Company overview of IKEA

IKEA can be an internationally known home furnishing retailer. It is continuing to grow rapidly since it was founded in 1943. Today it's the world's greatest furniture retailer, recognized for its Scandinavian style. Nearly all IKEA's furniture is flat-pack, ready to be built by the buyer. This allows a decrease in costs and packaging. IKEA carries a range of 9, 500 products, including home furniture and accessories. This huge range is available in all IKEA stores and customers can order much of the number online through IKEA's website. You will discover 18 stores in the united kingdom thus far, the to begin which exposed in Warrington in 1987. In July 2009 IKEA opened up a store in Dublin too - its first in Ireland.

IKEA stores include restaurants and cafes offering typical Swedish food. There is also small food shops selling Swedish groceries, from the famous meatballs to jam. Stores are located worldwide. In August 2008 the IKEA group acquired 253 stores in 24 countries, with an additional 32 stores possessed and run by franchisees. It welcomed a total of 565 million visitors to the stores through the year and an additional 450 million sessions were made to the IKEA website. IKEA sales come to 21. 2 billion Euros in 2008 displaying an increase of 7%. The biggest sales countries are Germany, USA, France, UK and Sweden. In 2008 IKEA exposed 21 new stores in 11 countries and expects to open up around 20 more in '09 2009 within its strategy for growth.

IKEA Perspective and Business idea

The IKEA eyesight is 'to create an improved everyday life for the countless people' sets this concern in the centre of the business. Our business idea helps this eye-sight by offering an array of well-designed, practical home furnishing products at prices so low that as many folks as possible will be able to find the money for them.

Aims and objectives

SWOT (Strengths, Weaknesses, Opportunities, Threats)


-Flat-pack technology

-Numerous global suppliers

-Focus on "low price with meaning"

-Extra in-store perks: restraunts, shopping carts, pencils, etc.

-Unique store environment

-Modern design pieces as well as traditional pieces


-Not doing appropriate market researach when branching into a new culture's market-such as when IKEA came to America.

-Ratio of sales representitives to consumers

IKEA's self-service ethos, American's aren't used to the kind of service.


-Saving money on labor by establishing supplier interactions with producing countries

-Movement into other countries that do not have this type of retailer

-Capitalize on good design with fair pricing

-Capatalize on the unique and attractive shopping experience


-Lower prices of basic retailers like Target and Wal-Mart that contain the capability to regain loss on other merchandise

-Finiding ways to charm to a borader public-Scandinavian design and style is a niche not specifically suited to everyone's likes. Therefore, IKEA must figure out how to do that before someone else does.

PESTLE ANALYSIS Alternative Environmental Factors

IKEA faces a variety of external environmental factors when executing business in a competitive, global furniture market.

These different factors, provides an reason of what faces IKEA (The Broad Environment)

Research shows in the broad environment, a person company can do little to straight impact these factors.

In this review, IKEA is broken down by social, inexpensive, technological and political/legal factors to dissect the broad environment.

Socioculturally it was hard for IKEA to combine itself in the American market. The furniture market in america contained a broad dichotomy between high-end and low-end design. Through this fragmented market, the very best 10 furniture sellers were only responsible for 14. 2% of the complete market share. The general discount stores, i. e. Wal-Mart, Concentrate on, Office Depot talk about the low-end market. These stores usually advertised their furniture based on cut-rate costing making margins lower in for these stations. There were also smaller retailers offering cheap furniture to price-conscious customers such as university students. However, these stores mirrored their good deal concentration with dreary, dingy environments containing haphazard exhibits and poor, inconsistently managed inventories.

Conversely, the high-end area of expertise marketplaces offered luxurious store surroundings with clean, plush exhibits, conjuring up affluence, wealth and comfort. These area of expertise stores include Ethan Allen, Thomasville, and Jordan's Furniture. Many of these stores offered easy payment credit options lessening the question when contemplating big-ticket items. Also, these stores arrived filled with high-touch sales consultants who helped with measurements and product selection.

These sellers offered interior design services for consumers whom were more enthusiastic about complete home makeovers. In addition, they boasted of huge inventories often formulated with many sub-styles within each specific style. Filled with delivery services, vendors could guarantee that consumer's new purchases would be shipped and set up in their homes in a matter of weeks without them even having to lift a finger. Lastly, these specialty vendors focused on the grade of the furniture touting that their quality pieces will last a lifetime hence the justification of steep prices-a customer wouldn't normally or shouldn't "need" to displace the part again within their lifetime.

The other large part of IKEA's bumpy accessibility to American culture was the lack of general market trends. Many Americans didn't like IKEA products because the beds and kitchen cabinets didn't fit American measured sheets or equipment, sofas were too hard for American comfort, the sizes were in centimeters, and the kitchenware was too small for American portion choices. A manger of the first store in Philadelphia (1985) recalled people having out of the vases rather than the serving glasses.

