Many people strive for success nowadays. Everybody wants to be a winner, to be successful and to be rich. Therefore, people are in constant search of the key of achieving success. Some of them try to find a well-paid job and be successfully employed while others believe that they can start their own business and become employers to other people. Despite the positions, both employers and employees face the problem of effective working process. Contemporary top leading companies solve that problem by applying specific business strategies. A strategy defines the future of the company. If there is one, company will survive and prosper, in the opposite, it is doomed to fail. Luckily, more and more companies realize the significance of a good strategy and start to develop it. Moreover, the experts believe that the essence of strategy is a clear and distinguished point of view that supports dynamic and rational action (Rumelt, 2011). The strategy is really about the action that is designed upon unique a set of conditions that result in exceptional and sustainable profits. Therefore, the issue of choice of good and bad strategy is urgent today. Good business strategy is accompanied with recognition of the nature of challenges and offering a way of overcoming it. Thus, this essay will provide readers with one of the examples illustrating good business strategy. It is the story of IKEA Company, how it went from the woods of southern Sweden to being a major retailer in 40 countries around the world.
The future founder of IKEA story was born in 1926 in Smaland in southern Sweden. His name was Ingvar Kamprad, and he was raised on a farm near the small village of Agunnaryd. Ingvar decided to develop a business since his childhood. Though he did not have a business strategy in his head, he was very attentive and easily got the idea of making a profit. At the age of five, little Kamprad started "matches business", at first selling them to neighbors and later (at the age of seven), further afield selling them with bicycle. He not only had that idea in his head, but he understood how to make money just from the reselling of matches he could buy cheaply in Stockholm. Matches were his first product, later he went to greeting cards, Christmas tree decorations, flower seeds, and later pencils and ball-point pens. What is more, his father encouraged him materially for his studying success. Thus, young Ingvar tried the taste of money very soon. Money received from the father, he used to establish his own business at the age of 17. Consequently, Ingvar Kamprad founded IKEA in 1943. The name IKEA was formed from the founder's initials and the neighboring villages. IKEA originally was intended for selling pens, wallets, picture frames, watches, jewelry, and nylon stockings with a main highlight on the reduced prices. As one can assume, the key idea was to sell something at the reduced prices. Since then, the concept and vision of IKEA appeared. Company's vision was determined as a creation of a better everyday life for the many people (Farfan, 2013).
History of IKEA Company is easier to follow by the decades. Such a division will help one track the key points of business strategy and its progress. As far as IKEA was found in 1943, 40s - 50s became the first and most important decade for his company. During this period, Kamprad learned the basis needed for the successful business. The first thing he learned was about the benefits of advertising and publishing catalogs. In two years of company existence, Kamprad's business increased so much that he was no longer able to call all his clients himself. Hence, the first IKEA advertisements in local newspapers appeared. To ensure sales on even larger scale, the first catalog was published. This decade had the profound impact on the shaping of company concept. Particularly, IKEA tried to sell furniture produced by local manufacturers that had become their main product afterwards. Kamprad accepted a very powerful strategy - "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" (Farfan, 2013). The idea of selling furniture at a low price turned out to be so successful that other companies tried to follow IKEA's example. The appearance of competitors did not impede Kamprad's business; it rather became the catalyst of company's success. When he noticed the competitors' thread in 1953, he opened the first furniture showroom in Sweden. It was a clever and original business move. Now clients could not only see the furniture in the catalog, but they could touch it and make sure it is quality. Of course, the innovation was a success and his client base expanded even more. Another good thing the competitors did was that they provoked IKEA to design its own furniture stems. Facing the obstacles, Kamprad did not retreat. He acted as a good strategist by honestly acknowledging the challenges and providing an approach of overcoming them. As the company continued to expand, the first IKEA store was opened (1958) and the number of workers expanded to the hundred of people.
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During the next decade, IKEA expanded its market even more, and the key products and materials were developed. After learning a lesson, Kamprad rejected the idea of "best" for IKEA, focusing instead on the constant quest for continuous improvement instead. Particularly, in 1960, the first IKEA restaurant was opened in the IKEA store in Sweden. Then the new IKEA stores started to appear in different countries. At first, these were limited to Scandinavia (Norway, Denmark and Switzerland), but as time passed these included Germany (which today is IKEA's largest market), Australia, Canada, Austria, Vienna, and Netherlands. Gradually IKEA became one of the international organizations that must constantly adapt to the different environments. The company had originally highlighted its 'Swedishness', but it had to revise this kind of approach in order to meet the demands of local cultures and employment laws (SWOT analysis, 2012). Thus, IKEA had to transform itself rapidly from an ethnocentric corporation to an organization that embraces people of all backgrounds, and has expressed the importance of having a culturally diverse workforce in order to obtain a competitive advantage on the global scene.
During this period, the following classics of IKEA were introduced: OGLA chair, MTP bookcase, PRIVAT sofa, furniture TAJT, SKOPA chair, POEM armchair, and BILLY bookcase. The company became sort of a trendsetter because others imitated its products. At the same time, the three pillars on which the company rests were established: product development, development of the overall concept, and business development (Truc, 2013).
