Introduction
In this report I will be examining Ikea in the Chinese market. First I will carry out an analysis of the company using Porter 5 Forces and SWOT frameworks. After this I will highlight the key issues of IKEA in China, which I will discuss market entry of IKEA in China. Finally, I will discuss my recommendations for IKEA in the Chinese market. Appendix and references therein.
Company analysis
Porter’s 5 forces (See appendix 1)
In terms of bargaining power of suppliers, through this analysis can be set as low due to several factors. China, for many years it has been dubbed the world's factory because of its low production costs and labor. This culture has led to a crowd of several providers available to foreign companies such as IKEA. Because of this IKEA is not limited to a single provider, which may require high quality at a low price, and if it is not accepted by a provider,
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They also have years of international experience and low cost experience the culture. These two combined they offer a strong market knowledge and the necessary skills.
As for weaknesses, IKEA is now facing a difficult relationship with their suppliers, as demand continuously lower prices but still want high quality products. These relationships could cause major problems of managing the supply chain, not only for the Chinese company, but also its other international stores. Another weakness is the European culture. Despite attracting Chinese consumers, it is also difficult for IKEA to bring European and Chinese culture. This is also relevant for DIY IKEA culture. Many Chinese consumers prefer to have furniture assembled by them, and at IKEA had to start offering a delivery service and instillation. Due to the large number who need these services, IKEA was also significantly reduces delivery
1. Given the SWOT analysis presented in the case, what are IKEA’s key competitive advantages? What strategic focus should the company take as it looks to further expand into the U.S. market?
This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.
These suppliers have slightly more bargaining power because of the differentiation between their work. However the need for these suppliers can be eliminated if furniture manufacturers produce every piece of their products themselves. A furniture manufacturer will only outsource production of parts if it proves to be cost effective for their company. Since the price of materials is consistent market and the outsourcing of production is unnecessary, suppliers have low bargaining power in the furniture manufacturing industry.
Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.
In IKEA’s history two different modes of entry were used. Both were met with big success and allowed IKEA to enter new markets very easily, and in a secure way.
IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international
IKEA is considered to be a low cost, high quality producer in the furniture industry, therefore it is important to
Businesses in the same industry compete against each other to meet their organization goals and sustain competitive advantage over one another. But to meet those goals, it’s important for businesses to analyze their internal and external environment to allow them to come up with new business strategies beneficial to the business. Firms can use SWOT as a starting point. SWOT is a basic technique that can be used by business owners to analyze their business and industry condition (Dess, G., Lumpkin G.T., Eisner, A., McNamara, G, 2013). Using SWOT will help business owners understand the strengths, weaknesses, opportunities and threats of their business. It would help them analyze and come up
There are many different suppliers for the different types of product lines. This makes it easy for companies in the industry to secure a supply. As Corning is a large company, it is able to negotiate good prices from suppliers. There are many suppliers that are willing to cooperate with Corning because they can earn substantial profits from Corning’s businesses.
Due to the size and scale of IKEA’s global business, this could lead that its hard to control the standards and maintain good qualities. This could represent the weaknesses in IKEA’s supply chain and affect consumer views. Training and inspectors visiting factories to make sure that suppliers meet its requirements is backed up by IWAY code (Business Case Study 2016).
They offer a good working environment, good pay and loads of incentives to take away. Thus candidates who seem interested in working with them, the information mentioned below will prove useful.
As mentioned earlier in Chapter 1, China Lodging Group is a multi-brand hotel group which as per now manages seven hotels with each having a specific target of customers. These Hotels are Hi Inn, Han Ting Hotel, Elan Hotel, Star-way Hotel, JI Hotel, Manxin Hotel, and Joya Hotel. Its mission statement is to create great brands of hotels that guests love. The group predicts to be owning over a quarter of the hotel market share in the next five years to come. The two major objectives that the company has set for the next five years to ensure that they attain their goal is to build one large five-star hotel in the heart of China Capital’s serene outskirts and to ensure that they hire enough
IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)
The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industry.
the China market IKEA China has been allowed to exceed and expand its sourcing of