Economically, IKEA is low priced. This is a big piece of breaking in to the American market. IKEA acquired to focus and advertising campaign directed specifically to thwart American's unwillingness to spend the their furniture. Part of this angle is the low cost. "It is merely furniture, change it out. " When you are willing to hear consumer opinions and changing just how American's viewed furniture, during the middle-1990's IKEA's profit share in American market segments improved.

Technologically, IKEA's Even Load up is unlike other furniture retailers shipping and delivery method-IKEA says that they do not want to pay to ship air. This is precisely why they can be "self-service", nor have to hire as many people as someone would think. These chiseled packs make it possible for people to lug their plans home without having to wait weeks for delivery. IKEA provides pencils, measuring tapes, store tutorials, catalogs, shopping carts, carriers, and strollers to assist with the shopping experience. Customers are expected to transport their own purchases as well as assemble them independently. The method in which IKEA's stores are prearranged are ingenious. A customer will shop displays and then take their options (jotting their item volumes) down to the warehouse to pick up their flat jam-packed items before proceeding to check out.

Utilizing Porter's Five-Forces Style of Industry Competition, IKEA can be evaluated in the next way

1. Customers

Americans-the most important consumer foundation for IKEA's debut in the American Market. The most likely IKEA shopper are those sort out of folks who travel abroad, like taking risks, enjoy fine food and wine beverages, have a frequent flier plan, and are early adopters of trendy consumer technologies such as Discmans, laptops, and cell phones (incidentally, IKEA's most atypical customer would be they kind of person who collects guns).

2. Suppliers

IKEA relies greatly on global suppliers. Once IKEA pieces its bottom price for an item, they then seek to balance cost-effective labor with the business's quality product specifications. It can so by dealing with 1, 800 suppliers in over 50 countries. In most cases, IKEA circulates its idea within dealer rings and stimulates those to compete for the creation offer. Sometimes to meet the foundation price, IKEA will have one design with pieces from a number of different suppliers.

3. Existing Competitors

Traditional Furniture stores are abundant in America. You can find none exactly like IKEA in the United States. Therefore IKEA has an benefits over those traditional stores which have high priced furniture. If that is not

what the consumer is looking for, then they can go to IKEA for quality, less costly furniture with a modern design border.

4. Potential Opponents/Entry Barriers

Since IKEA is certainly a unique, original idea/store it might be very "hard to duplicate the 'totality' of IKEA's culture. " A store could probably duplicate one or two of the items which create IKEA's atmosphere however they would are unsuccessful in other aspects. Like, a store could try and replicate the Scandinavian design niche but it would be hard and unauthentic (like what IKEA embodies) minus the Scandinavian history.

5. Indirect Competition/Substitutes

Wal-mart, Concentrate on, Office Depot and other low-cost suppliers are indirect competitors in the fact they do offer low-priced furniture that consumers assemble themselves. However, these indirect substitutes change in the fact these are general sellers instead of where IKEA is a particular retailer of home goods. Concentrate on, for case, retails outfits, accessories, home goods, groceries, office products and cleaning supplies.

IKEA Strategy and Strategic options

Company vision

IKEA's vision has right away been "To generate a better everyday activities for the majority of people".

IKEA's business principle originates in your choice to meet a need that no other company appeared

concerned with and led it to develop a niche market: developing beautiful, inexpensive and

durable furniture in most of people. 27 I. Kamprad state governments that IKEA should "stand on the side

of many people, which involves dealing with more responsibility than might initially seem to be to be

the case". 28 A recent example is the business's exceptionally costly transfer to the Russian market,

but considered necessary as affordable furniture is a pressing need for the Russian population. 29 The

democratic design also entails representing the hobbies of ordinary people and getting rid of

designs, which are difficult and expensive to create, even if it is simple to market. 30 The idea was

formalized in 1976 in Ingvar Kamprad's thesis "Testament of the Furniture Dealer", which became an

important way to multiply the IKEA beliefs. 31 The essential goal was and it is to provide

affordable furniture for the folks and cost reducing is key to achieving this. Cost-consciousness is a

strong part of the business idea and the throw away of resources is known as a "mortal sin at IKEA"32. By

ensuring that normal people are able to afford to provide their homes wonderfully, many associate

IKEA with an organization that stands privately of the "little person" which is a confident image for a

company to obtain. In addition to this, I. Kamprad had another fantasy: the "imagine good capitalism"

which is the idea that the good in a profit-making business can be combined with a sustained social

vision. This implies the goal of developing and reaching a much better future for IKEA's customers as well

as people working for IKEA thinking that by doing work for IKEA, they will work for a better society

and thereby contributing to a much better world. 33

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