Case Study: Ikea Value Chain Analysis

Ikea applies Value Chain Analysis to analyze and enhance its operations across the entire value chain, including sourcing, production, warehousing, and retailing.

Ikea, a renowned Swedish furniture retailer, has a rich history dating back to its founding in 1943 by Ingvar Kamprad in the small village of Älmhult, Sweden. Initially, the company focused on selling various household products, including pens, wallets, and picture frames. As Kamprad expanded the business, he introduced furniture into the product range. 

One of the pivotal moments in Ikea’s history came in the late 1950s when the company introduced its innovative flat-pack furniture concept. This approach involved selling furniture that customers could assemble themselves, allowing for more efficient packaging, transportation, and lower costs. In the 1960s and 1970s, Ikea began expanding beyond Sweden’s borders, opening stores in neighbouring Scandinavian countries and later establishing a presence in other parts of Europe. Over time, Ikea expanded further internationally, reaching markets worldwide. Ikea is known for its distinctive retail experience, characterized by its large warehouse-like stores, self-service model, and showroom setups that inspire customers with various room displays. This concept allows customers to explore and envision how Ikea’s furniture and products can be incorporated into their homes.

Ikea utilizes value chain analysis as a strategic tool to assess and optimize its internal operations and activities. By examining each step of the value chain, Ikea can identify opportunities for process improvements, cost reduction, and enhancing customer value. This approach aligns with Ikea’s mission to offer well-designed, functional, and affordable products to a wide range of customers. Here’s how Ikea applies value chain analysis.

Ikea’s value chain analysis helps identify areas of improvement, cost-saving opportunities, and ways to enhance customer value at each stage of the value chain. By continuously evaluating and optimizing its internal operations, Ikea can deliver quality products at affordable prices while maintaining a competitive edge in the furniture retail industry.