An ikea business analysis

IKEA was founded by Ingvar Kamprad in 1943. It really is one of the world's major and most dominant furniture shop, with functions in 32 countries (in early 2005). The company was popular because of its stylish and innovative designs. It had been the pioneer of furniture that might be dismantled and filled flat, to permit ease of transportation. With sales nearing $12 billion, IKEA run 154 stores in 22 countries and serviced 286 million customers each year. Initially, the business sold basic home goods at discount prices later it started out selling furniture and then IKEA started out designing its low-priced furniture.

The first IKEA store is inaugurated in Almhult, Sweden in 1958 and then IKEA experienced become the popular furniture-shopping vacation spot for price-conscious Swedes. The 45, 800-square-meter flagship which ultimately became the prototype for all of IKEA's shops. IKEA's in-house restaurants were the 15th-largest food chain in the us.

SUMMARY:-

Ikea has increased its amount of stores by 51. The company comprised 165 stores as of August 2003, and there are programs to open a further 16 new stores in both fiscal 2004 and 2005. However, although the company exposed 14 new stores in fiscal 2003, sales expansion was only 2. 7%, generally as a result of the despondent monetary conditions across European countries, the company's center business region. Thus, it is clear that, to be able to improve performance at a significant level, merely starting new stores is insufficient. Instead, Ikea must determine its external and competitive environment, determine the main element opportunities and risks which face it, and align its advantages and weaknesses to best counter-top the weakened consumer market, and so generate the strong expansion it needs to keep a strong brand and occurrence in its chosen market segments.

STRENGTHS:-

IKEA's was committed to workforce, which was the foundation of the business's innovative principles.

IKEA has strong international brand reputation.

Design and buy products that entail low development and travelling costs.

The "showroom-warehouse" principle, which reduced retailing costs.

Waste was considered a deadly sin at IKEA as employees were constantly reminded to save lots of on electricity which helps in reducing the price of production.

It concentrates always on cost efficiency.

IKEA has maintained long-term partnerships with its suppliers. This ensures that the business has access to high-quality materials at fair prices.

WEAKNESSES:-

It is very much indeed reliable on European countries, with 82% of stores situated in this region, and it offers difficulty in fulfilling customer targets of service as well as price.

The company found out that Americans did not like its products especially its bedrooms and kitchen cabinets, sheets and equipment etc.

The style selection at IKEA was limited.

Customers were expected to put together the furniture independently.

It was difficult to differentiate its product from competition' in conditions of good quality and low product.

IKEA needs to keep good communication with its consumers and other stakeholders about its environmental activities.

IKEA is a global company, so product criteria may be difficult to maintain.

OPPORTUNITIES:-

Increase of sales can be done via the development of e-commerce sites in each country which increases the client service, and reduces the demand on existing stores.

IKEA would circulate a explanation of the proposed product's features and goal cost to its suppliers and cause them to become contend for the development package

By plotting the company's current product offerings on the grid and looking for vacant spaces, product professionals could quickly identify market opportunities.

There keeps growing demand for greener products and reasonably priced products.

IKEA can further capitalize on the "green" movement and IKEA's customers' desire to have less of a direct effect on the environment.

THREATS

The extra trends are driving a vehicle the threat of a possible over saturation of the market, increased by the fact that opponents are following suit, by presenting similar product ranges at low prices.

More competitors entering the reduced price household and furnishings markets. IKEA must reinforce its unique features to contend.

The recession slows down consumer spending style and disposable income reduces.

The regulatory conditions across the globe vary and make a difference how IKEA does indeed business and its own product costs, especially the utilization of natural resources.

POLITICAL:-

IKEA was pressured to change a few of the elements of its global strategy in the culturally diverse Chinese market.

The interrelationship between IKEA's culture, structure and strategy and its responsiveness to the needs of local market segments are highlighted.

ECONOMIC:-

Producing a style of chair (OGLA) made from 100% post-consumer plastic waste.

Introducing some air-inflatable furniture products in to the product line. Such products decrease the use of recycleables for framing and stuffing and reduce travelling weight and amount to about 15% of this of typical furniture.

Using lumber from responsibly-managed forests that replant and maintain biological diversity.

Using only recyclable materials for level product packaging and "pure" (non-mixed) materials for presentation to assist in recycling.

SOCIOLOGICAL:-

IKEA backed UNICEF community educational task.

IKEA Social Effort is focused on promote the rights of each child to a healthy, secure years as a child and usage of quality education.

IKEA focus on the advertising of the financial and cultural empowerment of women and children's protection under the law to education, success, development, safety and contribution in the carpet belt region.

TECHNOLOGICAL:-

Low costs, reasonable quality, appealing designs, and sufficient product operation are major goals for IKEA. These goals stimulate the company to market a frequent product and technical development.

LEGAL

Companies need to check out corruption more as a situational problem and not so much social.

Usually disreputable online marketers endeavoring to earn income by generating Website traffic -- have flooded Facebook with these false gift card web pages over the past months.

ENVIRONMENTAL:-

While developing the product it ought to be taken into consideration that and will be offering low prices must never compromise the quality or safe practices of IKEA products.

Company definitely uses the hardwood from intact forests.

CONCLUSION:-

A continuous development of the Ikea retail business appears to be the concentrate for the business in the near future, with strategies improbable to include aggressive development into new areas, but instead building and developing in old. However, some changes may be observed with the development of e-commerce, which in the long run, this might have detrimental results on the revenue of bricks and mortar Ikea stores, but results on turnover for the company as a whole, and so is the main example of how the company is aligning itself to handle the key threat to its traditional stores. Consumers could find Internet shopping more suitable, as the Ikea reputation means that they are already promised of the quality and workmanship of Ikea products, which is against the present belief of Ikea that customers can feel and check the grade of products before purchase.

Ikea in addition has adopted an extreme expansion-based strategy during the last few years, although the weakness of the external consumer market means that sales development over another few years should continue to be relatively modest.

The development of e-commerce, making shopping at Ikea more accessible, may also have an optimistic impact on sales, although no progress has been visible on this front side of late, and therefore Ikea has been very guarded over its income levels. However, profit margins may fall in the short term as consequence of the extension into existing and new growing markets, with the business facing high set up costs and low spending ability, as well as several other exterior issues in developing markets

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