I.

COMPANY OVERVIEW (LONG)

1. Introduction about Ikea

1.1. General information:

IKEA, home furnishings retailer that was the world’s largest seller of furniture in the
early 21st century, operating more than 300 stores around the world. IKEA specializes in
low-priced goods, sold whenever possible in compact “flat-pack” form for in-home assembly
by the customer. IKEA was founded (1943) in Sweden but its headquarters are now in the
Netherlands. Yet, IKEA still flaunts its origins, from store exteriors decorated in the colours
of the Swedish flag (blue and yellow), in-store restaurants serving Swedish food, to the
company’s products carrying Swedish names.
1.2. Vision, mission and value:
❖ Vision:
IKEA may have come a long way since the humble beginnings, but their vision
remains the same: to create a better everyday life for the many people.
❖ Mission:
They also state their mission as a business 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.
❖ Value:
The IKEA values were shaped during a time in Sweden when the living conditions
were harsh. This fostered a culture of entrepreneurship and hard work, and made people more
pragmatic and mindful of resources. A lot has changed since the early days of the IKEA
brand, but on the inside, not a lot has changed. This is shown through `
- Togetherness: Togetherness is at the heart of IKEA culture. We are strongest when
we trust each other, pull in the same direction and have fun together.
- Caring for people and planet: We want to be a force for positive change. We have
the possibility to make a significant and lasting impact — today and for the
generations to come.
- Cost-consciousness: As many people as possible should be able to afford a beautiful
and functional home. We constantly challenge ourselves and others to make more
from less without compromising on quality.
- Simplicity: A simple, straightforward and down-to-earth way of being is part of our
Smålandic heritage. It is about being ourselves and staying close to reality. We are
informal, pragmatic and see bureaucracy as our biggest enemy.
- Renew and improve: We are constantly looking for new and better ways forward.
Whatever we are doing today, we can do better tomorrow. Finding solutions to
almost impossible challenges is part of our success and a source of inspiration to
move on to the next challenge.
- Different with a meaning: We are not like other companies and we don’t want to be.
We like to question existing solutions, think in unconventional ways, experiment and
dare to make mistakes - always for a good reason.
- Give and take responsibility: We believe in empowering people. Giving and taking
responsibility are ways to grow and develop as individuals. Trusting each other,
being positive and forward-looking inspires everyone to contribute to development.
 - Lead by example: We see leadership as an action, not a position. We look for
people’s values before competence and experience. People who ‘walk the talk’ and
lead by example. It is about being our best self and bringing out the best in each
other.

1.3. IKEA's business model

All of the elements above are suited that way to help IKEA grow and expand. Their
key partners are definitely different to other companies as every company has their own
pursuits. Based on the business model canvas above, IKEA is a very customer/family friendly
business that is targeted towards the mass market, small business, college students and
families.
❖ Key partners: Other than suppliers and manufacturers, their key partners include
wood makers such as Swedwood and non-profit organizations (WWF, UNICEF,
UNDP).
❖ Key activities: Their key activities include designing, marketing, advertising, and
distributing furniture, as well as continuously developing their products.
 ❖ Key resources: IKEA has several key resources that are essential to their company.
IKEA's key resources include: their megastores, equipment and tools, as well as the
furniture itself.
❖ Value propositions: One thing that IKEA could offer that other companies couldn't is
the experience. The Ikea experience is nothing like going through any regular
furniture stores, it consists of the very intriguing layout of their megastore, a childcare
on site, and a restaurant that offers delicious meals. Other than that, their affordable
furniture is what labels them value.
❖ Customer relationship: To further engage, connect and interact with their customers,
Ikea has a few things up their sleeves. Ikea has gift cards and a feature known as
"IKEA Family" that allows customers to get special discounts.
❖ Customer segments: Ikea is dominating the market / industry with their simple and
minimalistic furniture, but who's buying them? Ikea targets their goods to customers
that are cost-conscious (typically looking for cheaper and affordable options),
families, college students, and (small) businesses.
❖ Channels: Ikea utilizes a wide range of platforms to display their goods and captivate
the attention of their customers. They do that through their website (www.ikea.com),
food markets, retail shopping centers, catalogues, and the app store.
❖ Cost structure: Ikea allocates their money to manufacture, advertise, market,
charitable giving, labor costs, transportation costs, taxes, and such alike.
❖ Revenue streams: Ikea receives their revenue/has their revenue stream in from the
sales of their products, food services feem and their accessories sale.

