Swot Analysis Of Ikea Furniture Market

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?

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?

The only way to avoid other furniture stores to imitate IKEA’s strategies is to keep it a secret from all but the highest executives , imitating the strategies of IKEA can lead to not having any competitive advantage , and in order to preserve a competitive advantage is to keep it hidden and to keep it a

Several other companies also specialize in furniture that is discounted e.g. Walmart, Home Depot, Galiform et cetera. However, the inevitable allure of ready-to-assemble furniture aids IKEA in its growth in developing countries like China, Japan and Singapore. Global recession has also intensified IKEA’s competition as it can cause more expensive priced companies to have to reduce their prices. Such recession, however, can also decrease competition as it render’s the consumers’ spending power to lessen and thus they will not prioritize furniture as a needed expenditure.

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

Once IKEA identified and understood the consumers (i.e. abandoning metric measured appliances and beds for American standards of size and comfort), they were able to double revenues, from $600 million in 1997 to $1.27 billion in 2002. From this analysis, it is possible to infer that IKEA combined their already successful cost leadership strategy with the properly identified needs of its target market, the American consumer. With this modification of the value chain, IKEA increased revenues and is pointed in the right direction to achieve their growth goals for 2013. As seen in Appendix 1, their projected growth is well into 8% per year, in relation to total projected growth.

As describe in the current situation IKEA is doing well, and their concept is working worldwide. But as every company, IKEA also has weaknesses and threats also come along IKEA’s path. A good way of making an overview of not only the internal, but also external situation of IKEA, is by a SWOT analysis. In this chapter IKEA’s strengths and weaknesses, as well as the companies opportunities and threats will be shown in a SWOT analysis.

It is a known fact that global operations and internationalization of any organization would create rooms for both challenges and opportunities for operations. However, it is highly significant for the operations managers to improve productivity by building and managing operations management functions by contributing to ensure the competitive edge. Strengths and weaknesses of the organization are identified to form an effective missions and strategies to address these strengths and weaknesses which would typically complement the opportunities and threats in the environment. Figure 15 shows the SWOT analysis for IKEA’s international operations. Michael Porter had said that SWOT analysis would provide a clear picture of the industry, benchmark competitors and then will help to determine the strategies.

IKEA is a worldwide expanded company. They enlarge their showrooms to North America, Europe, Australia and Asia. Customers can check out IKEA’s product in the show rooms and also by checking out IKEA’s websites to get their selected products to be home delivered. This is an effective way of selling their products as customers who are busy with their own work can purchase their preferred products online whenever they want to. Thus, this is an advantage for both customers and IKEA’s company as their sales doesn’t stop at the showroom itself.

Swot analysis is a planned procedure used by an organization in developing strategic plan for goal and mission accomplishment as well as marketing plan. Swot analysis comprises of scrutinizing an organizations strength, weakness, opportunities and treats in its business environments. Swot analysis explores two types of environments. The first is the internal environments and the second is the external environment. The internal environments emphasizes on the strength and weakness of the business and the external focuses on the opportunities and threats. Swot analysis helps an organization to ask question like what makes as strong as an organization or what makes an organization weak. The opportunities that are available in the market

Ingvar Kamprad, an entrepreneur, founded the Swedish furniture company IKEA in 1943 (Chu, 2013). Kamprad was only 17 years old when he founded the IKEA company. He named the company after the initials of his first and last name and the first letter of the farm and hometown he grew up in (Bhasin). In the years following, the Swedish furniture giant has grown to 328 stores in 28 countries as of August 2015. This includes 1.9 billion visits to IKEA.com, 771 million store visits, 213 million catalogs printed in 32 languages and 155,000 co-workers across 6 continents. According to IKEA’s website, their vision is “To create a better everyday life for the many people”. An interesting fact about IKEA is that its furniture production consumes one percent of all the wood produced on earth (Bhasin). The site goes on to explain how they optimize their entire value chain to provide affordable quality to their customers. IKEA expanded into China and other countries so that they could continue to attain their goal of creating “a better everyday life for the many people”. A unique aspect with IKEA is their product packaging. The product is a flat package, so it is easy for the consumers to take the product home and assemble it themselves.

Ikea's success in the retail furniture industry can be attributed to its vast experience in the retail market and its ability to integrate both product differentiation and cost leadership strategies successfully.

By exploring the use of a SWOT Analysis, we will look at some of the Strengths, Weaknesses, Opportunities Threats, to IKEA. This SWOT Analysis gives us insight into some of the things that have hindered IKEA’s successes and failure. It also details how their threats have impacted their vision, and markets to view competitive advantages and areas of weakness.

• Rivalry - The IKEA’s furniture competitors’ offers different styles and functionality. Conrin targets a new low cost in terms of furniture line; Cratel & Barrel offers a furniture in a box which is subject in higher

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.