Swot Analysis Of IKEA

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Introduction IKEA is a multinational company that sells furnishings and furniture. It is founded in 1943 in Sweden by Ingvar Kamprad. The company focused on furniture retailing at the early stage of the business and started to design its own product in 1955. The first IKEA store was opened in Almhult (Sweden) in 1958 (Woodham, 2004). The company has experienced growth ever since, by 2016 IKEA had 390 stores in 48 countries (IKEA, 2016). Since the company was founded its pricing strategy has mainly been low cost. IKEA is known for providing a wide range of low-cost, functional and well-designed products. However, because of the scale and size of the business, maintaining the standards and quality of the products has the potential to become…show more content…
Technologies have also enabled IKEA to conduct marketing research with a lower cost (Ayodele, n.d.). Porter’s five forces analysis helps an organisation to identify the level of competition within an industry. Industry rivalry: IKEA’s unique selling point is low-cost. Although currently there is more furniture retailers are adapting the same pricing strategy, IKEA is still the strongest retailer in the low-priced furniture industry. Power of buyers: The customers’ bargain power is high, as there are other retailers offering low-priced furniture. Power of suppliers: Bargain power of the suppliers are low, because IKEA seeks to commit a long-term contract with suppliers, the competition among the suppliers is high. There are a larger number of suppliers willing to work with IKEA (Dudovskiy, 2015). Barriers to entry: The barriers to entry the industry is high, because the low-cost furniture industry is saturated and the business requires a huge amount of financial investment and expertise (Dudovskiy, 2015). Threat of substitutes: Threat of substitutes is low because the range of products and services IKEA provides still remains attractive to its target customers.

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