IKEA is known around the world for its stylist, quality and low-cost furniture and home furnishings.The company's success is based on a strategy of operational excellence in production, supply chainoperations and marketing. IKEA- wildly popular in Europe- has leveraged its brand reputation to penetrate markets in other countries. However, its penetration of the U.S. market has been hampered by a weakened economy and the inconsistency between the traditional U.S furnituremarket and IKEA's low-cost operating philosophy. IKEA must find a balance between its operationalexcellence strategy and U.S. consumers' demands for customization, good service, convenience, andquality.

When 17- year-old Ingvar Kamprad founded IKEA in 1943, he could not have imagined that hiscompany would become one of the world's most popular and iconic brands or the world's largest home furnishings retailer. The IKEA name is a combination of Kamprad's initials (IK) and the firstletters of the farm (Elmtaryd) and village (Agunnaryd) in southern Sweden where he grew up. From the beginning, IKEA was founded on different principles- namely, frugality and low cost. Most furniture companies offer personalized service and advice in lavish showrooms where salespeople compete for sales commissions. Kamprad, however, recognized that customers are willing to trade off typical amenities to save money. Today, the no-frills frugality is the cornerstone of the IKEA cache and one of the reasons for its immense popularity.

IKEA operates under a unique corporate structure. When Kamprad founded the company, he wanted to independent organization that would be sustainable for the long term. Since 1982, the Stichting INGKA Foundation, a Netherlands-based charitable foundation, has owned the IKEAgroup. Many estimates peg the foundation as one of the world's wealthiest charities- worth an estimated $36 billion. INGKA Holding B.V., also based in the Netherlands, is the parent company for all IKEA Group companies. The IKEA Group includes IKEA of Sweden (which designs and develops all IKEA products), Swedpan (which makes environmentally friendly wood panels), Swedwood (which makes all IKEA furniture), the sales companies that operate IKEA stores, all purchasing and supply chain functions. This type of ownership is unique in that the foundation is a nonprofit organizationdesigned to promote innovation in architectural and interior design. Some criticize IKEA's ownershipas an arrangement that leverages the uniqueness of Dutch law to avoid taxes and prevent a hostile takeover attempt.

Today, IKEA is Sweden's best-known export. The company had 2011 worldwide sales totally EUR 25.2 billion and an average annual growth rate of almost 7 percent. Roughly 79 percent ofIKEA's sales come from operations in Europe, with North America and Russia/Asia/Australia contributing 14 percent and 7 percent, respectively. The company has 131,000 employees and more than 325 IKEA stores in 38 countries, with 287 stores in 26 countries belonging to the IKEA Group. The remaining stores are owned and operated by franchisees. The first U.S. IKEA store opened in Philadelphia in 1985. Today, there are 38 U.S. stores, with 11 stores in Canada. IKEA had originally planned to have 50 stores operating in the United States by 2010, but the 2008- 2009 worldwideeconomic recession slowed IKEA's plans.

The IKEA Concept

The backbone of IKEA's success is "The IKEA Concept", which serves as both the company's visionand core operating philosophy:

The IKEA Concept: Provide functional, well-designed furniture at prices so low that as many people as possible will be able to afford them. Creating a better everyday life for the many people.