Company’s Overview

IKEA is a global home items organization. It has grown rapidly since it was established in 1943 by Ingvar Kamprad. As of now, it is one of the world’s driving furnishings and material retailers. IKEA offers in excess of 9,500 items, including a total scope of home and office goods, gear, lighting, and embellishments. This broad reach is accessible in all IKEA outlets, and purchasers can arrange various things online on IKEA’s true site. As of now, there are 18 outlets in the UK, with the first sent off in Warrington in 1987. In July 2009, IKEA presented its items in Ireland and opened an outlet in Dublin (“IKEA SWOT examination”, 2010). Over the past 60 years, IKEA has developed from a straightforward undertaking into a group of organizations with 76,000 partners. Simultaneously, an outstanding corporate culture with its own arrangement of standards has been created. The accomplishments of IKEA have been based upon energy and enthusiasm, a consistent goal to reestablish and advance, cost-cognizance and status to give a hand and take responsibility (“Our qualities”, n.d.). The paper will make an inward and outside examination of the organization to uncover its solidarity, shortcomings, open doors, and dangers as well as its spot in the worldwide market.

IKEA is a one-stop store fulfilling the different necessities of possible customers and offering various family and office items. These things have been painstakingly chosen for the clients to have the option to make their homes more appealing and agreeable. The purchasers have an admittance to a wide range of items under one rooftop, and this is planned to further develop their purchasing encounters. A wide assortment of merchandise and their plan draw in great many clients from everywhere the world consistently. The critical objective of IKEA is to help its clients in executing their own thoughts and working on their environmental factors. That is fundamentally finished by offering them a broad scope of premade furniture, material, and utensils for their homes and workplaces at sensible costs. Sweden is IKEA’s nation of beginning, while its item plans come from various regions of the planet, making it quite possibly of the most moderate organization on the lookout. In IKEA, clients have chances to browse many items and get proficient help from the IKEA staff.

Characteristics of IKEA

For both the organization’s clients and workers, IKEA is a novel organization. Effortlessness, which is one of IKEA’s principal highlights, is the way in to the organization’s prosperity. This rule is applied to everything, from the manner in which the administration works to the connections between supervisors, representatives, and clients. For instance, administrators and subordinates work on similar errands, share a similar vehicle leaving offices, and eat one next to the other in similar cafeterias (“Our qualities”, n.d.). The organization’s staff is a gigantically significant resource at IKEA, which is never-endingly attempting to augment the variety base and work on the nature of its items and administrations (“Our qualities”, n.d.). The imaginative methodology and unique plans alongside sensible estimating strategy add to the organization’s upper hand and make sense of its outcome in going through the emergency periods.

IKEA is additionally popular for offering indistinguishable things in all nations. The quantity of the organization’s items presented at one store goes from 8,000 to 10,000 products, contingent upon the power source’s size. Simultaneously, the global system embraced by the organization is in changing in accordance with the particular climate and public practices of the country in which an outlet is working. For example, in China, the store designs impersonate the plan of conventional Chinese lofts. Specifically, the power source contain a gallery area on the grounds that numerous Chinese condos have overhangs (Mill operator, 2004). In this way, the store areas, plan, and show are typically changed in accordance with the general market necessities and customer conduct.

IKEA displays its monstrous scope of in excess of 10,000 things in modest away outlets. The vast majority of its items, particularly furniture, are sold as thump down packs, for clients to take the items to their homes and gather them all alone. The mix of corporate customs and adaptability in saving comparative arrangement in various areas and simultaneously adjusting them to the requirements of different nations make sense of the ubiquity of IKEA from one side of the planet to the other. This empowers the organization to contend with business rivals on quality, undermining them by up to 30% on costs (“IKEA: SWOT examination”, 2010). IKEA presented another assembling cycle, “in which clients are likewise providers (of time, work, data and transportation), providers are likewise clients (of IKEA’S business and specialized administrations), and IKEA itself isn’t such a lot of a retailer as the focal star in a heavenly body of administrations” (“IKEA: SWOT examination”, 2010). An IKEA store, with its mouth-watering crèche and Scandinavian espresso, is accepted to be an extreme shopping objective for esteem mindful, vehicle borne clients. IKEA changed the providers’ and clients’ perspectives on the customary purchasing experience. Among the various uncommon qualities ascribed to IKEA, the one that makes it colossally appealing to shoppers is the names given to each stock-keeping unit (SKU). Diaconis, the showcasing director of IKEA, conceded: “Rather than basically calling an item 123456, we name a shelf ‘Billy’ or a texture ‘Anna’. Couch names are generally urban communities or waterways in Scandinavia, textures are steaks’ names, and the wall units are young men’s names. The explanation is that IKEA needs to project the inclination that the items are a piece of the family” (“IKEA: SWOT investigation”, 2010). This methodology also adds to extraordinary picture of the store.

