IKEA (Emillia)

8/6/2019 IKEA (Emillia)

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IKEA Background

IKEA has established itself as a leading furniture and house wares retail chain. Known

worldwide for its low prices, modern and unique style, IKEA is one of the largest privately

owned companies today, with sales of over $..........billion worldwide last year.

IKEA, is a unique name comes from the initials of his own town, and those of places close to his

heart: I stands for Ingvar, K for Kamprad, E for Elmtaryd (the name of the family farm) and A

for Agunnaryd (the name of the village).Kamprad established IKEA in 1943 at the age of

seventeen using the money that his father gave to him as a reward for his success in school.

Aiming to sell goods by mail order, IKEA Agunnaryd began in a shed that was just two meters

square in size. From its humble beginning, IKEA has grown to be a global furnishing companywith more than 200 stores in over 30 countries.

The founder of IKEA, Kamprad was born in 1926 in the village of Agunnaryd in southern

Sweden¶s Småland. He is a second generation Swede of German descent, his grandfather having

first moved the family to Sweden from Germany. Raised during the period of Great Depression

of the 1930s, Ingvar learned the value of thrift and displayed an extraordinary early aptitude for

entrepreneurship that shaped his life and business ethos (Lester, 2011).

Kamprad¶s entrepreneurial skills at the tender age of 5. He bought matches in bulk and sold

them from his bicycle at a profit. His aunt helped him to buy matches (100 boxes for 88 öre).

He sold them for 2-5 öre a piece. He expanded into ball-point and fountain pens, Christmas

cards, fish, garden seeds and lingonberries.

IKEA soon started making money. In 1945, Kamprad started promoting business through mail

order catalogues as conducting individual sales calls became impossible. Furniture was

introduced in IKEA's product portfolio in the year 1948. The use of local manufacturers allowed

him to keep his costs down. He then produced a small brochure, IKEA News was used to

advertise products including sofa beds and cut glass chandeliers. IKEA products namely beds,

wardrobes and hall furniture are named for Norwegian place names; chairs and desks for men¶s



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names; materials and curtains for women¶s names and garden furniture for Swedish islands.

This was the result of Kamprad¶s dyslexia, he found remembering the order numbers of goods

problematic and decided that giving items their own names would be much simpler.

The furniture was a hit, and in 1951, Kamprad decided to discontinue all other product lines and

focus on furniture. In 1956, IKEA launched its most revolutionary flat pack furniture. It was

invented by accident when draughtsman Gillis Lundgren realized that a bulky wooden table

could fit into a car only when its legs were removed. He put this observation to work and thus

was born furniture that could be easily dismantled and rearranged with the aid of accessories

such as nails and screws. Lundgren subsequently went on to establish the design team at IKEA

that created a bookshelf named Billy, and a sofa called Klippan, the two globally best-selling

furniture pieces from IKEA.This technology brought IKEA two distinct advantages: it madefurniture easy to carry (for both the buyer and the company), and it also reduced overall costs as

buyers could assemble the products at home using instructions provided by the company. This is

the strategy that IKEA uses which is cost leadership that leads the company to be competitive

and sustainable up until today.

In 1958, the first IKEA showroom opened in Älmhult, Sweden. The essence of IKEA experience

was to provide a wide range of affordable, well-made goods for customers to see and touch for

themselves in actual room settings (Lester, 2011). Two years later, the first IKEA Restaurant

opened in the same store. IKEA opened its first outlet outside Sweden in Norway in 1963.

IKEA¶s innovative idea set a new direction in the furniture design in the 1960s. At that point of

time, dark and heavy furniture was popular. Instead, IKEA launched modern oak furniture in a

lighter colour and style. By visiting the showroom, customers could review three dimensions of

its products -f unction, quality and low price - before making their purchases. In 1961 the

supply chain concept emerged as IKEA worked with the first non-Scandinavian supplier, which

was based in Poland. Their first delivery was made of 20,000 chairs.



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C ompetition Leads to Innovation

IKEA has now become known worldwide for its innovative and stylish designs. Almost all

IKEA products are designed to for flat packaging, which reduces shipping costs, minimizes

transport damage, increases store inventory capacity, and makes it easier for customers to take

the furniture home themselves, rather than needing delivery. But the original reason for it was

competitive pressure. In 1965, IKEA was in a price war with its main competitor. Rivals were

calling suppliers to boycott IKEA. This was turning point for Kamprad, he turned the treat to

opportunity by starting to design their own furniture.

