Thu, Dec 16, 2004 page12

• Ikea strives to keep core values as multinational

  CIVIC IDENTITY The fact that the company is privately held is one reason it has been able to make long-term plans, but it also helps to keep information to a minimum

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  As Swedish do-it-yourself furniture giant Ikea conquers more and more ground, the company is struggling to make its austere founding ideals mesh with life as a multinational mammoth.

  While the logos of other multinational gargantuans such as McDonald's and Coca Cola today often evoke vehement charges of cultural colonialization and destructive globalization, the Ikea blue and yellow stamp has, through clever marketing and public relations, come for many to represent more positive values like modesty and civic duty.

  

  This file photo from Dec. 2 shows a woman shopping at the first Ikea store in Aelmhult, Sweden, which opened in 1958. As the company expands to become a global brand, it is struggling to maintain the simple philosopy of its founder.

  PHOTO: AFP

  The company, which has a long tradition of community outreach programs and philanthropy, has tried to convey the message that its dedication to low-low prices has its limits.

  We offer "low prices, but not at any price," Ikea's chief of ethical issues Hans Djurberg told a group of French reporters in Aelmhult last week.

  And one of the main reasons Ikea, recently valued by Swedish media at 400 billion kronor (US$60.3 billion), has never been listed is to allow it to make sensible and ethical long-term decisions without having to bow to pressure from greedy shareholders, company founder Ingvar Kamprad said in a recent television interview.

  No matter how good its intentions are, however, Ikea's size and reach can sometimes make it difficult to follow them through.

  In the 1980s for instance, the company was hung out to dry in the media after it was caught using young children in Pakistan to make some of its carpets.

  Since then however Ikea has tried to scrub clean its reputation by imposing a company-wide code of conduct, also applicable to its some 1,500 suppliers across 55 countries, and pursuing recycling and environmental efforts and forest management.

  It is also a longstanding supporter of UNICEF programs aimed at rooting out child labor, though the International Labor Organization (ILO) says it would like to see a widened collaboration.

  "We have no reason to doubt that Ikea is doing interesting things but we would like to have more contact with them," said Frans Roselaers, the head of the ILO's International Program for the Elimination of Child Labour (IPEC).

  IPEC collaborates with other multinationals, including several in the textile, tobacco, chocolate and sportswear industries, and is known for being a tougher partner than UNICEF.

  The fact that Ikea as a privately-held company and is not required to publish any financial results helps it keep negative coverage of its earnings and business practices to a minimum.

  In fact the company does not release any financial information beyond its turnover, which it said was 12.8 billion euros (US$17.1 billion) in the 12 months ending Aug. 31. This state of affairs is clearly appreciated by the top executives, who like to talk products, not numbers.

  "If we were listed, you would be hassling me with financial ques-tions," Ikea president Anders Dahlvig, 47, told reporters.

  Ikea's hip and cheap products including tables, bookcases, candleholders and kitchen sinks have become must-have items in many places around the globe, and each store-opening, be it in Russia, China or Israel, is met with zealous enthusiasm.

  By next year, Ikea is expected to have a total of 222 outlets across 32 countries, and the company's store catalogue is today the world's largest free print publication, with copies in 25 different languages.

  And this behemoth was founded by a 17-year-old boy in a small Swedish village just over 60 years ago. Ingvar Kamprad, 78, is a legend in the company and throughout Sweden, where most everyone knows the story of how he worked hard selling matches and pens before founding Ikea in the village of Aelmhult in southern Sweden in 1943.

  He formed the name from his initials plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up.

  "Aelmhult is the mecca of Ikea. It is here that we have created our success story," said Dahlvig, who is only the second "young boss" here since Kamprad stepped down as chief executive in 1986.

  Behind the scenes Kamprad still pulls a lot of the strings though, travelling around to store openings, inspecting product displays and making sure that goods are stacked responsibly in the giant Ikea storerooms.

  Kamprad, who to this day is renowned for habits such as flying economy class, taking the Stockholm subway and even riding free Ikea buses when visiting his stores, has maintained ownership of the company with his family through a complex network of foundations.
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