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IKEA Operations Management - Case Study Example

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IKEA Operations Management

The company adopted the policy of its founder which desired a typically Swedish touch in the product, the company 'emphasized its Swedish roots in its international advertising, even going as far to insist on a Swedish blue and while color scheme for its stores' (IKEA Website). The company launched and expanded its operation without surveying the requirements and reaction of the public.
Before 1994, the IKEA has less than 10 outlets, and only one of the outlet was located outside Scandinavia, the expansion of the company internationally, was responsible for the magnificent rose in its annul reserves. In 1994, the annual reserves of the company stood at $210 million, and had 125 outlets in 26 different countries; the company reported sales of $5 billion. According to the 1994 statistics, only 11% of its sales were generated in Sweden, 29.6% came from Germany, 42.5% from the rest of Western Europe, and 14.2% from North America. The inauguration was attributed with the launch of IKEA concept and its development, the organization expanded its operation and services in United States in 1987, and the organization is operating more than 13 outlets in the United Kingdom.
In 2004 the IKEA reported total sales worth 12.8 billion euros, 'the United Kingdom had the second highest sales with 12% of worldwide turnover, equating to over 1 billion sterling' (IKEA Website). The organization considers its catalogue of significance, 'the catalogue is our most important marketing channel' (IKEA Website). According to the market survey, the IKEA catalogue is considered to be the major share leader of the retail direct marketing door-to-door distribution activity inside United Kingdom, the organization delivered more than 13 million catalogues. The company understands that, 'the catalogue is a vital brand builder for IKEA and the key driver for attracting customers to the stores' (IKEA Website). The organization planned to increase and improve its return of investment after spending a major portion towards the catalogue distribution, the publication of the catalogue is considered to be substantial investment, 'and remain ahead of the competition in terms of business strategy' (IKEA Website). The organization has tried to make it possible for each customer to have knowledge about the IKEA products, and this exercise has given edge to the IKEA over its competitors. The organization has struggled and plans to launch parallel projects to maximize its return on investment, and has further expanded its operation associated with the advertisement, and have also emphasized on the quality assurance, and has tried to maintain the quality and production figures in harmony. The organization has developed keys objectives for itself, and has emphasized over the identification of 'target consumer types and geographic areas for distribution of catalogue' (IKEA Website), and identification of the 'types and areas with poor sales potential' (IKEA Website), the company has further planned to increase its sales return to compensate for the catalogue expenditure, the company is also in the process of initiating a new business strategy.
IKEA has launched plans for the introduction and expansion of its product in the international market; it has competed against the local companies, and has taken a bold initiative to overcome the international competitors with success. The Swedish based company has already planned to invest more than 1.5 ...Show more


IKEA was launched by Ingvar Kamprad in Sweden in 1947m and introduced their first furniture catalogue in 1951. The organization opened their first showroom in Almhult, Sweden. IKEA has able to achieve the mark of world's largest retailers of home furnishing…
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IKEA Operations Management
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