IKEA declined - Icarus Paradox



IKEA declined - Icarus Paradox

Introduction

Previously companies used to focus only on one thing that was product, service and production method. This made them successful and even better in the market. Moreover, companies' uses to give less important to the other factors such as process other products n the market etc. This resulted in non adaption of new environment and changing technologies. For instances Laura Ashley, Atari, Digital Equipment, Tupperware, or Revlon are the historical examples. Icarus Paradox which is a tale from Greek Mythology who fashioned some wings out of feathers and beeswax to escape an island. The above companies form this tale, some recovered but some did not. This paper focuses on the IKEA, who suffered Icarus Paradox by not giving consideration to the other factors which changes as time changes.

Overview of the company - IKEA

IKEA (Ingvar Kamprad Elmtaryd Agunnaryd) is a multinational furniture company founded in 1943 by Ingvar Kamprad. The company is owned by a foundation in the Netherlands, but still controlled by the Kamprad family. In 2010 there were a total of 313 IKEA stores in 37 countries and territories. Of these 34 stores operated by external franchisees in the Middle East, Spanish islands and parts of the Asian market.

IKEA top sales countries are Germany 16%, U.S. 11%, France 10%, UK 7%, and Italy 7%. Sweden has a total of 17 stores. Newest inaugurated in Vasteras at April 13, 2011 and is nearly 40,000 square meters. It counts as one of the largest IKEA store. In 2005, IKEA in the south of Moscow was the world's most visited shopping center with 55 million visitors. Meanwhile, IKEA in north Moscow is the world's second most visited shopping center. IKEA names their products thematically, bathroom products may for instance name from Swedish lakes and streams, dining table and chairs named with Finnish geographical names, table and chairs are given male names and carpets may Danish geographic name. IKEA's products are in most cases the same name across the world.

The company's catalog with pictures and prices on their furniture is the world's largest commercial printing. It has been published in 27 languages ??and printed in about 191 million copies. A new edition of the catalog published every year in August or September, depending on country of publication. Old catalogs from the 1950s to the 1970s, has a high value to collectors, and a catalog can cost between SEK 50 and SEK 1600 depending on condition and year of publication (IKEA Marketing Plan, 2012).

The world's three largest IKEA Store

Stockholm King's Curve, Sweden: 55 200 m²

Shanghai, China: 49 400 m²

Svagertorp Malmo, Sweden: 44 000 m²

In 2011, Revenue was 25,173 while it was 23,539 in 2010, furthermore, Net income increased to 2,966 in 2011 from 2,688. As years are passing, the demands for IKEA products are increasing due to their high quality and creative work.

External Analysis

PEST analysis for IKEA

Political: IKEA has been successful in both domestic and international business across the global and national ...