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Ikea




  Company Logo
  Company Type Private
  Foundation '''1943''' in Älmhult , Småland ,<br> Sweden
  Location Leiden , South Holland ,<br> The Netherlands
  Key People Ingvar Kamprad , Founder<br /> Anders Dahlvig , President <br /> Hans Gydell , President Inter IKEA Groupt
  Industry Retail (Specialty)
  Products Self-assembly Furniture , See Section On Products
  Revenue $15425B USD ( 24%) ( FY 2004)
  Num Employees 104,000 (2006)
  Homepage wwwikeacom



IKEA is a privately-held, international, home products retailer that sells low-price products, including furniture, accessories, bathrooms and kitchens at retail stores around the world. It became famous for the fact that the customer himself or herself has to assemble many of the products. IKEA was founded in 1943 by Ingvar Kamprad in Sweden and it is owned by a Dutch -registered foundation controlled by the Kamprad family. IKEA is an acronym comprising the initials of the founder's name ('''I'''ngvar '''K'''amprad), farm where he grew up ('''E'''lmtaryd) and home village ('''A'''gunnaryd).

INGKA Holding B.V. is the ultimate parent company for all IKEA Group companies, including the industrial group Swedwood, which manufactures IKEA furniture, the sales companies that run IKEA stores, as well as purchasing and supply functions, and IKEA of Sweden, which is responsible for the design and development of products in the IKEA range. INGKA Holding BV is wholly owned by Stichting INGKA Foundation, which is a foundation registered in Leiden in The Netherlands .

Inter IKEA Systems B.V. also in Leiden, the Netherlands, owns the IKEA concept and trademark, and there is a franchising agreement with every IKEA store in the world. The IKEA Group is the biggest franchisee of Inter IKEA Systems B.V.


GENERAL OVERVIEW

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The company distributes its products through its retail outlets.
The chain has 258 stores in 35 Countries ; most of them in Europe , and in the United States , Canada , Asia and Australia . 2006 saw the opening of 16 new stores. There are plans to open another 24 stores in 2007. IKEA is one of the few store chains to have locations both in Israel and in other Southwest Asia n nations.

IKEA is generally pronounced but in many English-speaking regions, it is pronounced rhyming with the word "idea". In addition, it is generally pronounced in , as well as ''right now'' in Cantonese .

The IKEA Website , contains about 12,000 products and is the closest representation of the entire IKEA range. In 2005 IKEA reported over 275 million visitors to their websites.


HISTORY

, founder of IKEA]]
IKEA was founded in Älmhult , Sweden , in 1943 by Ingvar Kamprad , then 17. The acronym ''IKEA'' is incidentally similar to the Greek word οικία {Link without Title} (home) and to the Finnish word oikea (correct, right).

Originally, IKEA sold Pen s, Wallet s, Picture Frame s, Table runners, Watch es, Jewelry and Nylon Stockings or practically anything Kamprad found a need for that he could fill with a product at a reduced price. Furniture was first added to the IKEA product range in 1947 and, in 1955, IKEA began to design its own furniture. The company motto is: "Affordable Solutions for Better Living".

At first, Kamprad sold his goods out of his home and by Mail Order , but eventually a store was opened in the nearby town of Älmhult . It was also the location for the first IKEA "warehouse" store which came to serve as a model for IKEA establishments elsewhere and on March 23 , 1963 , the first store outside Sweden was opened in Asker , a Norwegian municipality outside Oslo .


PRODUCTS

IKEA furniture is well known for its modern, utilitarian Design . Much of IKEA's furniture is designed to be Assembled By The Consumer rather than being sold pre-assembled. IKEA claims this permits them to reduce costs and use of packaging by not shipping air; the Volume of a bookcase, for example, is considerably less if it is shipped unassembled rather than assembled. This is also a practical point for many of the chain's European customers, where Public Transport is commonly used; the flat-pack distribution methods allow for easier transport via public transport from the store to a customer's home for assembly.
, just south of Stockholm , Sweden ]]
IKEA contends that it has been a pioneering force in sustainable approaches to mass Consumer Culture . Kamprad refers to the concept as "democratic design," meaning that the company applies an integrated approach to Manufacturing and Design (see also Environmental Design ). In response to the explosion of human population and material expectations in the 20th and 21st century, the company implements Economies Of Scale , capturing material streams and creating manufacturing processes that hold costs and resource use down, such as the extensive use of Particle Board . The intended result is flexible, adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses.

