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Perform a SWOT analysis for IKEA.

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Introduction

Faculty of Business, Economics & Accounting Department of Business Studies9 HELP Bachelor of Business (HONS) Year 1 - HUBBU Subject : MGT 101 Principles of Management Subject Lecturer : Puan Norzan Abdullah /Tutor Name: Katherine Yong Yee Hwa B0903100 Lee Hwee Ching B1001467 Wong Sies Nee B1000546 Chong Shu Yi B1000735 Chong Ke Wei B1001019 Case Study 2: IKEA 'S BELIEVES A STRONG ENVIRONMENTAL STANCE IS GOOD BUSINESS Summary IKEA is one of the world's top furniture retailers. The company offers customers a wide range of nearly 10,000 Scandinavian-style products from housewares to leather sofas and from plush toys to curtains. IKEA has ability to sustain the strategic competitive advantage to the road of success through few factors such as the cost leadership strategy where their attention are directed towards minimising costs to operate more efficiently than the competitors. As a result of their majority of furniture is flat-pack, their costs and packaging can be reduced. Besides that, IKEA is success through their wide expansion of market because IKEA now has 37 stores in the U.S. and more than 300 IKEA stores in 38 countries. Furthermore, the low price is affordable to everyone and is reasonable with their high quality and stylish products. IKEA has always been social responsible through environmental goal setting. ...read more.

Middle

IKEA has no motivation to improve its business and products due to lack of competition. If this situation sustain continuously, the business will short of crisis awareness to the environment changes. Then, opportunities are the next part in this analysis. IKEA uses its strength to take advantages of the opportunities that arise. The business gets to response quickly to the changes of environment on both a broad and narrow scale. There are four opportunities for IKEA. First of all, the growing demands for greener products. The new global pursuit of green growth is an opportunity for the IKEA. Growth of greener products will increase the sales of IKEA as it is always practicing environmental activities. Asian economies such as Korea and China are future large market for IKEA as they are looking at cutting environmental impact. The demand for reduced water usage and lower carbon footprints are another trend that promoting IKEA's environmentally activities. Then, there is a growing demand for low priced products. The current financial climate may result in consumers trading down from more expensive stores. IKEA as a store selling low cost products will gains advantage from the trends. Consumers will reduce their expenditure by purchasing less expensive products. Thus, IKEA may target larger range of customers during this period. ...read more.

Conclusion

IKEA which have the advantage to enjoy economics of scale can lower its products price and the competitors are hardly to compete with such cost savings. Thus this puts up high barriers for smaller companies to entering the market. Last but not least, the aspect of economic factors. IKEA is famous with its products at low price, so it is vital to keep prices as low as possible when the retail sector is depressed especially during economics recession. This pricing strategy targets those limited budgeted consumers to consume its products yet for those who desire better quality and design with higher budgeted can also approach to IKEA. However, IKEA must ensure that it is always recognized as having the lowest prices on the market in the future in order to not lose its own customers yet attract new customers. To conclude, IKEA is a well-known global brand with hundreds of stores across the worlds. However, there are some threats that arise which may influence their business activity. Therefore, IKEA have to develop various plans or solutions against those threats that they are facing on in order to turn them into positive outcome. There are three threats which IKEA facing on, which are social trends, market forces and economic factors. However, IKEA managed to find the suitable solutions for each of it. After those threats have being minimized, IKEA may then be able to sustain its potential market and practices more business activities. ...read more.

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