Essay: Internal Environment Analysis of IKEA

By | April 28, 2011

Sample Essay

Business Description:

In broadly terms IKEA deals in the retail home furniture and home ware segment. INGKA Holding BV is the parent company of all the IKEA group companies. Some of the other business units that are closely attached with IKEA include Swedwood an industrial group which provides the IKEA furniture, then the sales company that run the IKEA stores and also purchases and supply functions. And lastly IKEA Sweden that is in charge of the design and development of the various product ranges for IKEA. Currently the group is being solely owned by Stichting INGKA Foundation which is a nonprofit foundation in the Netherlands (Datamonitor, 2010).

Firm’s resources:

IKEA is a vertically integrated company which means that all the stages of production for a good that starts from the acquisition of raw material till the retailing of the final product are controlled by the group itself. As we have identified in the above lines that Swedwood is IKEA’s industrial group which is responsible for producing wood based furniture and other wooden components for IKEA. Swedwood has 49 factories and sawmills in 11 countries and they are mainly performing their jobs in the operations that include production from forestry, sawmilling, board manufacturing to furniture production (Hay, 2006).

As the company operates globally it have 28 distribution centers and 11 customer distribution centers in 16 countries. The main responsibility of these centers is to regularly supply goods to IKEA stores located in that particular region. Apart from that the company also has 31 trading service offices in 26 countries. In those areas where IKEA stores are not present the company has a supply management system which consists of 1220 suppliers in 55 countries that cater the demand of that area (Hay, 2006).

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