IKEA has also expanded their product base to include flat-pack houses, in an effort to cut prices involved in a first-time buyer's home. The product, named BoKlok was launched in Sweden in 1996 in a joint venture with Skanska . Now working in the Nordic countries and in UK, sites confirmed in England include London , Manchester , Leeds , Gateshead and Liverpool .1

Although IKEA household products and furniture are designed in Sweden, they are largely manufactured in developing countries to hold down costs. Very little production actually takes place in Sweden.


Product names


IKEA products are identified by single word names. Most of the names are either Swedish , Danish , Finnish or Norwegian in origin. Although there are some notable exceptions, most product names are based on a special naming system developed by IKEA. 2



A notable exception is the ''IVAR'' shelving system, which dates back to the early 1970s. This item is named after the item's designer.

Because IKEA is a world-wide company working in several countries with several different languages, sometimes the Nordic naming leads to problems where the word means something completely different to the product. A well known example was the bed frame ''GUTVIK''. As the word can be pronounced ''Gootfick'' it invites German-speaking people to understand it like ''gut fick'' which means "good fuck" in German.

Company founder Ingvar Kamprad, who is Dyslexic , found that naming the furniture with proper names and words, rather than a product code, made the names easier to remember.


STORE FORMAT

in Queenstown , Singapore ]]
Newer IKEA stores are usually very large blue boxes with few windows. They are often designed around a "one-way" layout which leads customers along "the long natural way". This layout is designed to encourage the customer to see the store in its entirety (as opposed to a traditional retail store, which allows a consumer to go right to the section that the goods and services needed are displayed) although there are often shortcuts to other parts of the showroom. The sequence involves going through furniture showrooms, housewares (market-hall), then the warehouse (Self Serve) where one collects flatpacks for products seen in the showrooms, and then arrive at the cashier's station to make payment.

Whilst the original design involved the warehouse on the lower level and the showroom and marketplace on the upper, many Canadian, Spanish and U.S. stores and all German stores differ by placing the marketplace downstairs, and some stores are single-level, bungalow-style. Some stores maintain separate warehouses to allow more stock to be kept on-site at any given time, although this occasionally results in challenges in finding the items, as well as a perception of having to queue in line twice.

Many stores include Restaurant s serving typically Swedish Food , a few varieties of the local cuisine, and beverages such as Lingonberry juice. The restaurant area is usually the one place in the store where there are large windows. Outside of Sweden, these restaurants are sometimes complemented by mini-shops selling Swedish-made, Swedish-style groceries. One can buy IKEA's specialty foodstuffs, such as Swedish Meatballs from the store.

Many stores also include food markets specializing in Swedish Food . Patrons can purchase various assortments of Swedish meatballs, packages of gravy and various cookies and crackers with a Scandinavian flare. IKEA also sells Lingonberry Jam in a wide array of sizes, including buckets.

Most of the Canadian locations also serve alcohol at their restaurants; a limited selection of bottled beer is available in coolers along with the various other bottled drinks such as milks, juices and sodas.

Most IKEA stores also offer an "as-is" area at the end of the warehouse just prior to the cashiers. Returned, damaged and formerly showcased products which are not in "as new" condition are displayed here, and sold with a discount, but also with a "no-returns" policy. In the United Kingdom and Australia, this is referred to as "Bargain Corner".

In Hong Kong, where shop space is limited and costly, IKEA has opened three outlets across the city, which are actually part of shopping malls. They are relatively tiny, compared to common "large blue box" store design, yet most of them are still in the "one-way" layout. However, the newest outlet in Telford Plaza does not follow this template, and the three independent floors can be accessed freely from each. Following IKEA tradition, though, the only cashier is located on the lowest floor.


