IKEA was founded in the late 1940s by Ingvar Kamprad, an entrepreneur from Sweden, who hit upon the idea to offer home furnishing products of good function and design at much lower prices than competitors by using simple cost-cutting solutions that did not affect the quality of products.
With a total of 300 stores in more than 35 countries, more than 130,000 employees and figures reaching 21.5 billion Euros in 2009, IKEA is clearly the leader in the home furnishings industry in the world.
The brand has realized great success across the world due to:
Relatively low prices with regard to its competitors.
The relocation of its factories to countries where the cost of labor is low (For example, India and China).
A wide range of products adapted to each customer.
Good relationship with its customers
Privileged relations with its suppliers
Capacity to adapt its product to each customer's need and to innovate.
IKEA offers 100% natural furnishings in keeping with the current global outlook of protecting the environment. As a result of its collaboration with respected designers, IKEA innovates by offering furniture of quality and new designs.
[...] Long term contracts enable IKEA to make necessary investments and to ensure the supply of raw materials over a long period of time. Optimizing production potential and concentrating volume are essential in order to achieve low prices. IKEA's suppliers have a specific characteristic: they can influence the design of IKEA's products. Indeed, suppliers may modify initial designs in order to conform to the target price. For instance, a Chinese supplier modified the back angle of a chair in order to make it cheaper. [...]
[...] That is the reason why IKEA seems to be fully transparent in regard to its strategies. IKEA is proud of the fact that though it is not easy to combine design, function and quality in a product with an affordable price, the company is able to achieve it. This is essentially the heart of the IKEA ideology which corresponds to the profile of its consumers- a wide range of good quality products at low price. IKEA caters to all social and occupational groups, from upper class consumers to students in search of ‘bargains'. [...]
[...] The Swedish brand opts for transparency in its operations and always shares with its customers strategies which bear a positive influence, for instance, minimizing the impact on the environment, social responsibility and the policy of low prices. Originally, IKEA used to drive its communication strategies with its low price policy; however, today the identity associated with the company constitutes the heart of its communication strategy: we buy a ‘lifestyle'. IKEA and its suppliers collaborating for success When IKEA sources suppliers to manufacture products, the company aims to locate those who can manufacture products of good function and design at the lowest possible price. [...]
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