In 1980s, the IKEA developed further. To notice that, one would admit company's increase of catalog numbers (45 million copies, in nine languages), the number of workers (near 10,000 co-workers) and the number of stores (60 stores around the world). During this decade, IKEA appears in Paris, Belgium, USA, the UK and Italy. Meanwhile, its classics line expanded. New products included KLIPPAN sofa, LACK coffee table (with the sandwich technique called board-on-frame that will be used in many IKEA products in years to come), LACK shelves, MOMENT sofa, and STOCKHOLM range of furnishings from birch wood, leather and cretonne. Gradually, Ingvar Kamprad realizes the need for the ownership structure and organization that would stand for independence and a long-term approach. For that reason, the IKEA Group is established. This organization encompasses many companies owning stores in countries around the globe. Soon after that, IKEA FAMILY, the new customer club, is launched. This was done for the sake of client's appeal promising access to a wide range of member benefits. After such developments, Ingvar Kamprad retires from Group Management to become an advisor. Anders Moberg replaced the position of President.
In 1990s, new business strategy was introduced. The first environmental policy took its place at IKEA to ensure that the company and its co-workers take environmental responsibility for the business. From now on the company declared quality production and environmental responsibility as its priorities. IKEA turned to the natural material use - the wood. To produce wood-based furniture and wooden components an industrial group Swedwood was opened. The first forestry managers were employed at the IKEA Group to work with securing sustainable use of forestry resources. The production also was changed. Since the key products were producing already and bringing good profit, the product lines appeared. IKEA started to launch furniture series for different purposes. The next step was taken to widen its target audience. Firstly, IKEA take the course for kids as the most important people in the world. Children needs were therefore taken into account in the design of public IKEA places such as play areas, children's room settings, baby areas and special meals in the restaurant. Secondly, IKEA turns to Internet users and launches the IKEA web site www.IKEA.com. Company expanded even further for the IKEA group grew to 50,000 co-workers and has more than hundred stores in 29 countries including Hungary, Czech Republic, Poland, Spain and China. It is important to highlight here how Kamprad treats its workers. IKEA's corporate culture implies a very democratic form of leadership where great freedom is given to employees to contribute to the company's success. IKEA claims to treat all employees, no matter what rank they carry, as partners in the business (SWOT Analysis, 2012). To do justice to its workers, IKEA invented the Big Thank You event. It was a money reward for hard-working IKEA co-workers for contributing to the company's ongoing success. Since 1999, IKEA starts participating in the charity programs. The IKEA Group donates funds to UNICEF and Save the Children to improve education in Kosovo.
In 2000s, company elaborates on the work ethics. A code of conduct is launched and entitled The IKEA Way on Purchasing Home Furnishing Products. It defines the expectations from sides, IKEA and suppliers with regard to legal requirements and working conditions. Besides, IKEA also introduces The IKEA Way on Preventing Child Labor. IKEA is consistent in its policy towards the children, child labor and environment. Particularly, company participates in Child rights project in India to defense child labor, gives donations to UNICEF projects for children in Angola and Uganda, to Schools in Liberia and Burundi and provides quilts to Pakistan earthquake victims. IKEA is well known for its cooperation with Greenpeace and WWF. The IKEA Group and the global conservation organization WWF co-operate on climate change reducing emissions of greenhouse gases produced by IKEA operations. The two organizations join forces to promote responsible forestry in different regions around the world. Hence, they start a number of forest projects to support the development of responsible forestry around the world. With the concern of ecology, IKEA implements new product-recovery concept in its stores around the world to ensure that return products are repaired instead of being wasted. To show the effectiveness of their efforts IKEA publishes its first Social & Environmental Responsibility Report in 2004. To promote ecological transportation of IKEA material and products the company uses rails.
Meanwhile, the IKEA group seems to double its productivity in furniture retailing business. The company introduces new materials and products. It joins the first ranks the manufacturers who use the print-on-board technique, meaning producing furniture with patterns produced directly on fiberboard and particleboard. It also starts using wooden plastic - cheap and modern material that supports a company's vision of inexpensive furniture. New products of the company include fourth and fifth IKEA PS collections (for children), a complete and coordinated collection of bedroom furnishings, a wide range of coordinated kitchens and dining furnishings. In 2000s, company highlights its key production elements such as design, function and techniques. During this period, new technologies are implemented for the increasing buyers' ability, as well. E-shopping is started in Sweden and Denmark and then other markets borrow the idea of proposing online shopping at IKEA. At this time, company expands to the new markets. It arrives in Russia, Portugal and Japan. Finally, the 200th IKEA store opens in New Haven USA. The IKEA Group goes above 100,000 co-workers and operates in 44 countries worldwide. It launches IKEA Food label with nearly 30 percent of the 150 products in its food range. The range focuses on high-quality food products based on Swedish recipes and tradition, for a low price. The products are sold in Swedish Food Markets in IKEA stores and IKEA restaurants.
Accordingly, it is hard to overestimate IKEA contribution to the world market and Kamprad's contribution to the business world. His business strategy covers appropriate goals and their reaching. During the decades, Ingvar Kamprad proved himself as a talented leader who knew how to identify critical issues in the situation and then focus action and resources on them. His overall strategy element is flexibility. Kamprad was always flexible to the market demands, and he reacted instantly to all the signs of time. He knew where to move forward and to retreat, and that makes him a vivid example of a good strategist. Good strategy embraces the language of broad goals, ambition, vision and values. This strategy responses to innovation and ambition, as Kamprad did this. IKEA's strategy combines indicating of the way with identifying how leadership and determination are to be applied. Thus, it serves as a vivid example of a good business strategy.