CATALOGUE

See Also: IKEA Catalogue


IKEA annually publishes a popular Catalogue . First published in Swedish in 1951 , the catalogue is now published in 17 languages for 28 countries,3 and is considered to be the main marketing tool of the retail giant, consuming 70% of the company's annual marketing budget.4

The catalogue is distributed both in stores and by mail.5 Most of the catalogue is produced by IKEA Catalogue Services AB in IKEA's hometown of Älmhult , Sweden where IKEA operates the largest photo studio in northern Europe at 8,000 square meters in size.6 The catalogue itself is printed on chlorine-free paper of 10-15% post-consumer waste.

According to Canadian broadcaster, CTV , "IKEA's publications have developed an almost cult-like following online. Readers have found all kinds of strange tidbits, including mysterious cat pictures, apparent Mickey Mouse references and weird books wedged into the many shelves that clutter the catalogues." A Facebook group even celebrates the male dog found in the 2007 catalogue.7


IKEA FAMILY

In common with some other retailers, IKEA has launched a Loyalty Card in its stores in Sweden, the UK, the Netherlands, Germany, Russia and Japan called "IKEA Family". The distinctive orange card is free of charge and can be used to obtain discounts on a special range of products found in each IKEA store. In particular, it gives 25% off a commissioned range of IKEA Family products on presentation of the card. The card also gives discounts on food purchased in the restaurant and the Swedish Food Market. In the Netherlands and Russia it also entitles the holder to free coffee in the restaurant from Monday through Friday, this being adjusted to free tea in the UK.

In conjunction with the card, IKEA also publishes and sells a regular style magazine titled ''IKEA Family Live'' which supplements the card and catalogue. The magazine is already printed in thirteen languages and an English edition for the United Kingdom was launched in February 2007 . It is expected to have a subscription of over 500,000.8


CORPORATE STRUCTURE

See Also: Stichting INGKA Foundation
IKANO
Ingvar Kamprad


, USA]]
, Sweden (adjacent to Tornio , Finland ). The bilingual signage is in Swedish and Finnish . The leftmost flag is the Sami Flag .]]

Despite its Swedish roots, IKEA is actually owned and operated by a complicated array of Not-for-profit and For-profit Corporations of which Stichting INGKA Foundation located in Leiden in the Netherlands is the ultimate owner.

The IKEA corporate structure is divided into two main parts: operations and franchising. Most of IKEA's operations, including the management of the majority of its stores, the design and manufacture of its furniture, and purchasing and supply functions are overseen by Ingka Holding, a private, for-profit Dutch company. Of the IKEA stores in 44 countries, 229 are run by the INGKA Holding. The remaining 29 stores are run by franchisees outside of the Ingka Holding.9

Ingka Holding is not, however, an independent company, but is rather wholly owned by the Stichting Ingka Foundation , which Kamprad established in 1982 in the Netherlands as a tax-exempt, not-for-profit Foundation . The Ingka Foundation is controlled by a five-member executive committee that is chaired by Kamprad and includes his wife and attorney.10''The Economist'', May 11, 2006.

While most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation, the IKEA Trademark and concept is owned by an entirely separate Dutch company, Inter IKEA Systems . Every IKEA store, including those run by Ingka Holding, pays a 3% Franchising fee to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated and, ultimately, uncertain. Inter IKEA Systems is owned by IKEA Holding, a company registered in Luxembourg. IKEA Holding, in turn, belongs to an identically named company in the Netherlands Antilles that is run by a trust company based in Curaçao . The owners of this trust company are unknown (IKEA refuses to identify them) but are suspected to be members of the Kamprad family.

In Australia , IKEA is operated by two companies. Stores located on the East Coast including Queensland , New South Wales , and Victoria are owned by Inter IKEA Systems . Stores on the Western side of the country including South Australia and Western Australia are owned by Cebas Pty Ltd and operated under a franchise agreement with Inter IKEA Systems .11


Tax avoidance


The central purpose of IKEA’s intricate corporate structure appears to be Tax Avoidance . By funneling its profits through a Nonprofit Foundation and through a string of Shell Corporation s in various Tax Havens , IKEA drastically reduces the Tax Burden it would face with a more straightforward corporate organization.

