Analysis of the marketplace position of Ikea


Every industry will try to use an unparalleled, reliable, and effective business strategy that will allow them to remain at a intensifying position in the competitive market, especially in the global market. With respect to this, the purpose of this record is to provide a position evaluation for the furniture company IKEA. The positioning evaluation will apply a pestle examination, capabilities analysis, reference based view analysis, swot analysis and porters five makes along with IKEA's tactical issues and solutions to these issues.

Company Overview

IKEA was proven in Sweden over 50 years ago back 1943. Its founder Ingvar Kamprad still performs an important role in the business affairs today. IKEA is certainly one of the very best furniture retailers on the planet. Its key aspects are affordably, functionality and quality. Since their commencement, IKEA has persistently developed as a firm throughout the years and are currently regarded as a recognized successful worldwide business entity in the furniture industry today. This year 2010, IKEA exposed 12 new stores in 7 countries which presently give them an overall record of 318 stores in over 38 countries. IKEA has certainly achieved their tactical goals by performing diverse strategic marketing tools that has made them the success that they are.


IKEA's SWOT Analysis

In this article, the research of today's situation of IKEA will be completed by using different marketing tools. With this, IKEA will be analyzed via the use of SWOT Research. The basis of exterior and internal examination is to construe factors that can affect the said business to situate itself to take good thing about opportunities, and control threats uncovered via an analysis of external conditions. Especially, it also aids in spotting present weaknesses and advantages that may affect the organizations' capabilities.

Strengths (Internal factors)

A strong worldwide brand that appeals to key consumer organizations.

A Clear Perspective - 'to create a much better everyday life for most people'

A strong idea. IKEA offers a variety of well-designed products at a price, everyone are able.

Good product image. IKEA has a great balance between function, quality, design and price

Weaknesses (Internal factors)

Large global business. This makes quality control difficult to regulate and it implies a weak hyperlink in the string of source.

The requirement of low priced products. Although products are in a minimal price, consumers still need to feel that they are receiving value for their money.

Cultural differences. diversified marketplaces Japan, China and the USA

Restricted production features. IKEA depends on subcontracted manufacturers.

Opportunities (Exterior factors)

An increased demand for low priced merchandise. Due to trends in the present financial status of the global economy, consumers opt for less expensive goods alternatively than shopping at expensive stores.

The quickly emergent Parts of asia with prosperous middle-class population symbolize opportunities to get into and market the idea of affordable modern furniture to match a particular lifestyle.

Opportunity to improve levels of customer support through E- Business as the added business functionality.

Threats (Exterior factors)

Social tendencies - decelerate amount of first-time buyers coming into the housing marketplace.

Market pushes - more competition entering the low price home and furnishings market segments.

Imitated Concept -Within growing competitive retail market segments mainstream suppliers are beginning to mirror the model

Economic factors - the global financial crisis reduced disposable income and customer spending. We can see this from the desk below. IKEA's turnover was the same in 2009 2009 as it was in 2008.

Source: www. ikea. com (2010)

Porter's Five Forces

Market Entry

Seeing that IKEA has such a unique concept and brand name it'll be difficult to duplicate the IKEA way. However, another furniture company can enter into the furniture industry with a low- cost strategy including home delivery, opposing to IKEA non-home delivery method. IKEA's stores are not very much situated in small towns with small outlets so this is an chance for new rivals to type in small cities with another low priced strategy with smaller stores. This may catch the attention of a new sector of consumers.

Supplier Power

According to IKEA's welcome inside yearly conclusion, IKEA possessed 1, 074 suppliers in 55 countries in 2010 2010 A lot of the suppliers operate in the IKEA group and compete with other suppliers, plus they have a modest bargaining power. Because of low costs, IKEA's profit margin also affects the prices in recycleables than by prices in labour. The bargaining power of a supplier is actually a menace for the profit of the business, and both IKEA is very much alert to it. In light of this IKEA endeavours to keep good relationships with its suppliers, in this IKEA ensure that the IKEA group benefits in the said deal while suppliers take advantage of the mutual arrangement.

Competitive Rivalry

IKEA is comfortable with its competitive position, and also attempting to keep its competitive edge among competitors. IKEA performs in a extremely competitive industry, seen as a other inexpensive furniture providers such as Galiform of England and merchants such as Wal-Mart of america. Internally, the group has seen differences of view regarding product offerings and setting. Because of powerful global competition, IKEA has intelligently attemptedto compete by getting into the markets which typically present the most significant competition, such as China and Japan.

power of the buyers

Americans-the key consumer base for IKEA's debut in the American Market. The probably IKEA shopper are those sort out of folks who travel in foreign countries, like taking chances, enjoy fine food and wines, have a consistent flier plan, and are early adopters of trendy consumer technology such as Discmans, notebook computers, and cell phones (Lyne, 2009). IKEA's management ensures that their customers will be satisfied in all ways with the quality of service that they supply. Particularly, the business has focused their marketing procedure on the demands and needs of the customer for household furniture as well as food service options that satisfies them, and intensely placed their products in this segment.

