Nonetheless, the bargaining power of buyers is relatively high due to the large quantity of competitors in the industry. Buyers are price sensitive and they will probably seek for the lowest price before purchasing an item. There is no switching cost in the market so customers are likely to buy products in other store once they discover a cheaper price. The competitive rivalry is high as the industry is comprises of many clothing retailers. For instance, ASDA’s brands George and Matalan, which provide not only quality garments but also sell them in a low price.
Background on IKEA IKEA, a Swedish company with its headquarters in Leiden, was founded in 1943 by Ingvar Feodor Kamprad. It is hugely recognized for its Scandinavian style designs and has grown tremendously over the past years thus becoming the world’s largest furniture retailer. The company designs contemporary style models for its appliances and furniture and it emphasizes its affinity towards eco-friendly meekness. Additionally, the corporation is known to concentrate and develop its cost-effective, operational structure, continuous performance and product evaluation and innovation techniques. As of 2016, IKEA owns and operates 389 stores in 48 countries with a whopping number of 12,000 products approximately.
Barriers to Entry: · High because it is hard to form a large organization that will be competitive at the same size as Wal-Mart with such low prices. · This industry has high barriers because it is too expensive for new firms to enter and to be competitive. Substitutes: · Medium because it depends on where you live and what type of Wal-Mart stores are closer to you. · Substitutes would be going to another grocery store, a toy store, a hardware store; basically going to specialty stores instead of going to one store that has everything in one, as a Wal-Mart can. POWER of Buyers: · Weak because basically the prices are low from the beginning so there would not be any potential for buyers to bargain with.
In addition, IKEA’s threats are poor understanding of cultural needs and demands. Economically, IKEA's growth had increased due to their low price furniture. The threats, are IKEA had failures to look into the quality of the product. Technologically, IKEA products able to standardized globally. Perhaps, to maintained IKEA's business they tried to stabilize their business with different angles such as stabilizing political status by maintaining good rapport and follow legalization rules all countries.
For reaching the strategic requirement, IKEA improved its competitive capability and enhanced resources such as w... ... middle of paper ... ...It promotes the products during playing. Therefore, it reduces the feeling of hard sell of the customers. In external analysis, we try to compare IKEA with two Hong Kong local furniture company: PRICERITE and ULFERTS. PRICERITE is a company selling cheap furniture with general design.
Kamprad was able to find a business opportunity to change the current social situation since a lot of the furniture was priced high at the time. He wanted to be able to offer his customers a wide selection of functional and well-designed furniture at a price many could afford (Bartlet & Nanda, 1996). Kamprad had a better understanding of what the customer desired and how to go about meeting those desires at prices that were lower than other furniture companies, in turn creating a competitive environment (De Kluyver & Pearce, 2011). Sources of IKEA’s Successful Entry Even though it appeared that Kamprand had the competitive advantage within the furniture industry, finding a place for the company was at first a challenge. Kamprad started joining in on Stockholm, Sweden’s furniture trade fair once he was able to establish the company.
Services of these companies are typically provided by larger CPA firms and are very competitively priced. It is very hard to attract these big companies, especially when they already have a long-term cooperation with other CPA firms. So I think we should focus on the small and local companies.
This results in lowered costs of advertising and promoting products because they are able to accurately track demand and can adjust their advertising based on what is selling and what is not resulting in more accurate marketing efforts. Wal-Mart employs very effective upstrea... ... middle of paper ... ...ays. “Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves.”3 Both of these result in a significant advantage over its competitors when it comes to operations. Due to Wal-Mart’s superior ability to order inventory on demand, they are in a position to also meet customer demand better than their competitors.
Walmart has a reputation of having the lowest prices in retail sales. Walmart uses a rather simple yet extremely effective tactic while handling distribution. This gives them an upper hand in the competitive market, keeping their status as the largest retailer in the world. Generally, suppliers to retailer have monumental supply chain with little room for change. Companies account stronger for customer needs, depleting the cost of efficiency.
In the past two decades Wal-Mart has taken advantage of the internet technological advances to change the way many companies do business worldwide (3). The sheer size of Wal-Mart enables the company to buy in bulk at lower prices allowing the discount retail prices given to customers (3). Wal-Mart is able to by all products in great volumes and in return their supplier cuts some of the cost due the amount of product sold. Wal-Mart has great marketing and management plans before entering a market which allows the company to do very well in many different countries and cultures (3). Wal-Mart has also had a hand in helping manufactures realize the advantages of customer satisfaction through quality (3).