Page 3 - The Way the IKEA manages the Global Environment

Problem Statement

Management of global environment by IKEA.

Objective

• To study the way, they handled the global environmental changes
• To validate the business model of IKEA

Introduction

Ikea was founded by Ingvar Kamprad in 1943. The name of the brand is actually short for Ingvar Kamprad's
initials and the first letters of Elmtaryd and Agunnaryd, which is the farm and village where he grew up in Sweden.

He first started to sell pens, wallets, watches, picture frames, table runners, and jewelry at low prices, until, five

years later, he introduced furniture into his business. After seeing positive feedback, he expanded the line and
produced the first Ikea catalog in 1951. Ikea had its first showroom in 1953, so that their customers can see and

feel the quality of the furniture before they plan on buying it. The showroom was also an example of what was
the right choice when other companies were lowering prices as well. In the end, Ikea was successful at this, and

moved on to designing furniture for flat-pacts. Flat-packing began when a worker of the company disassembled

a table to fit inside of a car to avoid damage to the product. Self-assembled furniture also stemmed from this
action. Finally, in 1958, the first Ikea store opened in Älmhult, Sweden, which was the largest furniture display

in Scandinavia with 6,700 square feet of home furnishings. (Ratana, 2017)

Literature Review

Kamprad began his career at the age of six, selling matches. When just ten, he criss-crossed the neighbourhood

on his bicycle, selling Christmas decorations, fish and pencils. At 17, in 1943, Kamprad’s father rewarded him
with a small sum of money for doing well in school, despite being dyslexic. With it, Ingvar founded a business

named IKEA, an abbreviation for Ingvar Kamprad from Elmtaryd, Agunnaryd, his boyhood home. (Jönsson,

2015)

Two years after starting IKEA, Kamprad began using milk trucks to deliver his goods. In 1947, he started

selling furniture made by local manufacturers. By 1955, manufacturers began boycotting IKEA, protesting
against Kamprad’s low prices. This forced him to design items in-house. Kamprad was also behind the simple,

yet revolutionary innovation that is the flat pack. He began selling IKEA products in flat-pack form, from his

own warehouses. Thus, the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed
and sold in-house – was complete (Mansour, 2013)

Vision of the organization is to create a better everyday life for the many people’ puts this concern at the heart of
the business. Our business idea supports this vision by offering a wide range of well-designed, functional home

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