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susceptibility to damage are all issues IKEA was able to overcome with its innovative approach of selling furniture collapsed flat boxes. This approach not only lowered its shipping and inventory costs, but also creatively transferred the labor-intensive assembly costs to the customer. IKEA's innovate approach to adding the consumer to the value chain in effort to keep prices low and quality high has won it very loyal fans everywhere it has reached.

Packed to the brim, its stores attract customers from great distances who load up their cars to furnish entire rooms or homes in a single trip. Constantly introducing new innovative new products, its model rooms in its stores and catalogs have provided a creative way introduce its new products to complement its existing product line. The model rooms and catalogs teach the customers how to piece together an entire room from the furniture to the décor with all IKEA products. Fashionable and trendy it encourages customers to live the IKEA life.

Financials

Background: Ikea is a privately owned company with an extraordinarily opaque organization. Financial statements are not publicly available. The Ikea Group is ultimately owned by the Stitching Ingka Foundation, a charitable trust based in the Netherlands. The Ikea Group manufactures and sells products. Franchise stores are a part of the IKEA group, as shown in figure 1. However, Inter Ikea Systems, a separate company, owns Ikea's intellectual property.

Franchises: 'Inter IKEA Systems B.V. constantly seeks market expansion, and grants new franchises to markets/territories according to a detailed expansion plan' (Company Web Site). Ikea has identified location as a primary success factor, since store sales volume is so dependent on location. Franchises are granted only to organizations and/or individuals that can secure a strong market position and market penetration in the given territory [and have] the financial strength and potential as well as have identified well located sites for the retail activity.'

Investment required: Based on recent examples, such as the Ikea store opened in Israel in 2003, typical investment is ~ $15M with a leased store.

It is estimated that another $5M would be required for the building and infrastructure improvements. It is also estimated that a new distribution center may be required for the region. If this is required, it is likely multiple stores will be needed to justify such an investment.

Revenue: With 190 stores, sales top 12.2B Euro. This means on average each store generates 67M euro ($78M/store). To validate this assumption, it should be noted that Germany accounts for 1/5th of turnover with a proportionate 33 stores.

Costs: The Ikea store concept requires relatively little human resources, so costs are a function of other overhead such as lease, warehousing, utilities, taxes and advertising. It can be noted that manufacturing is primarily Poland and Asia, as Ikea grows in size, it should consider Brazil as third major manufacturing center for local and worldwide use.

Earnings: After tax earnings for the IKEA group were shared in t本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。