IKEA GROUP STORES WORLDWIDE In 2010, the IKEA Group opened 12 new stores, in 7

countries. On 31st August 2010, the IKEA Group had a total of 280 stores in 26 countries.

THE IKEA GROUP

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The IKEA Group had operations in 41 countries ±29 Trading Service Offices in 25 countries and

27 Distribution Centres and 11 Customer Distribution Centres in 16 countries.

INDUSTRIAL GROUPS

Swedwood, an industrial supplier within the IKEA Group, had 15,500 co-workers and 41

production units in 9 countries. Swedspan, an industrial supplier within the IKEA Group,

had 500 co-workers and 5 production units in 5 countries.

SUPPLIERS IN 2010

IKEA had 1,074 suppliers in 55 countries.

PRODU C TS IN THE RANGE

The IKEA range consisted of approximately 9,500 products.

IKEA GROUP STORE VISITORS IN FY10

The IKEA Group stores had 626 million visitors.



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ESTIMATED VISITS TO IKEA WEBSITES DURING 2010 IKEA websites had 712 million

visits.

PRINTED C ATALOGUES, LANGUAGES & EDITIONS The IKEA catalogue was printed

in more than 197 million copies in 29 languages and 61 editions.

C O-WORKERS IN 2010

127,000

C O-WORKERS PER FUN C TION Purchasing, distribution, wholesale, range & other: 14,500

Retail: 96,500 Swedwood: 15,500 Swedspan: 500

C O-WORKERS PER REGION Asia & Australia: 8,000 North America: 15,500 Europe:

103,500

IKEA's success was attributed to its vast experience in the furniture retail market, its product

differentiation and cost leadership. The company sold its furniture in kits, to be assembled by the

customers at home.

Even though IKEA has expanded, it is still privately owned. Ingvar Kamprad, who has been

called ³the most influential tastemaker in the world today,´ still has some control over the

company through a unique organization (Scully, 2004). With over 200 stores worldwide today,

IKEA¶s goal to expand comes from their idea to ³offer 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 .´ Besides acquiring items from outside suppliers, IKEA built and designed its own

furniture through Swedwood, an IKEA industrial group, where they also started testing the idea

of flat packages. The idea was to design products that could be packed completely flat and later

reassembled by the customer. Staying true to its motto of providing ³Affordable Solutions for a

Better Living,´ their consumer-assembled furniture allows them to decrease assembly and

shipping costs because of the simplicity in packaging parts of unassembled furniture (3). By



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developing a new paradigm for furniture and house wares, IKEA continues to lead the way in

home furnishings with much room for improvements and expansions.

Kamprad, though officially retired, is still the cheerleader for the practices that define Ikea

culture. One is egalitarianism. Ikea regularly stages Antibureaucracy Weeks, during which

executives work on the shop floor or tend the registers. "In February," says CEO Dahlvig, "I was

unloading trucks and selling beds and mattresses" (Kerry, 2005).

Kamprad has been extremely shrewd in creating IKEA's organizational structure. It is owned

ultimately by a Dutch trust controlled by the Kamprad family, with various holding companies

handling different aspects of IKEA's operations, such as franchising, manufacturing, and

distribution. IKEA even has an investment banking arm. Kamprad has repeatedly resisted pressure to take the company public, feeling that it would slow their decision-making processes

that have allowed their phenomenal growth.

Frugality and Charity:

On the one hand, Kamprad has a reputation for being, well, "cheap". He takes the subway to

work, and when he drives, it's an old Volvo. Rumor is that when he stays in a hotel, if he feels

the urge to drink one of those expensive sodas from the wetbar, he replaces it later with one

picked up from a nearby convenience store. Yet IKEA has a long tradition of community

outreach and philanthropy, with each store encouraged to support local causes, plus international

sponsorship of UNICEF and others.

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Vision

The IKEA vision is to create a better everyday li f e f or the many people. We make this



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possible by o ff ering a wide range o f well-designed, f unctional home f urnishing products at

prices so low that as many people as possible will be able to a ff ord them.

