SALAM STUDY PRE UNIVERSITY FOUNDATION
TOPIC:IKEA SWOT ANALYSIS
Student name: Aigerim Abdykarimova
IKEA International Group SWOT analysis for 2013
Name: IKEA International Group
Industries served: Retail
Current CEO: Mikael Ohlsson
Revenue: € 27.000 billion
1. Customer knowledge
One of the key competitive advantages IKEA has is its extensive knowledge about the customers. The company understands the purchasing factors that influence customers to buy and implements the best practices to induce that decision. IKEA offers low prices and a huge range of products. Designers constantly introduce new design products that look stylish in the eyes of customer 2. Constantly using innovations to drive costs down
Low prices are the cornerstone of IKEA business idea and the company always tries to do things as efficient and cost-effective as possible. To drive costs down all the time, the company must find new and innovative ways to do that and to incorporate them in its businesses model. 3. Supply chain intergration
IKEA is committed to long lasting relationships with its suppliers. In this way, the company can order large volumes and benefit from lower prices and greater quality while suppliers are assured of guaranteed orders
4. Brand reputation and market presence
According to Interbrand, IKEA is the most valuable furniture retailer brand in the world, valued at nearly $US 12.8 billion in 2012. The business operates 332 stores in 38 countries and is present in the major world markets.
5. Diversified product portfolio
Unlike IKEA’s largest competitors, the company has fairly diversified businesses. In addition to its furniture products, the company operates restaurants, houses and flats. Although, firm’s main business is designing, manufacturing and selling furniture it is not so affected by the changing forces in this market as other furniture retailers.
1. Negative publicity
The company has been criticized many times for issues like poor treatment of employees, questionable advertising practices or lobbying government authorities. Negative publicity decreases brand reputation and customer loyalty. 2. Decreasing quality
IKEA is unable to find compromise between continuous cost reductions while maintaining the same quality of products. According to UK Customer Insights report on IKEA by Verdict, IKEA’s customers are less satisfied with its product and services quality than the average customer in UK buying at other stores. 3. Standard products
IKEA’s main competitive advantage derives from low costs, which in part are achieved due to standardized products. Standardized products attract fewer customer segments. Therefore, the business inability to offer better quality more customized products allows its competitors to fill that niche and fortify their position in it.
1. Further expansion into developing economies
Retail markets grew by at least 5% on average in emerging markets in the last year, opening huge opportunities for IKEA’s revenue growth. The company currently operates in most of the developed economies but hasn’t firmly stepped into developing economies, except China. 2. Growing online sales
Online retail sales account for 17% and 4% of total retail sales in UK and US respectively. Online sales grow constantly and with 870 million visitors to its website IKEA could exploit this opportunity and benefit from increased sales and lower costs. 3. Expansion to growing grocery market
The current trend of eating healthier food has resulted in higher demand for grocery products in many developed economies. The company is already successfully managing its food outlets, so this expansion opportunity would be well aligned with the current operations.
1. Intensifying competition
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