Strategic research and proposal for IKEA

The name IKEA originates from the initials of Ingvar Kamprad, I and K, plus the first characters of Elmtaryd and Agunnaryd, which are the brands of the plantation and town where he grew up.

Ingvar kamprad came with a distinctive idea to offer home furnishing products with good design and lower prices than other competition. But he didn't want to bargain with the product quality. So he used simple cut costing alternatives. He attempted to find every opportunity to reduce costs. That's how IKEA principle began.

IKEA is a home furnishing company with a fully integrated supply string, including its own industrial groups - Swedwood and Swedspan. The IKEA Group, immediately or indirectly, also is the owner of retail centres, always with an IKEA store as unique anchor tenant. The IKEA Group works in four basic areas: range strategy & product development, creation, supply and retail. The parent or guardian company of the IKEA Group of Companies, INGKA Keeping B. V. , is had by Stichting INGKA Foundation in holland. The Stichting INGKA Basis was proven in 1982 by the founder of IKEA, Ingvar Kamprad, to set-up an ownership composition and business that are a symbol of independence and going for a longterm approach. It includes two purposes - to reinvest in the IKEA Group and account charity through the Stichting IKEA Groundwork.

The business idea is targeted on the idea of "help create a better life everyday life for many individuals".

IKEA is a renowned global home furniture and household products retailer which is privately possessed. IKEA was started by Ingvar Kamarad by 1943. Now the business possesses more than 300 stores in 35 countries with an increase of than 130, 000 employees round the world. The company reselling now a day more than 10000 products and the 190 million copies of catalogues sent out around all over the world. We can observe how IKEA expanded insurance firms more stores every year.

Figure 1: IKEA stores widening.

"To offer a variety of well-designed, useful home furnishing products at prices so low that as many folks as possible can afford them. " This is the business idea of IKEA. This idea of the IKEA is the bottom of their business operations which includes product designing, processing, travel, retailing and assembling.

When IKEA develop their products, their starting point is the idea that, despite having a thin pocket, people can create a lovely home with smartly designed, useful, safe and healthy products. To comprehend the several living situations and needs of individuals across the world is the key to success of IKEA.

IKEA website had 712 million tourists and 676 million store site visitors this year 2010. And 197 million copies of catalogue were branded in 29 languages. Total sales in this past year 2010 were 23. 1 billion Euros as mentioned in graph and IKEA food services turnover is 1. 1 billion Euros.

Figure 2: Annual sales in billion Euros. (FY2010)

Every solo company will try to use unique, distinctive and effective business strategy which can only help them to stay in very competitive market and especially in the global market. We use different tools to give a strategic research of IKEA. The examination will be use SWOT examination, Porter's five pushes model.

SWOT analysis:

SWOT examination is strategic planning tool which helps business to concentrate on key issues. This tool really helps to identify and evaluate of the advantages and weakness of a firm internally, hazards and opportunities of external environment. Strengths and weakness is such internal aspects of the company which may be operated. Usually these refer to marketing, fund, and creation. In same way threats and opportunities are external aspects which can not be controlled. These make reference to environment, local issue, government policy as well as others.

Strengths Weakness

Opportunities Threats



Figure: SWOT research.


IKEA is one the best strong global brand in home furniture's in its global operation which draws in consumer group and ensure the same quality and range with almost 10000 products in their all 300 worldwide stores. IKEA's desire for how people's lives at home is the source of most their business. The main element to the success of IKEA's business, knowledge of individuals different living situation and needs of most people surrounding the world. Their starting point of creating a product is how people can decorate their residence with a thin wallet without reducing the product quality. IKEA offers an array of functional home furniture in a low price that as many people as possible will be able to find the money for them.

IKEA is completely committed to their vision to make a better everyday life for the many people. This dedication even extends to their suppliers. IWAY is just how of buying IKEA products. Buying bulk and large volume for very long time keeps the price down from suppliers. And suppliers feel guaranteed also. Most of IKEA products result from supplier immediate to store. That means low cost and less carbon footprint. Increasing use of green and smarter use of raw materials helps them to keep carefully the price low. Customers contribute in keeping good deal by collecting, taking home and assemble product independently. Initialization of level packing and easy assembling managed to get possible. Now a day people can design their kitchen clothing and others household furniture themselves by IKEA computerized tools.


IKEA states

'There is a genuine business prospect of IKEA in providing alternatives that allow customers to reside a more sustainable life at home. IKEA is producing effective alternatives for customers to be able to support them recycling or reusing used products, aiming at no products ending up at landfill and the recycled materials used in producing new IKEA products. '

IKEA Raises use of alternative and smarter use of raw materials helps them to keep carefully the price low. By initialize of smooth packing and easy assembling help the customer to use their product home and assemble themselves. These all business insurance plan of IKEA is juts to ensure an excellent product in low price but if we look deeply we can easily see that IKEA using their strengths to have features of opportunities. Now a day's around the globe everyone is regarding about carbon footprint, greener products, low priced products. IKEA is making best out of the opportunities.

Now a day demand is growing for reasonably priced products. Current economical situation made consumers trading down from expensive stores.

All most everyone is pertaining to about carbon footprint. IKEA most of product comes to store direct from provider by which they gradually step out wooden pallets and use of the most spaces of transport. Using of less carry which is less carbon emission. They keep redesigning products so that they take less space. This way they save costs and donate to environment also. Other business may be has to change their business insurance plan because of the global concerning. But IKEA is taking advantages of these opportunities.


Each solitary company tries to discover their weakness and try to fix them. IKEA is a worldwide brand with 300 stores globally. Therefore the size and its range of global business can be a problem. It could be hard eventually to maintain using their standard and quality.

IKEA suppliers are in such country where federal doesn't put into action the legalization to control working conditions. It could affect business supply chain. Alternatively IKEA need low cost raw materials but good quality because of their products. But because of global warming and other financial and environmental issues maybe it's hard to get the source.


Emerging a fresh household company with good deal and its own food in the market will be a strong hazard for IKEA. Though rising a fresh company with such range and scale is not easy, but by keeping their standard IKEA can performed their position.

Porter's five factors:

Porter's five factors is a strong analytical tool. It helps us to understand business power of current competitive situation and the strength of the position we could moving into. The end result of this construction is five critical indicators which determine the competitive strength, as it may used of when making strategy, plans or making decisions regarding investment in regards to a business.

Figure: Porter's Five Makes model.

Powers of potential buyers:

IKEA be sure to fulfill their customers atlanta divorce attorneys aspect by providing quality service. IKEA is global brand for household furniture for realistic prices. The management of IKEA tries to keep carefully the standard globally so their customer is happy about the quality and the costs. Furniture and other home has small alternate and consumers has limited alternatives making IKEA unique in his competitive market. Good deal strategy is other way to response purchasers needs.

Powers of Suppliers:

We have to consider electric power of supplier for our competitive situation. To guarantee the quality and low price business insurance policy IKEA will need to have some supplier who is able to supply according to the demand. IKEA placed some rules because of their distributor. IWAY is one from it. All suppliers should follow these group of rules. IKEA receive the contracts with provider for a long time. In this way provider and IKEA both feel more guaranteed. If something happens with the distributor IKEA also acquired time for product. So in this case supplier acquired limited capabilities.

Competitive rivalry:

IKEA's furniture competitors offer different efficiency and design. However, the IKEA still holds the first position in his competitive market through his quality and good deal policy in Sweden and internationally also. Flat packaging policy preserved a lot in price and easy for customer to handle.

New entrants:

There is less chance to enter

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