IKEA SWOT, Porters 5 and PESTEL Analysis

IKEA SWOT, Porters 5 and PESTEL AnalysisJump to SWOT, Porters 5Forces, PESTEL macrocosmIKEA has created its feature blur draw in the area of furnishing at an impoverisheder-ranking- price price. IKEA strives to make a purify sustenance for m some(prenominal) by pass wide variety of well-designed, practical sign furnishing items at affordable prices. recordIKEA was found in 1943 by Ingvar Kamprad in small village Agunnaryd , Sweden. in the beginning phoner sold the basic household devouts at discount prices subsequently kamprad start to sell the basis furnishing and 10 year later IKEA open up its first show inhabit, clearly demonstrates the function and tonicity of its low-price products. In 1955 IKEA introduce its experience Designing article of piece of piece of article of furniture and in 1956 flat packs and self-assembly were launch (which reduced w ar and transport courts) and in later year IKEA has opened 301 stores all oer Europe and Asia which shows the success of comp each.PresentIn 2002, IKEA Group was worlds top furniture retailers. The total number of stores 301 operated by IKEA in 37 countries/territories. The IKEA Group itself owns 267 stores in 25 countries with 123,000 co- prevailers and generating annual sales of more than 21.5 billion euro (these facts be interpreted from IKEA website). in that respect are wide range of products in IKEA stores from plants and living way of life furnishings to toys and whole kitchens. At IKEA their vision is to create a better mundane life for the many multitude what make IKEA as worlds top furniture retailers, match slight approaches of IKEA attract the node whether its affordable price, portable furniture or the unique design in store, Swedish caf in the stores, child timber at facility in the storesSWOT Analysis of IKEAStrengths unmatched of the strongest potentialitys of IKEA is their strong scratch nameIKEA is widely known bulls spunk in Europe and nearly Asian countries .In 2002 IKEA was the worlds most famous furniture retailer. 1Unique selling point of IKEA is low prices and flat pack furniture which is economical for customer and easy to transportExclusive furniture design catch the care of the customerCheap Prices of IKEA furniture offers value to CustomerExclusive furniture design catch the attention of the customerAs published in Business Times Ikea catalogue is the third most printed book in the world after Bible and Harry Potter 2Furniture are easy to assemble and easy to shipIKEA has Strong potential of orbiculate sourcingPowerful advertising campaignIKEA has built its own set name and consistently strives to moderate itIn mid- 1990s IKEA had launched a spirited compose advertising campaign in the States intending to raise awareness of the IKEA mark offUK wide advertising campaign in September 2007 titled family is the Most Important Place in the World victimization earth agent signs with the term Not for Sale written on them as p art of the wider campaignWallets for Oyster cards and tube map are sponsored by IKEAIKEA consciously runs advertising campaign to create brand awareness.IKEA maintain Long-term Relationship with suppliersIKEA has preserved presbyopic-term relationship with its suppliers.IKEA bargain fors products in high volume from suppliers which allows IKEA to keep their product prices lowIt has about 45 commerce service offices in 31 countries. This enables them to develop close relationships with more than 1,350 suppliers in 50 countriesProduct improvementIKEA is actively fetching initiatives in purlieu transforms, they strongly cares about forest and support the suppliers to slander the total reach on the climates by contributing in forest projects.Weaknessprovider dependenciesOne of the main weakness of the IKEA is that it is dependent on the supplier for its manufacturing their productsBy totally dependencies on suppliers IKEA convert its strength toIKEA does not manufacture anythin g itself and is heavy dependent on the supplier.By limiting the manufacturing facilities means more dependencies on the suppliers.Ikea furnitures need to assemble yourself may be its is unattractive to certain groups of consumers chisel in design passel be confusing for those customer who need situation itemSwedish design may not so extended-hearted to separate regions of worldMajor Reliability on European Markets90% of IKEA stores are based in European regions and rest in America, mettle einsteinium and Asia , Ikea is limiting themselves to enter into the opposition buns take turn a profit of IKEAs non existences in the other fast riseing retails markets homogeneous America, Middle East and Asia by expanding their phone linees.Quality and standardsIts difficult to maintain high Quality and standards globally due to the size and scale of productsPeople generally associate the low prices with bad quality of products and non durabilityIkea furnitures not manufacture for l ifetimeOpportunities elaborateness in untouched retails marketIKEA should extent their championship or stores from world(prenominal) to global market , by developing in other regions like Asia and Eastern EuropeBy expanding in fast growing retails markets IKEA notify capture additional share in Asia and Eastern Europe however 10% percentages of stores were in underdeveloped markets. Its an excellent opportunity for IKEA to expand and grow their handicraftes in the untouched marketsDevelopment in EcommerceIKEA should enlarge their internet pass in marketsFast growing virtual markets in the Internet variety era gives an excellent opportunity to IKEA to enlarge their blank in the online melodic phrase all over the world like ebay , Amazon.com, IncIKEA can expand their stock by collaboration of local companies and suppliers.By developing E-commerce site and local company alliances gives an opportunity to achieve growth in existing business and can gain impudently acquisitionI n additional it pass on help to increase customer service