In 2004, the last year that the INGKA Holding group filed accounts, the company reported profits of €1.4 billion on sales of €12.8 billion, a margin of nearly 11 percent. Because INGKA Holding is owned by the nonprofit INGKA Foundation, none of this profit is taxed. The foundation's nonprofit status also means that the Kamprad family cannot reap these profits directly, but the Kamprads do collect a portion of IKEA sales profits through the franchising relationship between INGKA Holding and Inter IKEA Systems.

Inter IKEA Systems collected €631 million of franchising fees in 2004, but reported pre-tax profits of only €225 million in 2004. One of the major pre-tax expenses that Inter IKEA systems reported was €590 million of “other operating charges.” IKEA has refused to explain these charges, but Inter IKEA Systems appears to make large payments to I.I. Holding, another Luxembourg-registered group that, according to '' The Economist '', “is almost certain to be controlled by the Kamprad family”. I.I. Holding made a profit of €328 million in 2004.

In 2004, the Inter IKEA group of companies and I.I. Holding reported combined profits of €553m and paid €19m in taxes, or approximately 3.5 percent.

The Berne Declaration , a not-for-profit organization in Switzerland that promotes corporate responsibility, has formally criticized IKEA for its tax avoidance strategies. In 2007, the Berne Declaration nominated IKEA for one of its Public Eye “awards,” which highlight corporate irresponsibility and are announced during the World Economic Forum in Davos , Switzerland.www.evb.ch/en/index.cfm


Control by Mr. Kamprad


Along with helping IKEA avoid taxation, IKEA's complicated corporate structure allows Mr. Kamprad to maintain tight control over the operations of Ingka Holding, and thus the operation of most IKEA stores. The Ingka Foundation’s five-person executive committee, chaired and controlled by Mr Kamprad, appoints the board of Ingka Holding, approves any changes to Ingka Holding’s bylaws, and has the right to preempt new share issues. If a member of the executive committee quits or dies, the other four members appoint his or her replacement.

Even after Mr. Kamprad dies, his heirs will have difficulty altering the operation of the Ingka Foundation. The foundation's bylaws include specific provisions requiring it to continue operating the Ingka Holding group and specifying that shares can be sold only to another foundation with the same objectives as the Ingka Foundation.


Charitable giving


The INGKA Foundation is officially dedicated to promoting “innovations in Architecture and Interior Design ”. With an estimated net worth of $36 billion, the foundation is unofficially the world’s largest Charitable Organization , beating out the much better known Bill And Melinda Gates Foundation , which has a net worth of approximately $33 billion.12

Despite its enormous wealth, the Ingka Foundation does very little Charitable Giving . Detailed information about its grantmaking is unavailable, as foundations in the Netherlands are not required to publish their records. But IKEA has reported that in 2004-2005, the Ingka Foundation's donations were concentrated on the Lund Institute Of Technology in Sweden, and the Lund Institute reported the receipt of $1.7 million grants from the foundation during both of those years. By way of comparison, the Gates Foundation made gifts of more than $1.5 billion in 2005.. The lack of any consistent and serious philanthropy by the Ingka Foundation suggests that its Not-for-profit status is largely a Tax Avoidance strategy.

Notwithstanding the Ingka Foundation's lack of concerted philanthropic activity, IKEA is involved in several international charitable causes, particularly in partnership with UNICEF. These include:


IKEA also supports American Forests to restore forests and reduce pollution.http://www.ikea.com/ms/en_US/about_ikea/plant_trees.htmlhttp://www.americanforests.org/planttrees/af_info.php?campaign=ikea


COMMUNITY IMPACT

IKEA's goals of sustainability and environmental design in their merchandise have sometimes been at odds with the challenges that the impact a new IKEA store can have on a community.

IKEA stores are not commonplace, particularly in the United States , where consumers anticipate a retail outlet to be fairly accessible and have a number of locations. While the stores draw consumers from far and wide, the traffic and congestion impact of a store on a particular community can be a challenge. Some attempts have been made to improve such issues such as free shuttle buses at some stores., Stockholm , Sweden ]]




CRITICISMS

Some criticisms of IKEA:


ADVERTISING AND AWARDS

IKEA ran a commercial widely thought to be the first commercial featuring a gay couple. It aired only once, in 1994.[http://www.commercialcloset.org/cgi-bin/iowa/portrayals.html?record=76] Another commercial, featuring an interracial gay couple, was run in 2006. It has also had other commercials targeting the gay community, as well as a commercial featuring a Transgender ed woman. [http://www2.commercialcloset.org/cgi-bin/iowa/portrayals.html?record=546]