The IKEA Concept is founded on a low-price offer in home furnishings. This indicates that the

company embraces the low-cost leadership strategy. Ingvar's innovative idea was to offer home

furnishing products of good function and design at prices much lower than competitors by using

simple cost-cutting solutions that did not affect the quality of products. Ingvar used every

opportunity to reduce costs, and he scraped and saved in every way possible - except on ideas

and quality. This is how the IKEA Concept began.

Flat packages = reduced transport ± and damage costs = lower prices.

IKEA Culture

The corporate culture of IKEA is built upon the philosophy of sustainable development and a

continuous strive for improvement in all areas of the value chain which is an effective way to

shape the industry to better fit IKEA¶s future strategies. Due to the uniqueness of IKEA's

strategic positioning, being the largest competitor in its field, the firm has the advantage of

setting the phase of the industry.

Cost is another part of corporate culture; the culture emphasizes efficiency and low cost which is

not to be achieved on the expense of quality or service. Moreover, bureaucracy is fought at all

levels in the organization, e.g. all design teams enjoy complete autonomy in their work, but are

expected to design new appealing products regularly.

Business per f ormance

The Economist reported that in the fiscal year 2010, IKEA¶s sales grew by 7.7% to ¼23.1 billion

and net profit increased by 6.1% to ¼2.7 billion. Conforama, Habitat and other rivals do not come

close. IKEA¶s strong brand and low prices helped it to weather the downturn, even though 80%

of its sales are in crisis-hit Europe. In 2010 its sales rose by 8.2% in Spain and 11.3% in Italy.

The firm is doing well in Bulgaria and Romania and planning to expand further in central and



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eastern Europe. While frugal Germans are IKEA¶s best customers, accounting for 15% of sales.

Figure 1.

IKEA Structure

Despite the retailer¶s retail brand positioning being thoroughly Swedish, IKEA has, ironically,

not been Swedish in a strict legal sense (The Economist, 2006) since the early 1980s. IKEA'scomplicated ownership corporate structure is believed to be designed to protect the Kamprad

family from taxes and to avoid the possibility of a takeover of IKEA. Though Ingvar Kamprad,

the founder of IKEA, is often cited as one of the wealthiest men in the world, Kamprad does not

technically own IKEA. IKEA is privately held by a foundation, which in turn owns a group that

controls the companies that run IKEA's individual operations. Responsible for this tangled web



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of corporations, foundations and tax shelters is IKANO, a Swedish group also owned by the

Kamprad family that is primarily concerned with managing the Kamprad family fortune, though

interestingly, in 2008 it owned 25% of Habitat, another large European based furniture store.

The whole IKEA group is privately held and owned by the Stichting INGKA Foundation,

registered in the Netherlands. INGKA Holdings B.V., the parent company for all the companies

comprising the IKEA Group is owned by the foundation, a non-profit registered in Leiden in the

Netherlands which is controlled by the Kamprad family. The Dutch foundation, worth US$36

billion in 2006, according to The Economist, was created by Kamprad in 1982 for the stated

purpose, "To promote and support innovation in the field of architectural and interior design."

Stichting INGKA Foundation is the owner of INGKA Holding B.V.

The parent for IKEA Group, which controls 284 stores in 26 countries, is Ingka Holding, a private Dutch-registered company. Ingka Holding, in turn, belongs entirely to Stichting Ingka

Foundation, a Dutch-registered, tax-exempt, non-profit-making entity, which was given Mr

Kamprad¶s IKEA shares in 1982. A five-person executive committee, chaired by Mr Kamprad,

runs the foundation.

The IKEA trademark and concept is owned by Inter IKEA Systems, another private Dutch

company. Its parent company is Inter IKEA Holding, registered in Luxembourg. For years the

owners of Inter IKEA Holding remained hidden from view and IKEA refused to identify them.

In January a Swedish documentary revealed that Interogo, a Liechtenstein foundation controlled

by the Kamprad family, owns Inter IKEA Holding, which earns its money from the franchise

agreements Inter IKEA Systems has with each IKEA store. These are lucrative: IKEA says that

all franchisees pay 3% of sales as a royalty. The IKEA Group is the biggest franchisee; other

franchisees run the remaining 35 stores, mainly in the Middle East and Asia. One store in the

Netherlands is run directly by Inter IKEA Systems.



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INGKA Holding B.V.

