Ingvar 's Vision for IKEA and His Sons Term Paper

IKEA Family OwnershipIntroductionIKEA is a family-owned business with a complex corporate ownership structure that somewhat masks the fact that the company is essentially controlled by the Kamprad family. Founded in 1943 by Ingvar Kamprad as a mail-order business that transitioned into furniture retail, IKEA morphed from a small Swedish company to an international corporation by the 1970s. This paper will present the history and description of the family business, provide a company overview and outline of the family tree and ownership structure of the company, assess the current situation facing the company, and give recommendations and lessons learned.History and Description of the Family BusinessThe IKEA family business began in Sweden, and was formed by a young Ingvar Kamprad when he was still just a teenager. A young entrepreneur, he had been working in retail from childhood, first selling matches that he purchased in bulk and re-selling them individually at a low price (but sufficient to turn a profit), and then selling fish, seeds, and other items deemed useful to the locals where he grew up.[footnoteRef:2] His father Franz is the one who gave him the seed money used to start what became known eventually as IKEA as a reward for his hard work in business and in school. [2: Daniel Politi, The Swedish Entrepreneur, Slate, 2018. https://slate.com/news-and-politics/2018/01/the-swedish-entrepreneur-who-founded-ikea-ingvar-kamprad-dies-at-91.html]IKEA began as a mail order catalogue but grew quickly into a worldwide brand offering furniture and household goods. Ingvar made the company a success because he understood the consumer and what the consumer wanted. He did not set out to sell cheap furniture that would not last but rather to help consumers get what they wanted as affordably as possible. Once he had them, he offered them a whole line of products that would meet their needs.Kamprads three sons, Mathias, Jonas and Peter, all have board seats within the various groups under the IKEA umbrella today. The three brothers own Ikano Group, which oversees various investments and businesses such as retail, insurance, and real estate.[footnoteRef:3] However, the sons are very active throughout the entire IKEA organization. For instance, in the late 1990s, Peter gave the annual Christmas speech to IKEA employees in Almhulta speech typically given by Ingvar in the past, but that by the end of the 20th century was just one of many responsibilities being taken over by the Kamprad children.[footnoteRef:4] By 2013, Ingvar had ceded all control over to his sons and stayed on merely as an advisor, with Peter heading Stitching Ingka Foundation, the parent company of IKEA outlet stores. Brothers Jonas and Matthias would also participate in design and entrepreneurial aspects.[footnoteRef:5] [3: Katie Warren, Ingvar Kamprad, Business Insider, 2019. https://www.businessinsider.com/ikea-founder-ingvar-kamprad-wealth-family-net-worth-2019-12] [4: Olivier Truc, King Ingvar and His Three Sons, Worldcrunch, 2013. https://worldcrunch.com/business-finance/king-ingvar-and-his-three-sons-inside-the-ikea-family-saga] [5: Olivier Truc, King Ingvar and His Three Sons, Worldcrunch, 2013. https://worldcrunch.com/business-finance/king-ingvar-and-his-three-sons-inside-the-ikea-family-saga]Throughout the transition from father to sons, Ingvar worried that the three sons might begin to compete with one another for total control of the company. To prevent such competition, the sons have been surrounded by various executives who oversee the next generation of Kamprads. Prior to his death, Ingvar was still reluctant to have his sons appear in a very public manner as heads of the company. Peters Christmas speech, for instance, was not followed up with another: Ingvar did not like the impression it gave and so Peter and the other two brothers have largely been given roles behind the scenes, according to their own interests and characters.[footnoteRef:6] Meanwhile, the division of the company into various groups and foundations, done for tax purposes solely, serves to mask the fact that IKEA is still…

Some parts of this document are missing

Click here to view full document

…can obtain the support I need both for myself and for the next generation if the family business is to be sustained. It will require strategic insight, a long-term perspective, and a willingness to innovate. It will also require maintaining good relationships with customers and ensuring that the brand is never sullied by reckless decision-making.ConclusionThe IKEA family-owned business is a good example of how to think about succession and the next generation coming to power within the family. Ingvar had developed a massive corporation over many decades and by the time his sons were of age to assume control he did not just hand it off to them. First, he studied them and identified their interests and talents. He tested them in the public eye. He saw that they were not ready for such a role and so stayed on to continue to guide the ship even as he delegated more control to them. In the end, he structured the company in such a way that the sons would never be without the assistance and insight of executives with experience and knowledge of business strategy. He counted on his sons, however, to bring the core family values and innovative ideas that would facilitate the growth of the company into the 21st century. He did not press them to take on responsibilities they did not want or were not able to assume. This was a good practice on his part and helped to keep IKEA stable during the transitional years. Now that IKEA is without Ingvar it is important that the sons work with the Foundation boards to develop a long-term vision that will keep the company sustainable, true to its values, and grow sales. One possible way is to focus more on vertical integration so as to alleviate supply chain concerns…