Ingvar Kamprad and IKEA (from Besanko publisher)

This case traces the development of a Swedish furniture retailer under the leadership of an
innovative and unconventional entrepreneur whose approaches redefine the nature and structure
of the industry. Traces IKEA's growth from a tiny mail order business to the world's largest
furniture dealership. Describes the innovative strategic and organizational changes Kamprad
made to achieve success. In particular, the case focuses on his unique vision and values and the
way they have become institutionalized as IKEA's binding corporate culture. The trigger issue
revolves around whether this vital "corporate glue" can survive massive expansion into the
United States and the Eastern Bloc and Kamprad's replacement as CEO by a "professional
manager."
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We want to approach this case on three broad levels.
The strategic level
a) To focus on industry structure-conduct-performance and the dynamics of successful
entry, first at a national level, and on an international canvas.
b) To study how a dynamic entrant can blaze new trails, and take on the mantle of industry
leadership, transforming industry structure and conduct.
c) To explore how to identify emerging strategic challenges.

The organizational level

a) To explore whether successful strategic execution requires an organization to go beyond
strategic intent to organizational capability, and to study the linkage between intent and
capability.
b) To study how this organizational capability needs to evolve with time.

The managerial level

a) To focus on the role of leadership in establishing organizational purpose and vision.
b) To examine not only the power, but the limitations also, of this tool in managing a
corporation.

Question to consider during case prep:

1. IKEA Strategy in Sweden. What were the sources of IKEA’s successful entry in furniture
retailing business in Sweden?
2. IKEA’s strategy while expanding internationally. How important was internationalization to
IKEA? What challenges did IKEA face while expanding internationally, and how did it
overcome them?
3. Organizational capabilities of IKEA. What were the management processes by which IKEA
coordinated and controlled its Europe-wide operations? How effective were they?
4. Organizational values and Ingvar Kamprad’s vision. What was Ingvar Kamprad’s role in
IKEA’s development?
5. Action-plan for the future.
a. What challenges lie ahead for IKEA?
b. Please recommend courses of action that Anders Moberg might undertake.

IKEA conception is founded on presenting a varied assortment of fine creations, practical

household supplying merchandises at low cost. The product range meets these needs 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. The IKEA range includes products for every part
of the home. The target market of IKEA is mainly the global middle class. It sells good quality
and durable but affordable home furnishing products. The middle class consumers generally look
for products that are good in terms of design and quality and come for low prices. It is also a
reason behind the increasing presence and popularity of IKEA globally. IKEA has built its cost
leadership position, and furnish the customer with a high quality product with components
derived from all over the world utilizing competitive advantages, low cost logistics, and large
retail outlets in suburban areas. In its high-flow warehouses, IKEA employs automatic storage
and retrieval systems to drive down its costs-per-touch. Products stocked in a low-flow facility
are not in high demand, and operations rely on manual processes since workers will not be
shifting and moving inventory around too much.