Overview of the IKEA Company

            The business concept of IKEA involves selling high volume of the furniture products in low prices. Moreover, "with an aim of lowering prices across its entire offering by an average of 2% to 3% each year, its signature feature is the flat packed product that customers assemble at home, thus reducing transportation costs" (IKEA). The vision of the company reflects its strategy, which is "to create a better everyday life of many people. We make this possible by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them" (IKEA). .
             IKEA was founded in 1943 by 17-year-old Ingvar Kamprad (Heidi Owens). IKEA was first opened in Sweden. Kamprad's strategy was to design furniture that was easy for men to build and not expensive. Their target market is the young generation and the middle class families.
             The first issue is a high flow of visitors at one-time which result in the lacking of manpower. The second issue is a lack of innovation that it offers a very similar product base. This is partly due to the IKEA's policy of hiring same culture, which inhibits diversity. Thus constraints innovation in meeting changes in new markets. The third issue is pricing. It tries to make price more affordable. .
             IKEA is using a strategy of cost leadership. As the price of manufacturing is expensive in Sweden, Kamprad start its own machine production with undercutting the retailers and sold it to the own warehouse. In order to achieve lower cost, IKEA expands its suppliers to each of the company in big markets to avoid the shipping costs all over the world. It has suppliers in Europe, United States and China. Its focus is cost advantage. In order to protect the IKEA concept in long-term success and sell IKEA products, Kamprad applies business format called franchising. Franchising helps IKEA to build resources before they could expand the market.