Threats of substitutes

There is not any particular furniture swap however IKEA has to keep up with the latest developments and innovations so that their quality furniture will not walk out style and become irrelevant. Wal-mart, Concentrate on, Office Depot and other low-cost suppliers are indirect rivals in the actual fact they certainly offer low-priced furniture that consumers move jointly themselves. Conversely, these indirect substitutes change in detail because these are general retailers instead of being a specific store as IKEA is a dealer of household furniture.

PESTEL Analysis

Political - As part of the national or global developments and changes, IKEA is just one example of companies that are successful in both local and international business. The Swedish furniture shop has found the Scandinavian style of furniture that was coupled with "do-it-youself" flat packaging became popular and established a global cult brand.

Economic - THE BUSINESS, due to the economical changes and fads are implementing different kind of strategies that will need an appeal on their customers and looking to own the client loyalty. Financially, IKEA is low priced. This is a large little bit of breaking into the American market. IKEA experienced to target and marketing campaign aimed specifically to thwart American's unwillingness to spend the their styling of furniture.

Social - The IKEA added much in the culture as they provide opportunities in people and the employees are entitled in several benefits such as insurance and pensions ( 2005). Moreover, the company assures to provide more high quality furniture that sticks with their original principle - stylish furniture at low prices.

Technological - IKEA uses superior technology and systems to encourage shorter waiting times, accurate scheduling, tracking and trading habits, and staffing. The machine made the IKEA in a position to ensure the right variety of staff in a right place and in the right time to match the initial trading design s at each stores of IKEA. The company view in optimizing from the supply string is also optimizing and controlling the workforce to set-up an efficient store environment and keep customers happy.

Environmental - Regarding the environmental factors such as the air, sound, and drinking water, inspections are put in spot to ensure the company provides remedial actions inside a stipulated time. The environmental inspection contains legal documents and environmental specialists as the business enterprise operations are continuing.

Legal - The legal conformity of IKEA is sternly applied with pertinent regulations that impact to the surroundings, sociable and working conditions. The company also scheduled the most demanding requirements to be specific in preserving the set of laws and regulations and with the types of procedures.

Analyzing IKEA's Capability

Based on the given synopsis of the IKEA Company it is known that IKEA exerts a tactical approach to be able to maintain their competitive border in the furniture industry. The management of the company is able to identify the priorities of the business and make decisions based on the strategic way, by placing things to consider of the business enterprise and its own stakeholders.

IKEA is skilled as it targets the importance of both internal and exterior customers to ensure that these customers remain satisfied and faithful. The company also ensures that they motivate, trainer, guide, and support their staff to understand the objective of the IKEA. Also, IKEA's capacity to identify its suppliers is another factor that sustains the business's competitive advantage. The power of management to differentiate and diversify their business strategy to dominate the global market may also be considered as major capabilities of IKEA

Resource Founded View Analysis

IKEA chooses the most feasible position as it pertains to delivery of items. Their warehouse is smartly located with different industries to have greater control of activities. This strategy analyses the deployment of resources, finalizing time and queue times for various actions. IKEA's staff is rotated to be able to complete customers' purchases from each picking area. Resources are simulated at higher levels and are applied and complete in relevant working schedules.

Stakeholders' Analysis

Other than what is already known about IKEA, it is seen that aside from the management of the business enterprise, IKEA's customers play an important role in the success of the organizational goals. The management skills and functions of the pioneers of the business have propelled IKEA into being truly a powerful entity in the furniture industry today. Furthermore, the devotion of its customers has also greatly aided IKEA in retaining its competitive edge. Customers and workforce entities go together, as IKEA's employees will be the ones who work naturally ensuring that the business satisfies the requirements of its customers. Therefore, when customers are satisfied, as they get value for his or her money with IKEA, they'll remain loyal and therefore build IKEA's value chain. The suppliers and stakeholder s can be viewed as an additional factor that made IKEA the success they are at present.

IKEA's Strategic Issues and Challenges


The IKEA's furniture competition' offers different styles and functionality. Conrin targets a fresh low cost in terms of furniture range; Cratel & Barrel offers a furniture in a box which is subject matter in higher prices; Ethan Allen targeted at a far more upscale market; Wal-Mart is equipped in a major pack furniture that is grouped under the general store must-have-items, but don't have much of a style. IKEA is the most successful in delivering the complete package deal for the clients that reflects on vulnerable rivalries.

Natural Resources

IKEA is the largest furnishing company world wide, so it needs al lot of hardwood. This implicates, that there are confrontations with dynamics guarding organisations.

The IKEA Concept

The IKEA idea is simple to take up. Companies like Bush Business in america have taken over the idea of cheap furniture, nevertheless they followed their products to the American habits.

Reaching Small Customers

The important problem which IKEA is currently facing is they are only getting a

limited amount of customers because of their few store locations.