2. Ikea’s product
2.1. Ikea's product
There are 2 things every furniture purchaser has to consider: delivery and the cost.
And IKEA can satisfy both considerations. The furniture is designed to be easily assembled
by the consumer rather than being sold pre-assembled. This method allows IKEA to reduce
costs because it is cheaper to ship an item that is unassembled and takes up less space. The
flat-pack distribution method also allows a consumer to easily transport the product from the
store to a customer's home for assembly.
Apart from that, the IKEA product range is wide in several ways. First, it's wide in
function: you'll find everything you need to furnish your home, from plants and living-room
furnishings to toys and whole kitchens. Second, it's wide in style. The romantic at heart will
find just as much as the minimalist. And finally, by being coordinated, the range is wide in
function and style at the same time, and at all times. No matter which style you prefer, there
is something for everyone.
Another interesting fact about IKEA's products is how they were named. The naming
system is considered brilliant in its simplicity and scalability. Each product is named after
Swedish towns and villages, humans, and other applicable Swedish words. For example,
Bathroom items are named after Swedish lakes and bodies of water, Linen products are
named after flowers and plants and Desks and Chairs are named based on Scandinavian boy’s
names. The system helps IKEA name new products quickly and efficiently, but IKEA doesn’t
constrain itself by the system. They’ll break their own rules when it makes sense. With over
12,000 products, IKEA has created a brilliant naming system. The names are quirky and
endearing, and they elevate the status of each product. The naming system is efficient and
scalable, which is essential for a global brand that is naming thousands of unique products.
2.2. Ikea's product lifecycle
Currently, IKEA is mostly focusing on its sustainable design rather than the actual do-
it-yourself furniture design. IKEA is devoted to preserving raw materials, saving energy use,
and eliminating as much waste as possible. IKEA gets their main raw materials (wood and
cotton) from sustainable sources and seeks to decrease raw material use and waste outputs by
finding alternative material to use. IKEA uses a tool called the “e-Wheel” to analyze the four
stages of a product’s life cycle, which includes resource extractions, production, use, and
recycling/end-of-life. It helps evaluate the environmental impact of the products they are
supplying and keep track of the use of raw material.
a) Source of Wood
Wood is considered as a good resource when it comes from a sustainable source
because it is recyclable and renewable (“Building a Sustainable Supply Chain”). The top five
wood sourcing countries are Poland, Russia, China, Romania, and Sweden (IKEA). IKEA
also seeks to increase the availability of certified wood, specifically in regions of China and
Russia, and finds ways to decrease the use of raw material as well as searching for alternative
material that will prevent resources from being scarce (IKEA).
Another way IKEA succeeds in being sustainable is by using a new material of
particle board (an engineered wood product made from wood chips) specified for furniture
use. As a result, wood raw material was reduced to 85, 816 tons and trucks for transportation
lowered to 2,800 less annually. This was because of “lower cargo weight, easier handling of
the merchandise for the customers and reduced costs and prices” (“Raw Materials”).
 b) Reduce Water Consumption
Water is a very important natural resource and IKEA works to minimize the water
consumption and to improve wastewater treatment. IKEA has found some techniques that
would help reduce water consumption by looking at the product design to figure out the
amount of water needed for manufacturing. The printing technique called Soft Pigment
Printing (SPP) “reduces the after consumption by 60 percent” in comparison to other printing
techniques (IKEA). Approximately 40 percent of IKEA’s printed textile products are
produced with techniques that need less water (IKEA).
c) Design Starts With a Price Constraint
Different from most furniture stores, IKEA puts a price tag for their product first.
Then, the designers must analyze the entire production process of the product from the raw
materials to the amount of energy used to the delivery system. The designer has to meet the
goal of staying within the budget and calculate that the selling the product will gain enough to
profit from.
d) Making More from Less Resources
IKEA tries an approach to make more things from less to be more sustainable and
taking advantage of the resource. IKEA makes an effort to use the least amount of resources
possible to make the best products possible. There are many design solutions IKEA creates to
minimize material use. A good example of saving material is that IKEA makes legs of
furniture hollow and uses chipboard as filling to save on wood resources. IKEA also reduces
use of cotton by blending cotton with other materials (IKEA). IKEA’s goal is to minimize the
amount of waste generated in the manufacturing process. All IKEA stores and distribution
centers recycle large quantities of material, which helps save resources and money.
e) Utilizing the Material Waste
IKEA specifies to its producers during manufacturing that waste should be avoided as
much as possible. They try to encourage producers to take the waste and try to use it to
manufacture other products (IKEA).
A creative idea that IKEA does to be more sustainable is by using recycled old plastic
bottles to create other smart and stylish products. The “TEPPAS drawer unit is made from
100 percent recycled PET plastic. It is stackable and can be combined with a handy trolley
for mobility – perfect for any home office or children’s room” (IKEA). IKEA hates waste,
which is why they “take every opportunity to turn spill from production into raw material for
other products.” For example, the LUSY BLOM cushion makes good use of the potentially
wasted material. It is filled with leftovers from IKEA quilt production and the content is safe
and healthy (IKEA).
f) Transportation of Products
IKEA furniture uses a flat pack system to transport their goods because they are cheap
to transport. The furniture stays in a flat pack for the customers to later build, which keeps the
product prices lower (VanGilder). IKEA patented Loading Ledges are a good alternative to
traditional wooden pallets because they can expand and contract to fit the size of the load.
They are made from polypropylene plastic that can be recycled into making new ledges. The
shape and size are perfect for containers and forklifts. The low weight wedges allow two tons
of more goods to be loaded (IKEA).

https://en.wikipedia.org/wiki/IKEA#Recent_history_(2000s-present)
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