IKEA SWOT Analysis

{ Posted on Apr 09 2011 by adam | 5,913 views}

IKEA is furniture based international industry that is held privately and caters all ready to use furniture products. Being the world Largest in furniture production and retails, the company manufactures not only the home based furniture but also covers the office demands. The company dates back its origin to 1943 and was funded by Ingvar Kamprad and at present its headquarters are in Delft, Netherlands. The company has its world wide coverage that is the reason behind its huge revenue of € 23.5 billion and Net income of € 2.7 billion as reported by financial figures of 2010. The company is mainly dominating Europe by having 76 % of the sales out there. Almost 127,000 employees are involved in the success stories of the company.

Strengths

• Beside the company’s vast locations being served the company has been successful in targeting its key consumers because of consistency in lots quality being served.

• The vision of the company is very well define, that is for the betterment of everyday life of people.

• A wide range of products with respect to deigns as well as range at relatively affordable cost. The Ikea’s cost consciousness’ design is specially taken into account while introducing new design or variety.

• Special monitoring guidelines are followed by Ikea and are expected from its suppliers as well. The monitoring is done for evaluating the customer’s responses as well as supplier’s performances regarding sales and attitudes towards purchasers.

• Ikea is linked to the environment sustainability and as a proof it uses almost 75 % of the renewable material in its products. Along with that the waste products are being considered for energy production, producing 90% of energy through this material; that may otherwise be wasted.

• Ikea values its suppliers and extends its support to the maximum level for attainment of the long term partnerships even by lowering the prices to the maximum level.

• The source and supply change are in coordination with each other maintaining the minimum possible distance between them. To reduce the travelling pollution Ikea directly supplies the products to the stores from the supplier location.

• Furniture of the company is so designed to consume as minimum raw materials as possible. This credit goes to the research and development sector and Ikea revolving chair is one of the success stories that the company owns.

Weaknesses

• The company is highly dependable upon the subcontracted manufacturers as its own manufacturing capacity is not up to the demand.

• The dependability also compromises the quality standards as the quality of products is not homogeneous at every location.

• The demographic locations are not evenly distributed Europe being its main hub, and at the time of crisis in Europe the profits would be highly endangered.

• Although the discounts are often provided but the services are not included in the packages, so the complete shopping experience needs to be introduced.

• The Ecommerce, which is need of the hour, is not being worked on and the customers are not able to compare and decide its products without being physically present at the outlets.

Opportunities

• The Ikea is more focused on the agenda of being environment friendly by people enjoying the sustainable products, increasing demand for greener products and low carbon footprint production.

• Online ideas and trips are being provided for having good home decoration solutions.

• The projects for sustainable environmental programmers in collaboration with the concepts of charity provided by WWF and UNICEF.

• Focused on the Asian markets specially that of middle class people by covering 5 to 10 % of the market in theses regions.

• The potential of the outlets is so huge that it is liable to find huge market specially in North Africa.

• The company is striving for the improvement of Ecommerce which would reduce the burden of its outlets and would increase the shipping business, along with easing the customers to place orders being at their homes.

Threats

• Shipping prices are rising through out the market.

• A number of direct and indirect competitors like developed furniture stores and Wal-Mart.

• Inflation forces the key customers to buy the flat products having low costs and this threat is prevailing on all industries of Europe and America.

• Social pressures, economic factors and market forces are parallel threats that may be faced by the company.

• It is difficult to maintain the low cost as well as design in variety and it is difficult to maintain the standards while spreading demographically.

References

1.Reuters (January 8, 2008).IKEA mulls joint venture with Bosnia furniture maker.

2.Armitstead, Louise (2010-10-01). “Ikea”. The Daily Telegraph (London).

3.Henley, Jon (2008-02-04). “Do you speak Ikea?” The Guardian (London).

4.”UNICEF’s corporate partnerships”. Unicef.org. http://www.unicef.org/corporate_partners/index_25092.html. Retrieved on March 8, 2011.

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