Event that founder retires or dies

Major obstacle to keep the core principles alive specially when the company becomes larger and much more diverse and the founder retires from the business.

Catalogue Distribution

IKEA want to raise the return on investment for the catalogue circulation, which is a considerable investment, and remain prior to the competition in terms of business strategy

Solutions to IKEA's constraints


IKEA needs to ensure than they distribute their catalogues who can be potential IKEA customers in conditions of where they are located and ther demographic capabilities. IKEA can also sell its catalogue at a low price to help make some earnings as its catalogue is its biggest marketing mechanism.

Low price

The company must be sure that it is always known for having the least expensive prices on the marketplace in the future. Communication performs an important role here. IKEA must main its low cost leadership utilizing the low cost control strategy.

Market forces

IKEA is large enough to enjoy economies of level. This lowers average costs in the long run through, for example, better use of technology or outsoucing professional professionals. Economies of size also provides business a competitive border if cost benefits are then offered to customers in the form of lower prices. This places up high barriers to entry for smaller companies joining the marketplace.


IKEA must maintain communication with its consumers and other stakeholders about its environmental activities.

Store Locations.

IKEA must strategically place its retailers where it has never been before. IKEA usually has large outlets in large places. However, a tactical procedure is to launch smaller outlet stores in smaller cities. This will entice a new sector of customers hence increasing IKEA's profitably in the furniture industry.

A new organizational composition will be necessary because of moving the business from a global perspective towards a transnational perspective. Where in fact the global organization is designed as to increase development efficiencies using global economies of range and scope ideas, the transnational group combines efficiency, local responsiveness and organizational learning.

In order to assist the transition process towards such an company, the IKEA group must drastically change its approach on the function of its subsidiaries. At the moment, IKEA's subsidiaries are scarcely only expansions of the business hq in Sweden.

The responsibility of the subsidiaries is never to sway parent or guardian company strategies, but reasonably follow instructions from your home country Sweden. High localization pressures emerging scheduled to demographic and cultural dissimilarities will compel subsidiaries for taking strategic initiatives to act in response to local market requirements. The new organization would be simpler to follow and spread more accountability to subsidiaries. The centralized research and development department could have form strategic in-house systems with these subsidiaries and, in a shared methodology, develop products that are implemented to match country level requirements.

Strategic corporate direction should be maintained, since there's a need to safeguard its market niche market. The changes projected in the organizational composition will have encouraging impacts on the company culture, which happens to be founded on the IKEA notion or the IKEA way. Minimal management from Sweden will bring about the incursion of new rules, values, and actions in to the IKEA way. This can boost the intricacy of the operational culture, but will improve decision-making predicated on a spot on international sizing.


To conclude, with this position analysis, appropriate analysis has been considered using different marketing tools, which lead to the perseverance of today's position of the IKEA Company. This analysis has unveiled which elements of the IKEA business entity that requires development and altering to be able to keep the competitive edge. The IKEA strategy is exclusive but it works, as IKEA is a leader in the global market. IKEA places its give attention to further profit creation and growth and development.

It can be said that predicated on the given circumstance, IKEA strategy is something is different but effective to accomplish their goal of dominating the global market. Giving value with their stakeholders is one of the essential approaches that the business had used. In addition, their capability to innovate and diversify their products in addition has been identified within the strategy of IKEA.

In addition, due to competitive situation of the company, there's a strong hurdle to accessibility for a fresh home furniture as well as grocery store that would compete with IKEA. As the business is rivalling in both local and large-scale market environment, IKEA's feasibility is to accomplish more customers from improved areas of the globe and also to provide each customers quality and resourceful household furniture products and can fulfill their needs while enjoying affordable and affordable prices. The company is looking forward to supply the customers more from what they expect via technologies. Furthermore, the strategy of the company also contains their capability to adapt to the changing needs and demands of their target market even in different parts of the earth. IKEA is within a favourable position to carryon functions in the years forward.


De Wit, Bob and Meyer, Ron (2005) Strategy Synthesis. Second model. London: Thomson Learning. Print ISBN 1 86152 965 1.

Johnson, Gerry; Scholes, Kevan; and Whittington, Richard (2005) Exploring Corporate Strategy. 7th edition. Harlow, Essex: Pearson Education. Print out ISBN 0 273 68734 4. Available through Voyager (UH LIS main catalogue) as an electronic resource.

Mintzberg, Henry; Ahlstrand, Bruce; and Lampel, Joseph (1998) Strategy Safari: The Complete Guide Through the Wilds of Strategic Management. Harlow, Essex: Pearson Education. Printing ISBN 0 273 65636 8.

Porter, Michael E (1979) How Competitive Causes Condition Strategy. Harvard Business Review, March/ Apr, Volume 57, Concern 2. Available through UH LIS electronic publications (Business Source Complete).

IKEA Sustainability Record for Fiscal 12 months 2009 and Fiscal 12 months 2010. "Welcome Inside"

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