satisfaction and customer feedback in addition it can reduce the work pressure from store to certain takeDesign various type of StoreIt will be good opportunities for IKEA to try rude(a) outlay of store to easily find the exceptional products which will increase the growth sales and customer satisfactionMinimizing run off (IKEA and the new EU canon on chemicals)IKEA avoids use of chemicals and clobbers that can be of any harm to people and the surroundings. All IKEA products for all markets, ein truthwhere in the world will tie up to the chemical restrictions in the REACH legislation. efficacious use of materialsIKEA strives to use fewest resources to make the best possible products, without having any negative effect on the functionality or the design or the look of the products. The main material used in the manufacturing of the products is wood, cotton, metal, plastic, glass and rattan and we work towards using as many renewable and recyclable materials as possible.Threats contaction of European economyAs IKEA is predominantly present in European region, any adverse effects in this region will tint the business of IKEA.Major sales and purchasing are done is European markets.In order to avoid such situation, it needs to limit place in other retail market and increase awareness of the IKEA brand and products worldwideCompetitionIn ship threat of competitionOne of the red-hot growing rivalrous retail market in Europe and other businesses regions of IKEADifficult to preserve good quality and design at forte prices when competition is increasing rapidly growing e.g. In USA Wal-Mart , room to go , kmart ,In Japan Nitori Co and MUJIEven average retailers are producing low cost values flat packed furniture, which can spew dreaded impact on the IKEA.Advantages of competitionCompetition is aggressively offer uniform productMost of retailers promising to serve on high quality of and serviceEdu cating customer on quality of woods, construction techniques and so onCompetitions are offering free delivery of assembled furniture whereas IKEA is not self-aggrandising any options to customer on the transportationSummary of IKEA SWOT summarySWOT analysis describes IKEAs strengths and weakness, as well as encountering the threats with opportunities which will secure IKEAs place in the retail marketStrength of IKEA group in the world of retail markets is their Vision IKEA strives to make a better life for many by offering wide variety of well-designed, practical seat furnishing items at affordable prices which display their clear business idea.3IKEA buy long from the suppliers and gain benefit of low cost product which is one of strongest strength of IKEA , as they can sale the finished goods in cheaper than competitorsIKEA is good long term business relationship with the suppliers and weakness is the total dependencies on the supplier which can be the threat in their future business.Business schema of IKEA gives the Excellent opportunities to expand their services to the world widely and but by limiting their expansion only to the European and selected Asian countries can be epicgest threats and can be advantage to the competitors due to the non-existences of IKEAPorters 5 forces analysis of IKEACompetition from successors HIGHThe furniture retails market is on developing stage. Competition from Substitute it is high in the modern time people consider better products if it is costly. The switch costs are high and Substitute will be other brands supplier at high prices. Other options might be cheap furniture from local supplier. But IKEA can competitive advantage from low prices, unique design and flat pack furniture negociate forefinger of buyers LOWIKEA focuses on large segments and target individual customers young person people aged around 20 to 40 years as in the modern world people prefers compact and foldable furniture so it is easy use and transport.IKEA products are affordable for everyone because of the low prices. There is high customer loyalty therefore low bargaining power of customers. One more reason of low bargaining power can the brand name of IKEA, consumer can buy the identical furnitures from capitation but because of the IKEA label they prefer to buy.Furnitures Industry is growing tremendously, there is very high switching cost for the buyers and with the product differentiation is prime factors.Therefore Because of the brand and large collection of product the customer loyal and preference is IKEAThreat of revolutionary Entrants LOWThe Home Furnishings tolerate wares Retail industry is developed markets and IKEA has its own reputation and experiences players in retail markets. It is very difficult to compete against with big players in the industry as to build to own status brand lots of resources such as unique design, technology, low cost products, alkali and human resources. IKEA having a very long experience in its theme and it has established itself differently from competitors. IKEA stores and distinguished itself as a functional category products .In Retail industry, low cost and use new technology is very essential and IKEA spent years to establish this reputation .However for a new entrant it is difficult to get. negociate power of supplier LOWIKEA deals with suppliers for timber cotton, metal, plastic, glass and rattan.IKEA subscribe more 1,300 direct suppliers and about 10,000 sub-suppliers in 60 countries and 28 distribution centres and 11 customer distribution centres in 16 countries.IKEA had set up its own code and conducts for the suppliers. Being a international brand there is a competition among supplier for selling to IKEA. They purchase in huge volume of material from the suppliers at low costIKEA buy massively from these suppliers to deliver in the European marketThe Bargaining power of suppliers is low as they can lose their one of biggest clientsr ival among existing firms HIGHIKEA competitors are mainly in the Home Furnishings House wares Retail industry and competition from