Ikea Case Analysis Essay

1768 Words Aug 7th, 2013 8 Pages
Introduction

Ingvar Kamprad's rags to riches story starting from humble beginnings is an inspiration for all. Driven by core values of simplicity, an indomitable will to translate challenges consistently into opportunities, and an incredible 5:30 AM to midnight work ethic, Ingvar Kamprad built an enduring furniture company and served worldwide customers. IKEA's entry into US gives us an opportunity to understand the differences between Scandinavian and American customers, and examine the growth strategy.

At age 17, Ingvar Kamprad founded IKEA with money (a gift) from his dad for successfully completing his studies. In 1951, he published his first catalog. Two years later, he opened a showroom in Almhuit and soon thereafter began
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4). From this, a very distinct organization culture and management style emerged (Ingvar Kamprad and IKEA, 1996).

IKEA's informal atmosphere and flat organizational structure facilitated idea sharing at every level of the company (Manners, 2009). IKEA understood Jack Welch's statement, "layers add cost and complexity to everything" (Winning, p. 117). Thus, they eliminated bureaucracy. Store managers and corporate staff alike were expected to fully understand the operations, and the search for creative solutions was highly prized within IKEA (Ingvar Kamprad and IKEA, 1996). Kamprad wrote, "Only while sleeping one makes no mistakes. The fear of making mistakes is the root of bureaucracy and the enemy of all evolution" (Ingvar Kampad and IKEA, p. 5). This management structure and philosophy supported open communication and innovation from the vast amount of IKEA employees (Manners, 2009). IKEA's unique culture focused on customer value and thrived on innovation throughout the company. This mission and structure spawned ideas such as the repackaging of “BILLY” bookcases (IKEA, 2011). A manufacturer designed a better process and a more compact shipping configuration which further cut costs, incidentally lowering the price of the bookcase (IKEA, 2011). The openness of IKEA’s flat structure allowed this idea to reach higher levels of the business and to be put into action. IKEA has seen

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