IKEA's Innovative Human Resource Management Practices and Work Culture
| Case Code: HROB066 Case Length: 15 Pages Period: 1953 - 2005 Pub Date: 2005 Teaching Note: Available |
Price: Rs.500 Organization: IKEA Industry: Furniture Retailing Countries: Sweden Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background
Kamprad was a born businessman. As a young boy, he started a business selling matches to neighbors on his bicycle. He bought the matches cheaply in bulk and sold them at low prices, making a tidy profit. He reinvested his profit in the business and soon diversified into selling a variety of articles including Christmas decorations, stationery items, fish, and seeds.
In 1943, when Kamprad was 17, he formed IKEA (an acronym made up of his initials and the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up), using the money he received as a gift from his father for doing well in school. IKEA sold an assortment of goods from pens and pencils to watches, jewelry, picture frames, wallets, and stockings. By 1945, business had increased so much that it was no longer possible to make individual sales calls. Kamprad, therefore, set up a mail order catalogue and shipped orders using the local milk van.
In 1947, furniture was introduced for the first time in IKEA's product line in the form of armchairs. Craftsmen from around Kamprad's village made the furniture using wood from a nearby forest. IKEA's furniture became very popular and the line was extended to include more products. By 1951, furniture sales had increased so much that Kamprad decided to discontinue all other products and specialize exclusively in low priced furniture. In the same year, the first IKEA furniture catalogue was published. IKEA opened its first furniture showroom in 1953. The showroom allowed customers to see, touch, and feel the items they were buying, so that they could assure themselves of the quality of the items. The showroom was the result of an intense price war that IKEA was engaged in with its main competitor at that time...
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