INGKA Holding B.V. is the parent company for all of the IKEA Group companies which is

governed by a Supervisory Board; Goran Grosskopf is the Chairman. Though ostensiblyretired, Ingvar Kamprad serves as Senior Advisor, while his son Mathias is on the Supervisory

Board. The IKEA Group companies are comprised of IKEA Services B.V. and IKEA Services

AB which have nine divisions in Sweden and the Netherlands which support the work in all the

IKEA Group companies.

IKEA Group

IKEA Group Management

IKEA Group Management is composed of: Anders Dahlvig - President and CEO of IKEA

Group; Hans Gydell - Group Vice President; Sören Hansen - Chief Financial Officer; Lars

Gejrot - Head of Human Resources; Torbjörn Lööf - Head of CS Region West; Peter Högsted -

President of the UK division; Ian Duffy - President of the Asia Pacific division; Pernille Spiers-

Lopez - President of the North America division; Göran Stark is responsible for Industry

Investment and Development; Werner Weber - President of the Germany division and Mikael

Ohlsson.

IKEA Group C ompanies

The IKEA Group Companies are primarily concerned with carrying out the necessary functions

to bring IKEA products to market. The companies include Swedwood, IKEA of Sweden,



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Purchasing, Distribution, and other functions such as Human Services, Internet Technology and

Communications.

Swedwood

Swedwoodis the name for the industrial companies that manufacture IKEA

products. Swedwood was formed in response to the economic and political upheaval that began

with the fall of the Berlin wall in 1989. In 1991, Swedwood was born, forever changing how

IKEA does business. Though Swedwood has branched out into North America with the openingof a plant in Danville, VA and into other parts of the world, the majority of the labor remains in

the Eastern European nations. With over 7000 employees in FY2007, Poland makes up 52% of

Swedwood's employee base. Slovakia comes in second with 2130 employees (18%), and Russia

is third with 1290 employees (9%).

Swedwoodis responsible for ensuring compliance withIWAY - the IKEA Way of Purchasing

Home Furniture Products. These are IKEA's internal policies governing everything from

environmental issues, worker safety, compliance with local laws and regulations to socialwelfare and manufacturers who contract to do business with IKEA must abide by these policies.

IKEA of Sweden



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IKEA of Sweden, located in Älmhult, Sweden, employs the designers that design and develop

the IKEA range of products that are sold in IKEA stores. IKEA designers work on the original

principle, "to create a better everyday life for the many people."

Purchasi ng and S uppli es

IKEA maintains 41 Trading Service Offices in 30 countries, and has over 1350 suppliers in over

50 countries. Purchasing is responsible for ensuring reliable production, efficiency and minimal

waste in manufacturing processes.

D istributi on

Distribution is responsible not only for moving products from point A to point B, but also for

maximizing efficiency, analyzing and managing supply chain issues and maintaining quality

control throughout the supply chain - from the manufacturer to the customer in the warehouse.

Distribution is also responsible for the Recovery department, which maintains the AS-IS room

(also known as the Bargain Corner). There are over 27 distribution centers and 11 customer

distribution centers in 16 countries.

Inter IKEA Systems B.V.

Separate from the IKEA Group companies isInter IKEA Systems B.V.which is registered in

Delft, The Netherlands and is the owner of the IKEA concept and trademark, and is the

franchisor of the IKEA concept worldwide. According to the website for Inter IKEA B.V., "the

objective of Inter IKEA Systems B.V. is to increase the availability of IKEA products through

world-wide franchising of the IKEA Concept." Inter IKEA Systems B.V. is not owned by

INGKA Holding B.V., but is owned rather by Inter IKEA Holding S.A. which is registered in

Luxemburg and is part of Inter IKEA Holding which is registered in the Netherlands Antilles.The ownership of these holding companies has not been disclosed, but it is widely assumed to be

owned in part or full by the Kamprad family.

IKEA Stores



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The IKEA Range

Trends come and go, but combining a low price with good design and function never goes out of

style. The IKEA range has a profile that reflects the IKEA way of thinking. It is simple and

straightforward. IKEA products are hard-wearing and easy to live with. They reflect and

facilitate an easy, natural and unconstrained way of life. They express form, and are colourful

and cheerful. And they appeal to the young at heart of all ages.