Operations at IKEA

IKEA is highly concerned with the company’s internal operations. It has always determined a target price of a product before creating it. This method was in contrast to the traditional practice of initially developing the product and then pricing it according to its actual cost and the prices in competitors’ stores. The designers of IKEA had to take into account all the costs, including raw material, manufacturing, and distribution for making appropriate choices and reaching the initial price targets (“IKEA: SWOT analysis”, 2010). IKEA has 202 retail outlets all around the world, which welcome more than a million consumers a day, throughout the year (“IKEA: SWOT analysis”, 2010). Thus, supply chain management plays a vital role in decision-making process at IKEA. The company carries 3.5 million stock units and provides 10, 000 different types of products. Almost 10% of them are new every year (“IKEA brings picture to life”, 2005). Supply chain planning sometimes gets complicated because the outlets are spread across 32 countries. Furthermore, the company has 1600 suppliers in numerous regions and they are divided more or less evenly between Europe and Asia. IKEA consists of 27 central distribution centers in 16 different countries (“IKEA: SWOT analysis”, 2010). As a rule, an IKEA retail store opening is a public event and some customers travel hundreds of kilometers to shop there.

Internal Factors Analysis

The point of the inside examination is to recognize decisively significant qualities and shortcomings of the organization for working on its procedure if vital. This objective can be accomplished, as a matter of some importance, by distinguishing key inward factors, for example, circulation channels, incomes, areas, innovation, and hierarchical construction, and, furthermore, by assessing these variables. The inner elements investigation is neither direct nor straightforward. The means will more often than not cross-over, and the administrators in various positions and levels approach the inside examination in various ways. Subsequently, it is fundamental for the organization to give appropriate consideration to the inner elements investigation. IKEA has as of late sent off a well thought out course of action with respect to manageability and the organization’s objectives up to the year 2015 (“IKEA SWOT examination”, 2010). IKEA’s business system is primarily centered around the organization’s points connected with manageability and natural worries.

Strengths

The following aspects can be regarded as IKEA’s strengths:

• A recognizable brand name and strong positioning in the global market give company a solid advantage over its competitors.
• Perfect match between quality and pricing along with effective cost reducing strategies is referred to as ‘Democratic Design’ (meaning good quality at lower prices).
• Responsible approach towards market research helps the company to be pro-active about entering new markets.
• IKEA enjoys economies of scale because of its bulk purchasing.
• Wherever IKEA goes, it develops an excellent infrastructure around its location which makes this company an immediate favorite for the locals (“IKEA SWOT analysis”, 2010).
• One of IKEA’s major strengths is delivery of products directly from the supplier to IKEA retail outlets. This cuts down the handling costs, lessens the number of road miles, and decreases the carbon footprint.
• The product development and differentiation are considered to give it a competitive advantage over the others while keeping its operation costs low. The following diagram illustrates the correlation between costs and quality.

Weaknesses

Problems which any firm may face internally can have a significant impact on its performance. IKEA acts appropriately to eliminate such issues (“IKEA SWOT analysis”, 2010). The most notable weaknesses of IKEA are the following:

• It manufactures products in many countries, and its management can experience difficulties in adapting to the local specifics and meeting all the requirements of social policies.
• Although IKEA spends a lot of funds on research and development, it has problems meeting one of its primary goals – providing quality products at low prices. Economies of scale help the company to reduce the prices but maintaining a balance between price and quality can be a tough task.
• IKEA continuously introduces differentiated products, but its business rivals are catching up with the copies as well as with their own products (“IKEA SWOT analysis”, 2010).
• Communication barriers are a major concern as well. IKEA’s management needs to maintain strong channels of communication within the organization as well as with their consumers.
• IKEA has limited advertising and promotional strategies.

External Factors Analysis

The external factors generally refer to the external environment of business and, therefore, can be divided into two categories. The first group of factors includes the opportunities that should become a basis for the company’s strategies. The second group includes external threats that display the difficulties, which a company can potentially experience, and which require taking appropriate preventative measures.

Opportunities

IKEA considers that its environmentally friendly manufacturing operations contribute to its positive branding. IKEA is working on recycling strategies, which would allow using the same materials repeatedly (“IKEA SWOT analysis”, 2010). From the analysis of the situation in the market sector, it can be stated that IKEA can take advantage of the following opportunities:

• An immense possibility for developing and marketing is a rising demand for environmentally friendly products (“IKEA SWOT analysis”, 2010). • The ever-growing interest of consumers in cheap products correlates with IKEA’s corporate culture and manufacturing cycle. The current economic situation can motivate consumers to pay more attention to the pricing policies.
• It is essential to attract the younger generation as they can become loyal customers in the future. IKEA attempts to attract them by creating low-priced, modern, and stylish products.
• The company works on reducing water usage and lowering the use of carbon footprints. IKEA has set out its plan for cutting the energy use by introducing alternative energy sources in its stores and changing its packaging material. Its environmentally friendly transport proposal embraces the aim to reduce business flights by 20% in 2010 and by 60% by the end of 2015 (“IKEA SWOT analysis”, 2010).
• IKEA considers social responsibility when developing its strategies. Focusing on corporate social responsibility, IKEA’s strategy includes charity activities, such as the World Wildlife Fund, UNICEF, and Save the Children (“IKEA SWOT analysis”, 2010).
• To attain the market value, IKEA can follow the basic marketing strategies of penetrating and scheming the competitive industry in order to function globally.
• It is essential for the company to be open with all its suppliers and stakeholders. This includes creating confidence through good communication with customers, co-workers, and the media. Sustainability is a fundamental element of IKEA’s image (“IKEA SWOT analysis”, 2010).

