertise and experience to build an