IKEA was also named one of the 100 Best Companies for Working Mothers in 2004 and 2005 by '' Working Mothers '' magazine. It ranked 96 in Fortune's 100 Best Companies to Work For in 2006 and, in 2007, was recognized as one of Canada's Top 100 Employers published in Maclean's magazine.27


DESIGN REFORM

As pointed out by circuit lecturer Will Novosedlik, IKEA embodies the principles of design reform begun by William Morris and John Ruskin , insofar as the company seeks to elevate public taste by providing quality goods at affordable prices.

IKEA is sometimes compared to the late design school of Bauhaus in Germany, in which art, aesthetics, and function was introduced into everyday objects in mass quantities.


IKEA'S DEBUT IN EACH COUNTRY


  Align "center" 2005
  "http://wwwinformationdelightinfo/information/entry/Turkey" class="copylinks">Turkey
  "http://wwwinformationdelightinfo/information/entry/Istanbul" class="copylinks">Istanbul
  Align "center" 2007
  "http://wwwinformationdelightinfo/information/entry/Romania" class="copylinks">Romania
  "http://wwwinformationdelightinfo/information/entry/Bucharest" class="copylinks">Bucharest ( Băneasa )
  26,000 Square Meter Store Opened March 21st, 2007 In Baneasa "Feeria" Shopping Center "http://wwwzfro/articol_100838/ikea_will_have_400_employees_by_next_spring__html" class="copylinks" target="_blank">IKEA will have 400 employees by next spring '' Ziarul Financiar '' November 7, 2006 Accessed November 9, 2006
  Align "center" 2007
  "http://wwwinformationdelightinfo/information/entry/Cyprus" class="copylinks">Cyprus
  "http://wwwinformationdelightinfo/information/entry/Nicosia" class="copylinks">Nicosia ( Strovolos )
  Align "center" 2008
  "http://wwwinformationdelightinfo/information/entry/Ukraine" class="copylinks">Ukraine
  "http://wwwinformationdelightinfo/information/entry/Kiev" class="copylinks">Kiev
  Align "center" 2008
  "http://wwwinformationdelightinfo/information/entry/Bulgaria" class="copylinks">Bulgaria
  "http://wwwinformationdelightinfo/information/entry/Sofia" class="copylinks">Sofia
  Align "center" 2009
  "http://wwwinformationdelightinfo/information/entry/New_Zealand" class="copylinks">New Zealand
  "http://wwwinformationdelightinfo/information/entry/Auckland" class="copylinks">Auckland
  IKEA Has Purchased A Site Near Auckland To Open New Zealand's First Store It Is Slated For An Early 2009 Opening It Is Owned By The Franchisor Of Perth+Adelaide "#ref_32">32
  Align "center" TBA
  "http://wwwinformationdelightinfo/information/entry/Republic_of_Ireland" class="copylinks">Republic Of Ireland
  "http://wwwinformationdelightinfo/information/entry/Dublin" class="copylinks">Dublin ( Ballymun )
  Approved By The Government The Store Was Intended To Be Opened In 2007 But Due To Conditions Imposed By The Local Authority, Its Construction Was Severely Delayed "http://wwwfinfactscom/irelandbusinessnews/publish/article_10007590shtml" class="copylinks" target="_blank">IKEA given planning permission to open giant furniture store in Dublin subject to conditions ''Finfacts Ireland'' October 11, 2006 Accessed November 12, 2006 On 2007-06-13 the Irish Planning Board, An Bord Pleanála, finally gave the go ahead for the store 33
  Align "center" TBA
  "http://wwwinformationdelightinfo/information/entry/Serbia" class="copylinks">Serbia
  "http://wwwinformationdelightinfo/information/entry/Belgrade" class="copylinks">Belgrade
  IKEA Is Reported To Be Looking For A Site In Belgrade To Open Serbia's First Store There Are Three Possible Lot Locations All 25 Ha In Size "#ref_34">34


  Name IKEA International A/S
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