Critical Analysis of IKEA Company - Case Study Example

IKEA IKEA IKEA IKEA 2 Being a company that deals in the production and sale of low cost home products Ikea is a privately owned company, it is an internationally known and an international company. Its main production line includes low cost house hold and home making products. Its basic mode of being so famous is that it is one of those companies that are famous for designing utilitarian designer furniture and that furniture is mostly assembled by its consumer's world wide. Founded in the year 1943 this company has grown to a world widely famous consumer and household goods producing company and has done so with the hard work and efforts of a number of key people. This company was founded in Sweden to be more exact it was founded in Almhult, Smaland. It calls the Netherlands its home and has its head quarters in the place called Lei den that is in the South of Holland. The person that is responsible for giving the world this fine brand and company for manufacturing designer label yet economically affordable furniture is none other than the companies founder Ingvar Kamprad. This man founded this company in the year 1943. He has since then had the help and support from a number of people who have helped bring the company to its internationally renowned status. The name given to this company has been thought of very carefully and hidden in the name are the roots on which this company has flourished and grown to what it is today. The word IKEA is actually comprised of acronyms that are that each alphabet is the initials of the name of the founder and his home town village. That would be Ingvar Kamprad, and home village, Elmtaryd, Agunnaryd. The president of this company is currently Anders Dahlvig along with another name that is Hans Gydell, president of the inter IKEA group. IKEA 3 IKEA Being a company that deals in the production and sale of low cost home products Ikea is a privately owned company, it is an internationally known and an international company. Its main production line includes low cost house hold and home making products. Its basic mode of being so famous is that it is one of those companies that are famous for designing utilitarian designer furniture and that furniture is mostly assembled by its consumer's world wide. Founded in the year 1943 this company has grown to a world widely famous consumer and household goods producing company and has done so with the hard work and efforts of a number of key people. This company was founded in Sweden to be more exact it was founded in Almhult, Smaland. It calls the Netherlands its home and has its head quarters in the place called Lei den that is in the South of Holland. The person that is responsible for giving the world this fine brand and company for manufacturing designer label yet economically affordable furniture is none other than the companies founder Ingvar Kamprad. This man founded this company in the year 1943. He has since then had the help and support from a number of people who have helped bring the company to its internationally renowned status. The name given to this company has been thought of very carefully and hidden in the name are the roots on which this company has flourished and grown to what it is today. The word IKEA is actually comprised of acronyms that are that each alphabet is the initials of the name of the founder and his home town village. That would be Ingvar Kamprad, and home village, Elmtaryd, Agunnaryd. The president of this company is currently Anders Dahlvig along with another name that is Hans Gydell, president of the inter IKEA group. IKEA 4 IKEA The owner and the franchiser of the IKEA trademark and the concept behind IKEA itself if the company Inter IKEA systems that has the words B.V after it as well. This company that is Inter IKEA systems has its offices and head offices situated primarily in the Netherlands, in Sweden and also in the country Belgium. Several other companies which have complex kinds of ownerships have the ownership of the IKEA brand as well. And it is the reason that it has several other companies and foundations as well. This is also one of the reasons why stores that sell products by the Brand IKEA have to pay 3% royalty on all products. The distribution of this company' products is done through their hundreds of retail outlets that are situated in more than an estimated 35 countries and most of these outlets are said to be in Europe. And also many in the United States and some also in Asia and Australia. This chain has more that 254 stores scattered across the globe. In the year 2006 it is seen that this chain opened about an average of 16 new IKEA outlets itself. The company has also shown that it has the plan of opening and spreading its retailing outlets through out the rest of the world and they plan on doing this by opening another estimated 24 new stores by the end of the year 2007. In the south eastern parts of Asia and in the country Israel IKEA is one of the very few store chains that has shops and stores in these countries and areas of the world. It also does its selling and retailing in the form of online purchasing that can be done via its compatible fully up and running and continuously updated web site which is said to feature more than a whopping 12,000 of its original products and that has been estimated to be the closes representation that has ever been given of the company's IKEA 5 IKEA complete range. The website alone had been reported to receive thousand of visitors and purchasers to its website on a daily basis and has reported the visit of over 275 million customers (approx) in the year 2005 alone. When the company began the brand only sold products such as pens, and wallets, picture frames, and also table runners, he also added to this collection of products things such as watches, jewelry and nylon stockings and then it was at a point that they sold practically anything Kamprad found a need for and that he thought and actually could fill with a product and that too at a much lower and much more affordable price. It wasn't until the year 1947 that they decided to add furnitue to their line of products and then they actually started producing this within their brand name by the year 1955. IKEA products are known worldwide and identified by either single or one word names. Most of the names that idetify its products are associated with or are either Swedish, Danish, Finnish or Norwegian in their origin. Although there are definitely some very noticable and positve variations, most product names are based on a very specific and a very specially designed naming system developed by the company itself that is IKEA. Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs Swedish placenames are all identified by a word which has Swedish origins and that is Klippan.Beds, wardrobes, hall furniture and identified by Norwegian placenames Dining tables and chairs are identified by Finnish placenames Bookcase ranges are marked by and identified by the use of occupations related words.Bathroom articles are marked under and identified by Scandinavian lakes, rivers and bays. Kitchens and such related utensils have IKEA 6 IKEA marked words that are grammatical terms, sometimes also other names to identify them. Chairs, and desks all have men's names Materials, curtains are identified by their distinctive words that are women's names. That is how famous this brand has become that people allover the world fknow and recognise their items and products simply by the distinctive names alloted to them. IKEA is said to have a very intricately designed corporate structue and the reason behind that being so could be for the purpose of Tax avoidance. The thing IKEA does to reduce an other iwse heavy tax burden that a straightforward corporate organisation would hav eto face IKEA funnels its profits through a non profit foundation and then through a system thatis siad to be a string of shell corporations. This is doen in various tax havens. In the year 2004 the Inter IKEA systems has siad to have made up an estimated amount of 600 million in franchising and other fees and collections. But it reported the estimated amount of only 200 million. Again in the year 2004 the inter IKEA group and I.I has been seen to have reported a total combinations of both its profits to be an estimated amount of 500 million and has been seen to have only paid 3.5 percent of that annual profit in taxes. It is also seen that Mr.Kamprad the founder of IKEA is the one who has been given complete control over the company and all its parts. He not only has the benefit or job of helping them avoid tax losses but also has tight control over the operations of mostof the IKEA stores. The IKEA foundations is seen as one of the worlds biggest charitable organisations and has been estimated to give a grand total of approximately over 30 billion in charity every year. IKEA 7 IKEA REFERENCES: http://www.ikea.com/ms/en_US/customer_service/faq/faq.html#0100 http://www.ikea.com/ms/en_GB/about_ikea/press_room/student_info.html http://www.ikea.com/ms/en_GB/about_ikea/press_room/thecataloque.pdf http://www.ikea-group.ikea.com/corporate/about_ikea/index.html Read More