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Ikea's History, Legal Structure And Warranties

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HISTORY

The thought of owning his own business intrigued young Ingvar Kamprad, for at the age of six, in 1931, Kamprad began selling matches. But this idea/passion quickly grew as Kamprad learnt to bulk buy and resell the matches to earn a larger profit. As he grew older it expanded into selling flower seeds, all sorted cards, decorations and stationery.

This passion stuck because in 1943 when Ingvar Kamprad turned 17, was given a gift from his father. This gift allowed Kamprad to turn the few matches sales into a business. Kamprad named the business IKEA, after his initials and the initials of the farm and village he grew up in. I.K standing for Ingvar Kamprad, E standing for Elmtaryd and A in place of Agunnaryd. With the new name also came new products. These products included: picture frames, table runners, watches and jewellery.

In 1945, Kamprad made his first advertisement in the local newspaper and started to sell furniture in 1948. Soon after the introducement of furniture, the business started to rapidly grow and now needed a catalogue. The same catalogue idea is now used today.

Although the furniture is now in a catalogue, much easier to shop for consumers, there still isn’t any showrooms where customers can experience what it may be like to own IKEA’s products. However in 1956, along with the first open showroom which demonstrates quality and feel, IKEA furniture is now a lot more compact and relies on self-assembly. The first item to be flat packaged was LÖVET, a table with the legs removed.

This sparked revolutionary ideas and pushed for bigger items, more options, variety and altogether easy, accessible, cheap and compact furniture. Now the range was massive and required IKEA’s first store. In 1958, the first store opened with 67,000 square metres of space making in the largest in Scandinavia at the time.

Finally, the business began to settle and Kamprad and his employees began to expand the range of products at IKEA through the 1960s-1970s. Furniture produced from this time included the POÄNG and BILLY (see Figure ii & iii).

Although through the next 10 years IKEA went through a lot of monumental changes. The changes included:

  • Expanding the company to France and opening a warehouse/ store.
  • IKEA Group starts up. IKEA Group is a structure that manages many departments such as vision and business ideas, and sustainability along with investing for the future.
  • IKEA Family is launched as a way of rewarding regular customers with membership deal and prices.
  • IKEA expands into Belgium, USA, UK and Italy.

Founder Ingvard Kamprad retires and pursues connecting company, INGKA Holding B.V.

Even though the retirement of the founder, IKEA as a company kept soaring in sales, growth and ideas. IKEA had recently opened a children’s section which was very popular, but had also opened a store in Beijing, China and launched their first website. Now with mass furniture being made, IKEA was using a lot of resources to provide for the sales. To cope through 1980 – 1990, IKEA implemented environment policies, bought their own sawmills and production plants, became a member of FSC (Forest Stewardship Council), employed a forestry manager and donated funds to UNICEF.

Today IKEA has grown into the largest multinational furniture retail company, servicing 52 countries in 423 stores. IKEA’s product’s worth for 2018 was AUD$60.5 billion and they hold nearly 1% of the world’s product wood consumption.

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LEGAL STRUCTURE

IKEA believes in long-term independence, meaning IKEA is a private company with only multiple allowed shareholders. IKEA is aware of this and says that, “As a private company, devoting significant resources to make IKEA more affordable, accessible and sustainable for IKEA customers. A part of that is developing new store formats and e-commerce capabilities across the IKEA value chain. This of course impacts short-term results.”

IKEA Group CFO, Martin van Dam

Although due to IKEA’s complicated of departments, both non-profit and profit, the corporate is often separated into two parts: operations and franchising.

GUARANTEES & WARRANTIES

IKEA provides multiple warranties, however, they depend on many factors. Australian IKEA Guarantees are protected under the Consumer Law. IKEA’s guarantees last for different amounts of different products, for example,

5-year guarantee

  • cookware
  • appliances

10-year guarantee

  • bathroom basins
  • sofas and armchairs

15-year guarantee

  • knives
  • other cookware

25-year guarantee

  • mattresses
  • kitchen systems

IKEA also has a price guarantee. This ensures that the prices will stay relatively the same for different countries (not including prices of taxes). They also give warnings that items may have a slight colour/ size difference.

Price protection can also be added to members purchases and allow a product to be refunded the difference if the item goes on sale. This protection lasts for 90 days and requires a receipt.

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Ikea’s History, Legal Structure And Warranties. (2022, February 17). Edubirdie. Retrieved December 8, 2022, from https://edubirdie.com/examples/ikeas-history-legal-structure-and-warranties/
“Ikea’s History, Legal Structure And Warranties.” Edubirdie, 17 Feb. 2022, edubirdie.com/examples/ikeas-history-legal-structure-and-warranties/
Ikea’s History, Legal Structure And Warranties. [online]. Available at: <https://edubirdie.com/examples/ikeas-history-legal-structure-and-warranties/> [Accessed 8 Dec. 2022].
Ikea’s History, Legal Structure And Warranties [Internet]. Edubirdie. 2022 Feb 17 [cited 2022 Dec 8]. Available from: https://edubirdie.com/examples/ikeas-history-legal-structure-and-warranties/
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