Ikea Case Study Essay

A1. The given case study talks about IKEA, the world’s biggest furniture vender. IKEA was founded by Ingvar Kamprad in Sweden.

As a 17 year old boy, Kamprad worked out of the family kitchen, selling goods like fountain pens, cigarette lighters and binders which he purchased from low-priced sources and then advertised these in a newsletter. In 1948, he added furniture to the list of goods and the immediate success of this new item made him give up all the small ones and focus on this one.

Through the years, IKEA expanded and multiplied sales because of certain unique features adopted by Kamprad. Some of these were-

• Opening of a display store in 1951, letting customers inspect products before buying. This principle is still followed by the company as it tempts customers through a catalog to visit its stores, where they can see the interiors, touch the furniture and then place an order.

• Introduction of self-assembled furniture in 1953. Customers could buy flat packages and put them together themselves at home, saving transport and storage costs.

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Then IKEA realized that it would have to work directly with glue-producing chemical companies and by collaborating with them, was able to reduce formaldehyde emissions from its products. When the Billy incident occurred, IKEA stopped both production and sales of Billy bookcases worldwide. This incident was estimated to have cost the company around $6 million.

• The Formaldehyde problem prompted the company to address other environmental issues directly. IKEA established a forestry policy stating that it would not accept any wood from intact natural forests or from forests with a high conservation value. For this, the company appointed forest managers to carry out random checks of wood suppliers and run projects on accountable forestry around the