IKEA's Social and Environmental Responsibility Initiatives

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Case Details:

Case Code : BECG058
Case Length : 22 Pages
Period : 1997-2005
Pub. Date : 2006
Teaching Note :Not Available
Organization : IKEA
Retail - Furniture
Countries : Sweden, US, China

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A Socially Responsible Company Contd...

Being socially and environmentally responsible made good business sense too - as Anders Dahlvig, President of IKEA Group said, "Done in a sensible way, social and environmental work is good for business. It is good for business because our customers will feel reassured that they are doing business with a company that shares their views and values. And it is good for business because it can also support cost efficiency. Using resources and raw material efficiently, saving energy, improving working conditions at our suppliers and through that getting more motivated people, will have a positive effect on costs and therefore support our business objectives."7

About IKEA

Kamprad established IKEA in 1943 at the age of seventeen. He came up with the name IKEA by combining the first letters of his name (Ingvar Kamprad), followed by the first letters of the farm and village he grew up in (Elmtaryd and Agunnaryd).

IKEA began in a shed that was just two square meters in size. Kamprad started his business by buying pens, Christmas cards, matches, cigarette lighters, nylon stockings and other items in bulk.

He sold these items to the residents of Smaland8 at a reasonable price, but still made healthy profits. To save more money, Kamprad would piggyback his packages on milk delivery trucks. 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 1947.

By 1951, the furniture sales had increased so much that Kamprad decided to discontinue all other products and concentrate solely on selling furniture that was stylish but low priced. In the same year, the first IKEA furniture catalogue was issued and the first IKEA furniture shop was opened in 1953 at Almhult in Sweden. The first IKEA showroom was opened at Almhult in 1958. The opening of the showroom was an important milestone in the growth of IKEA as customers could, for the first time, see and touch the furniture before placing an order. By visiting the showroom, customers could review three dimensions of its products - function, quality and low price before making their purchases. IKEA began its overseas foray in 1963 with the opening of its store in Norway...

Excerpts >>

7] "Social and Environmental Responsibility: President's Message," www.ikea.com, 2005.

8] Smaland literally means 'Small Country.' It is a province in southern Sweden.


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