Low Price

Low price is a prerequisite for the IKEA Concept to realise the IKEA vision - "to create a better

everyday life for the many people". As the IKEA Concept aims to serve "the many people", the

IKEA product range needs extremely low price levels.

The majority of stores are franchised through Inter IKEA Systems B.V. by INGKA Holding

Group, which operates stores throughout Europe, North America and Australia. Other stores are

franchised independently. Regardless of the franchisee, all IKEA stores pay 3% of sales to Inter

IKEA Systems B.V. on an annual basis.



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IKEA designers do their part to keep prices low by using production capabilities from other areas

in unique and previously unimagined ways - like having a shirt factory produce furniture

upholstery. Or using leftover materials from the production of one product to create an entirely

new one.

IKEA customers also contribute to keeping prices low. They select and pick up the products

themselves, transport them home and then assemble them themselves. And they can enjoy them

already later that day.

The IKEA C atalogue

Interestingly the IKEA catalogue is not just catalogue, but it offers customers solutions,

inspiration and low-priced products. As a global company, the IKEA catalogue is printed in

more than 25 languages, circulated to more than 35 countries and distributed more than 190

million copies all free of charge. The IKEA catalogue is a daily invitation to the IKEA store. It

offers prices in the catalogue are valid for a 12-month period.

IKEA f ranchising

Inter IKEA Systems B.V. is the owner and world-wide franchisor of the IKEA Concept and aims

to bring IKEA products to as many people as possible by franchising the IKEA Concept to

franchisees. Right to franchise the IKEA Concept is only granted in new countries with no IKEA

operations present. All our existing IKEA Stores are shown at our homepage.

Financial per f ormance

Swedish furniture giant Ikea on Friday reported a significant hike in net profit in 2010 as sales

rose, especially in China, Russia and Portugal.



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Ikea, an unlisted, family-owned company that does not traditionally release regular earnings

reports, said in its annual statement its net profit rose 6.1 percent to 2.7 billion euros (3.6 billion

dollars) in its 2010 financial year -- September 2009 to August 2010.

Global sales meanwhile jumped 7.7 percent to 23.1 billion euros, Ikea said, adding that its performance had been especially strong in China, Russia and Portugal.

Last year "was a good year for us, with increasing sales despite a tough market situation in many

countries," company president and chief executive Mikael Ohlsson said in a statement.

Ikea's chief financial officer Soeren Hansen agreed, pointing out that the year had been

"unpredictable ... with the effects of the financial crisis in 2009 still a reality for many of our

customers.

"The conditions in our markets ranged from favourable to difficult," he said in the annual report,

adding however that financial year 2010 had "turned out to be a very good year for our retail

operations, with growth in most markets."

The company said its gross margin improved to 46.1 percent from 44.6 percent a year earlier.

During financial year 2010, Ikea said it opened 12 new stores in eight countries, and at the end of August counted a global total of 280 stores in 26 countries.

The company, which has 127,000 employees, said Europe accounted for 79 percent of sales, with

North America on 15 percent and the Asia-Australia region the rest.



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Facts & Figures

How the IKEA Concept adds up around the world.

For all IKEA stores



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Country's first store

1958 Sweden - Älmhult1963 Norway - Oslo (Nesbru)

1969 Denmark - Copenhagen (Ballerup)

1973 Switzerland - Zürich (Spreitenbach)

1974 Germany - Munich (Eching)



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1975 Australia - Artamon

1976 C anada - Vancouver (Richmond)

1977 Austria - Vienna (Vösendorf)

1978 Netherlands - Rotterdam (Sliedrecht)

1978 Singapore - Singapore

1980 Spain - Gran Canaria (Las Palmas)

1981 Iceland - Reykjavik

1981 France - Paris (Bobigny)

1983 Saudi Arabia - Jeddah

1984 Belgium - Brussels (Zaventem and Ternat)

1984 Kuwait - Kuwait City

1985 United States - Philadelphia1987 United Kingdom - Manchester (Warrington)

1988 Hong Kong - Hong Kong (Shatin)

1989 Italy - Milan (Carugate)

1990 Hungary - Budapest

1991 Poland - Platan

1991 C zech Republic - Prague (Zlicin)

1991 United Arab Emirates - Dubai

1992 Slovakia - Bratislava

1994 Taiwan - Taipei

1996 Finland - Esbo

1996 Malaysia - Kuala Lumpur

1998 C hina - Shanghai

2000 Russia - Moscow (Chimki)

2001 Israel - Netanya

2001 Greece - Thessaloniki

2004 Portugal - Lisbon

2005 Turkey - Istanbul

2006 Japan - Tokyo (Funabashi)

2007 Romania - Bucharest



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2009 Ireland - Dublin

Sources adapted from © Inter IKEA Systems B.V. 2003 ± 2009

IKEA in Malaysia

IKEA Store in Malaysia is established in 1996 in Mutiara Damansara.

