IKEA in Russia - Ethical Dilemmas Lusine Demirjian Business Ehics I-Executive Summary IKEA is the world’s largest retailer of home furnishings. It strives to provide simple, functional, modern, and useful products at affordable prices to as many people as possible in as many places regardless of their geographical location. IKEA concept is implemented from the start of idea, implemented into the design, manufacture, logistics, sales and final assembly of each product. IKEA was developed by Ingvar Kamprad from southern Sweden, where people are known for surviving and making the most from limited resources. IKEA has aggressively pursued expansion into emerging markets as well as developed economies to make it possible for all …show more content…
IKEA in business to generate profit is expanding rapidly in both developing and emerging markets. In an attempt to generate more and more profit it markets, inexpensive products that may originate from sustainable resources but at the same time it encourages excessive consumption, it is often located in remote areas with very large footprint. Products with limited life cycle need replacement more frequently and consumers more often than not end up purchasing far more than they needed when they come to IKEA. It is designed to be consumer friendly, stylish rooms set up for one to visualize placement of furniture at home and if needed available staff to help you in planning and placement of your furniture. Most recently in February 2013, case of embarrassment came from its food service where it was found the “Swedish Meatballs” it served contained horsemeat. Corruption and bribery case in Russia was an awakening experience for IKEA. In 2010, its top two managers were fired due to bribery of contractors to provide electricity power supply generators to its stores to avoid power shortage. Knowingly it allowed payments of bribery to secure electricity supply, which was a blow to its reputation as ethical business practice around the world. However, it is often understood bribery and corruption is pervasive in Russia and cannot be avoided. Second instance of corruption for IKEA in Russia
The well-known ‘build-it-yourself’ product design makes them progressive and makes them running ahead of the competition. IKEA is the only big brand in a category further not present in global markets, there are no real competitors operating in the same category. In 2013 775 million customers visited IKEA in 2013, and its website hosted 1.2 billion visits (4). Due to the ‘build-it-yourself’ product design IKEA is able to provide their customers with high quality and low cost products, even the customers with limited income and limited living space
”The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few.” *http://www.ikea.com/ms/en_GB/this-is-ikea/the-ikea-concept/index.html
Ikea is a Swedish international home products company that designs and sells ready-to-assemble furniture. It was founded in 1947 by 17-year-old Ingvar Kamprad, who currently is one of the richest people in the world. He borrowed some money for his parents and create a small local furniture store, 65 years later Ikea is one of the leading home furnishing companies in the world with its vision to ‘’create a better everyday life for the many people’’ (Kamprad). The company’s 2011 sales jumped 6.9 percent to €24.7 billion and its net profit rose 10.3 percent to €2.97 billion ($3.85 billion) (Local, 2012).
Since its 1943 establishing in Sweden by Ingvar Kamprad at 17 years old years, IKEA has offered home furniture and frill of good outline and capacity at low costs so most of the general population can manage the cost of them. IKEA 's vision is to: "Make a superior regular life for the numerous individuals" Its business thought is "To offer an extensive variety of all-around outlined, practical home outfitting items at costs so low that whatever number individuals as could be expected under the circumstances will have the capacity to bear the cost of them"(IKEA 2004)
IKEA’s clear vision is to offer well designed and useful home furnishings at low prices so many customers will be able and capable to afford them. IKEA designs exclusive products that meets firm requirements for task, well-organized delivery, excellence and has a good impact on the environment.
Ingvar Kamprad, an entrepreneur, founded the Swedish furniture company IKEA in 1943 (Chu, 2013). Kamprad was only 17 years old when he founded the IKEA company. He named the company after the initials of his first and last name and the first letter of the farm and hometown he grew up in (Bhasin). In the years following, the Swedish furniture giant has grown to 328 stores in 28 countries as of August 2015. This includes 1.9 billion visits to IKEA.com, 771 million store visits, 213 million catalogs printed in 32 languages and 155,000 co-workers across 6 continents. According to IKEA’s website, their vision is “To create a better everyday life for the many people”. An interesting fact about IKEA is that its furniture production consumes one percent of all the wood produced on earth (Bhasin). The site goes on to explain how they optimize their entire value chain to provide affordable quality to their customers. IKEA expanded into China and other countries so that they could continue to attain their goal of creating “a better everyday life for the many people”. A unique aspect with IKEA is their product packaging. The product is a flat package, so it is easy for the consumers to take the product home and assemble it themselves.
To begin with, IKEA is an established global brand which has managed to attract main consumer groups, while with its vision "to create a better everyday life for many people", it promises and offers the same quality and variety around the world. Moving on, it is reputed for its strong concept and its "democratic design", since it offers a big variety of
IKEA is short for Ingvar Kamprad Elmtaryd Agunnaryd, as the Swedish furniture corporation, which with more than 200 stores in over 30 countries (Chen et al., 2011). In 2011, IKEA had 23.5 billion euros in sales with 2.7 billion euros net income and 127,000employees worldwide (IKEA sustainability report, 2011). The company is known for being good at cost control and continuous product development, which allows keeping its prices competitive and continue its global expansion (Jonsson et al, 2010). In order to have a better understanding, this report will
IKEA has “learn[ed] from its failures and buil[t] on its successes, [providing] affordable, well-designed, functional furniture to the masses” (Hill & Jones, 2012, p. C96). Incessant learning, adapting, and modifying is necessary in the highly competitive retail market in which the company rests. In order to continue “helping [its customers] achieve a better everyday life” (Hill & Jones, 2012, p. C96), the company has to take a toll of its external opportunities and threats, as well as its internal strengths and weaknesses.
IKEA is a leading furniture manufacturer in the world. It has been able to achieve its success because of a unique competitive model that emphasizes simplicity in design and low costs. Based in Sweden, the company has established manufacturing facilities overseas, with its first manufacturing facility opened in Danville, Virginia in the United States in 2008.
Ikea is not only a furnishings market brand, but also a furniture brand. Through a series of operations, in people 's eyes, Ikea is not simply a purchase house ware places, it represents a way of life. In our mind, Ikea 's success not only depends on its integration of the trade, logistics, but it used to integrate the core idea of trade, logistics-lifestyle (Margonelli, Lisa 2002). As we said before: using Ikea’s products is just like eating McDonald 's, drinking starbucks coffee, becoming a symbol of a lifestyle.
IKEA is a manufacturer of home and business furnishings who offer interior furnishing products to consumers in several countries across the globe. Before IKEA plans on expanding and entering any new market, they are required to obtain a clear understanding of what consumer behaviour and requirements are in that particular market. There are basically two types of Markets which include Consumer Market and Business Market.
IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,
In general, it can be said that IKEA’s product range is quite broad and versatile in many different ways. Shopping at IKEA, you may find anything you need for your home under one roof, be it furniture or cutlery, lamps or curtains, pans or toys or even entire rooms, in short anything that helps you to functionally make your home a better place for living. In fact, the range of different styles is probably not too wide, missing over-decorated and premium styles, however the “broad mass”‘s tastes might be satisfied by IKEA’s choice. Another big plus is the typical “IKEA-style”. The products offered there are different and often you are able to distinguish between IKEA-products and other products only by looking at them, which is certainly not a bad thing. What makes IKEA products so special is that even though they are relatively cheap, they do not have this “cheap”
IKEA is one of the largest European home furnishing retailers established in 1943. It has more than 300 stores in 37 countries with a business turnover of approx. 22,7 billion Euros in 2009 and an approximate direct workforce of 127,800 employees all over the world. IKEA’s retail concept is based on selling well designed products at low prices so that maximum people can afford them and live a better life.