Substitutes too high in the industry. some competitors for IKEA such as Wal-Marts, TGT, kmart in Japan Nitori Co. Many manufacturers provide furniture with same functions and design. As published in Business Times we can take Example of TGT has recruited top designer Thomas OBrien to develop a range of low-priced furnishings and In Japan Nitori Co. has a lock on low-cost furniture.4 Competition is putting a lot of resources to manufacture the same type of productsStrategic Position of IKEAIKEA PESTLE analysisPolitical Factors administrations set out put various taxes, duties and vat on IKEA products their constitutions in different countries.Changes in the giving medication and trading policies can threat to IKEAFor example Russian government has kept on hold all new coronation and delaying arbitrariness of the administrative processes for Mega-Sam ara mall sports in Russia because of the delay IKEA have to postponed the 30 new stores in the country5Awareness of political situation of every country where company is operating ImportantMany countries offers incentive to attract the foreign investment like Malaysia , china and ThailandIKEA has grown from a small company to largest home furniture retailer in the world, Political factors has direct impact and is relate on other aspect. Political factors can control the process of business and greatly impact on the operating industry. As IKEAs major business is on the European regions, it has to adopt the guidelines and policy formed by the EU.stinting FactorsInterest rates and tack rates have a direct impact on company. Some time foreign currency exchange fluctuation may be beneficial or un beneficial for IKEA callable to recession demand for home furniture declined as people dont have money to buy expenses products and customers go for cheap alternatives.Fluctuation in cost of r aw material can be threat for the IKEA , as they dont produces on its own , but buy from whole sellerRecession has impact on all kind of industry more or less it has effected on IKEAIn todays time global warming is cardinal concern to every business should consider to reducing elements effect the environmentSocial FactorsIKEA takes initiatives and founded a committed to invest in the social programmes on a global level which can give IKEA a recognized globallyIKEA is proactively trying to fight against Child labour and give better life to childrenEveryone is trying to save and reduce the causes of global warming does IKEA is The IKEA contributed oft in the society as they provide recyclable products and try to minimize the wasteTechnological FactorsIKEA products are eco-friendlyIKEA should consider natural resources like using solar power renewal energy usage and energy efficienciesOne of Important aspect which should be take into account as a need of new trends in changing busi ness styles and enhance the competitive advantage which development of E-commerce and entre the world of Online business (virtual markets)Legal FactorsGovernments may put a negative as well as positive impact on IKEA as it is operating all over the globe accordingly it may vary according to different countries.In 2004 Irish Government had implement law of restricting the maximum size of a retail outlet to 6,000 (units?) to save the small business but retails giant of home furnishing wants IKEAs plan to build stores in Dublin and usual size of IKEA stores is quatern time bigger caused the law be put up for debate. In Jan 2005 The Government has agreed to change the planning laws clearing the way for furniture stores such as Ikea to open in IrelandIKEA and the new EU legislation on chemicalsIKEA avoids use of chemicals and materials that can be of any harm to people and the environment. All IKEA products for all markets, everywhere in the world will adhere to the chemical restrictio ns in the REACH legislation.Environmental FactorsProduct DevelopmentIKEA is proactively taking initiatives in climate change projects. As 50% of the raw material is from the forest, it strongly cares about forest. The sudor is to leave nominal impact on environment. It contributes to many forestry projects and honour authentication by the Forest Stewardship CouncilErase the abscondIKEA believes in using Waste by-products generated due to manufacturing where possible. In 2006, IKEA implemented the EU directive on Waste Electrical and Electronic Equipment (WEEE) and IKEA stores now postulate and recycle IKEA electrical produce and electronic devices. Customers can also retrogress certain types of waste such as discarded packaging, spent batteries and low-energy bulbs for straitlaced recycle and disposal. In 2006, IKEA stores and distribution centres handled 281,734 tons of waste, of which 81% was sorted for recycling reuse or energy recover. In the pursuit of recycling, as of Oc tober 1, 2008, IKEA USA no longer sells throwaway bags. IKEA products are recyclable and make minimum usage of polythene.Product DevelopmentIKEA is proactively taking initiatives in climate change projects. As 50% of the raw material is from the forest, it strongly cares about forest. The effort is to leave minimum impact on environment. It contributes to many forestry projects and honours certification by the Forest Stewardship CouncilClimate changingIKEA ensures that the products and resources are customized to reduce any negative impact on the environment.IKEA Group and WWF co-operate in projects at intend to reducing carbon dioxide emissions generated by IKEA operations.6ConclusionIKEA is well recognized brand for flat pack furniture and Swedish design in the world of furnishings, also they are leading retailers in globally. IKEA should explore their new opportunities into Asian market as there is no major competition in flat pack furnishing and also due to over population in so me asian countries flat pack can be eye catching for new customer as IKEA captured 90% of European . IKEA should strain to introduce new technologies to reduce use of wood.