IKEA Case Analysis

IKEA is a Swedish-founded multinational group that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories, among other useful goods and occasionally home services. It has been the world’s largest furniture retailer since at least 2008. It was founded in Sweden in 1943 by 17-year-old carpenter, Ingvar Kamprad, who was listed by Forbes in 2015 as one of the ten richest people in the world, worth more than $40 billion. The company’s name is an acronym that consists of the initials of Ingvar Kamprad (name of founder), Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, southern Sweden).

The company is known for its modernist designs for various types of appliances and furniture, and its interior design work is often associated with an eco-friendly simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development, corporate attributes that allowed IKEA to lower its prices by an average of two to three percent over the decade to 2010 during a period of global expansion. The IKEA group has a complex corporate structure, which members of the European Parliament have alleged was designed to avoid over €1 billion in tax payments over the 2009-2014 period. It is controlled by several foundations based in the Netherlands, and Liechtenstein.

As of November 2017, IKEA owns and operates 415 stores in 49 countries. In fiscal year 2016, €36.4 billion (US$42.4 billion) worth of goods were sold, a total that represented a 7.6 percent increase over 2015. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 2.1 billion visitors to IKEA’s websites in the year from September 2015 to August 2016. The company is responsible for approximately 1% of world commercial-product wood consumption, making it one of the largest users of wood in the retail sector.

Most of IKEA’s stores and factories were previously owned by INGKA, a holding company controlled by the Stichting INGKA Foundation, one of the 40 wealthiest foundations in the world.