IKEA retailing, with its Swedish roots, is based on a franchise system. Inter IKEA Systems B.V.,

located in Delft, The Netherlands, is the owner and franchisor of the IKEA Concept. IKEA stores

are operated by a number of different franchisees in 29 countries.

IKEA products are sold solely in stores operating the IKEA Retail System--franchised by Inter IKEA Systems B.V. of The Netherlands.

Franchises are granted by Inter IKEA Systems B.V. as part of a detailed expansion plan. Serious

applicants are carefully researched and evaluated and franchises are granted only to companies

and/or individuals with strong financial backing and a proven record in retail.

Ikano Pte. Ltd.

Ikano Pte. Ltd. is a franchisee of Inter Ikea Systems B.V., owning and operating

two IKEA stores in Singapore and one store in Kuala Lumpur, Malaysia. Ikano

Pte. Ltd. also owns an Ikano shopping centre, adjacent to the IKEA store in

Kuala Lumpur, Malaysia.

IKEA Business Idea

We shall offer 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.



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Facts & f igures

Turnover (2009) 191 million Euro

Markets Singapore, Malaysia, Thailand

Managing Director Tom Huzell

Number of employees 1059

Value chain

Project Out line

Introduction:

- Over view on lean management and services (definition, concept, philosophy,

««(Arfifah).

- Learn management from the perspective of TQM group and examples of companies who



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practice Lean management mentioning IKEA

- Draw chart for Learn management

- Check Page 508 in the text book

IKEA Group is growing and financially strong - net profit FY10 up6.1% to ¼2.7 billion FY10 sales grew by 7.7% to ¼23.1 billion. The IKEA Group net profit for FY10*increased by 6.1 % to 2.7 billion Euro, compared to the previous fiscal year. Thestrong result was due to increasing sales, higher gross margin and improvements of the cost structure in the running business.

"FY10 was a good year financially for us ± sales grew despite tough marketconditions in many countries. Profits give us the resources to grow and reach morepeople on existing and new markets as well as lowering prices. The main part of theprofit was re-invested in existing and twelve new stores in order to become evenmore inspiring and accessible. In times like this, even more people appreciate valuefor money in terms of good design and functional home furnishing products ataffordable prices and we are committed to continuing that journey", says IKEAGroup President and CEO Mikael Ohlsson.

In line with IKEA long-term sustainability direction IKEA continued, during FY10, toinvest in renewable energy sources. The number of solar panels nearly doubled andcurrently, IKEA owns 52 wind turbines. During 2010, the IKEA Foundation donated¼45 million to social projects. The IKEA Foundation funds programmes designed toimprove the rights of children and youth in the developing world to enable them tocreate a better future for themselves and their families. These programmes willhave benefited 100 million children in 2015.

IKEA Group yearly summary, called ³Welcome inside´ and IKEA GroupSustainability Report FY09, are available on www.ikea.com. IKEA GroupSustainability Report FY10 will soon be published.

*The fiscal year 2010 of IKEA runs from September 1 2009 to August 31 2010. IKEA Parent organization:

IKEA back ground (the founder, vision, mission, guiding principle «. Objective , action plan ,

structure , branches location around the world (Emilia)

1- Business Performance of IKEA ( financial result, market share )

2- competitive advantage and core competency , IKEA strategy, I way « SWOT analysis

(Zainab)



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3- operation management( Supply chain management) (Emilia)

IKEA Malaysia:

1- Structure organization, history when started, location with picture. Emilia

2- Business Performance of IKEA ( financial result, market share) Emilia

3- competitive advantage and core competency , IKEA strategy « SWOT analysis) Zainab

4- Interview with IKEA Malaysia manager ( 500 employees , no warehouse in Malaysia ,,

central warehouse for East Asia ( used to be in Shah Alam and moved to Bangkok,

Thailand ,,,, another warehouse in China ) largest store is in Singapore and Malaysia is

second in terms of size , but first to be establish in East Asia «. She said ³ IKEA concept

is self service therefore customers hardly see employees around ,,,,, actually during our

visit we did not see employees who are stationed at the information counter at each of thei counter ,

5- Interview through video conferencing

Pictures and explanation of lean activities:(Wafa)

IKEA Lean Service



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- In the IKEA model a great part of the work traditionally carried out by the employees is

done by the customer, therefore providing the option to design one¶s own value-cost

pattern.

- Interaction between IKEA¶s personnel and the customers is minimized (decrease the cost

of management) everything is made clear so customers¶ need to an assistant will be

minimized.

- IKEA designed its store into different areas to facilitate the consumer buying process.

- Tools and techniques on lean page 510 and 511

Facilitators:

Shoppingy Pencils ( the size of the very small ½ of the normal size , blain, to save raw materials ,

save environment and using recycley Shopping note ( 1/3 of the A4 paper)y Measuring tapesy

store guidesy Cataloguesy Shopping bagsy Shopping trolleysy Sings

Ex: EKEA has videos to explain to customers how to fill in order form, and how to find a

product in the warehouse.

Display

Price and Product:y Clear informationy Large signsy Easy to read



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y Information pointy Lights used in the store are less bright using environmentally friendly energy bulbs.y Eco friendly store ( no plastic bags, less resources used for pencils, shopping list notes,

measuring taps, energy bulbs )y Optimizing all the spaces in displaying their productsy

Warehouse:y Shopping trolleysy Handcartsy home delivery

logistics:

designing products

y design product in a way that make sure no row materialsare wasted and foldable that

minimize the storage space, transportationy design product in a way that the packaging process will maximize the use of spacesy minimizing storage space.

Servicesy personalization and customization ( using software that customer can download to design

their own room using IKEA furniture.y Outsourcing for furniture delivery and installation by IKEA business partners ( lean

management in terms of cutting overhead cost) no waste in terms of transportation.y Hiring part time employees who are paid extra per hour when there is a need for extra



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work ( save money which indicate optimizing resources to reach efficiency.y

Customer experience buying process at IKEA:

1. Collecting information ( Pencils Notebooks, Measuring tapes, store guides, Catalogues)

2. Learn about shopping process ( videos, signs)

3. Customer draw down information ( item number, place, price)

4. Salesperson work as facilitator; interact if customer asked for help.

5. Go to warehouse to collect item.

6. Self deliver to home, or IKEA delivery service.

7. Do it yourself.8. The process save personnel cost and offers flexibility.

Lean management and services as an Islamic concept-( Zainab )

1- Ayah and Hadith in saving resource ,, ( not wasting resources , time )

2-

Look for incidents during prophet time3- Look abut improvement of work flow ( perfection)

Conclusion

Re f erences

Ingvar Kamprad , Retrived June 20, 2011 from http://en.wikipedia.org/wiki/Ingvar_Kamprad.



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C hina boosts Ikea 2010 pro f its. Author: AFP / The Swedish Wire, Published Friday, 14 January

2011 11:59, Retrieved June 20, 2011 from http://www.swedishwire.com/business/8072-china-

boosts-ikea-2010-profits.

C apell, Kerry. "Ikea: How the Swedish Retailer Became a Global Cult Brand." Business Week.14 Nov. 2005. Retrieved June, 23 2010 from

http://www.businessweek.com/magazine/content/05_46/b3959001.htm

Scully, James. "Style and Design: Icon: IKEA." TIME 2004. 29 Apr. 2006

<http://www.time.com/time/2004/style/042604/ikea/index.html>.

IKEA Sustainability Report 2010. Retreived June, 23, 2011 from

http://www.ikea.com/ms/en_GB/about_ikea/pdf/ikea_ser_2010.pdf

http://entrepreneurs.about.com/cs/ f amousentrepreneur/p/ingvarkamprad.htm

The Economist: The secret o f IKEA's success. ³Lean operations, shrewd tax planning and

tight control.´ Feb 24th 2011, Retrieved June 24, 2011 from

http://www.economist.com/node/18229400

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