Threats

If a corporation is aware of the potential external threats, it has better chances to overcome them. By implementing the innovative ideas, IKEA can fight against its threats and secure its business in the industry. Threats to IKEA may arise from the issues described below.

• A considerable amount of potential consumers is afraid of trying new products. For this reason, some of the consumers can remain only one-time buyers.
• The furniture market has strong competitors that can influence IKEA’s market value. Attracted by the consumer demand and expected returns from household and furnishing markets, many companies have entered these markets. IKEA should pay more attention to its unique qualities and special offers (“IKEA SWOT analysis”, 2010).
• The economic factors are also among the major threats for furnishing retailers. The economic downturn has slowed down consumer expenditure, and disposable income has been reduced.

By and by, IKEA is focusing on these dangers and attempting to beat them. It is dealing with shortcomings and dangers to create a constructive outcome. IKEA is fostering the arrangement of online help to illuminate clients about the supportability techniques. On its site, IKEA gives the clients data and thoughts on the most proficient method to diminish their harm to the climate. This is additionally expected to add to cost viability. The directors and representatives get formal preparation on maintainability, especially on the thing IKEA is doing and the way that they can take responsibility to become answerable for themselves (“IKEA SWOT investigation”, 2010). IKEA’s size permits the organization to profit from the economies of scale, which brings about below expenses of activities. The organization has a group of experts who foster creative innovations pointed toward diminishing the expenses. In light of its capacity to get benefits from elevated degrees of economies of scale and lower expenses of carrying on with work, the organization can offer quality items at sensible costs that make them exceptionally cutthroat for shoppers. By summarizing the previously mentioned viewpoints, it very well may be recommended that because of its one of a kind situation on the lookout, the organization enjoys an extensive serious benefit and lays out obstructions for new market participants.

Since IKEA offers sensible and reasonable costs, the organization increments interest for its items even in the hours of monetary emergency in its market area. Keeping costs as low and practical as could really be expected, dismissing every one of the difficulties is basic. The organization ought to save its vote based valuing strategy (“IKEA SWOT examination”, 2010). IKEA’s positive marking and other promoting procedures can add to its monetary prosperity. In this way, its advertising division ought to involve various media channels and advancements for connecting with different gatherings of possible customers and expanding the client base.

Consumer Behaviors Influencing IKEA’s Marketing Strategies

IKEA’s corporate culture includes the principles of fashionable design, low prices, and madcap promotions, which ensure its significant competitive advantage in the market sector. Due to the specifics of its marketing strategy, IKEA can influence people’s preferences and lifestyles. In a highly competitive furniture and textile market, IKEA offers a one-stop shelter for assurance and positive buying experience. It is a safe zone that people can enter and instantly become a member of a like-minded, cost-, style-, and environmentally-sensitive global community (“IKEA: How the Swedish retailer”, 2005).

IKEA has all the necessary precursors for business success and further growth. It accounts for 5% to 10% of the furniture market in each country where it operates and sells its products (“IKEA: How the Swedish retailer”, 2005). The company’s CEO, Anders Dahlvig, admitted that brand awareness contributes to IKEA’s business success (“IKEA: How the Swedish retailer”, 2005). That is why IKEA positions itself as much more than a mere furniture merchant. “It sells a lifestyle that customers around the world embrace as a signal that they have arrived, that they have good taste and recognize value” (“IKEA: How the Swedish retailer”, 2005). The founder of IKEA, Ingvar Kamprad, is known as one of the most successful entrepreneurs who has led his business through creation of new designs and products to shaping up the consumer trends and tastes.

The company invests a significant amount of costs in the launch of new stores. That is on average $66 million to ensure that the location and assortment of stores correspond to the needs of local consumers (“IKEA: How the Swedish retailer”, 2005). CEO Dahlvig intends to pay special attention to IKEA’s development in the three of its fastest-growing markets: the USA, Russia, and China. The US market offers plenty of new opportunities for IKEA, “We have 25 stores in a market the size of Europe, where we have more than 160 stores” (“IKEA: How the Swedish retailer”, 2005). IKEA is offering exclusive catalogues to attract and fascinate the consumers. Pieces address the intricacies of the customer traditions. The IKEA catalogues are about uniqueness and personal style. They are distributed worldwide to 175 million people. The IKEA catalogues offer a combination of fine arts and marketable production.

IKEA’s Positioning in the Global Market

The company has recognized that the major proportion of its market constitutes the customers belonging to the middle class who have common buying behavior and preferences. The customer expenditure patterns are also similar throughout all countries. Despite these similarities, IKEA understands that the company’s positions in the global market depend on its success in particular locations. It explains the growing need to adapt to the local specifics in different areas. For example in China, in the year 2005, IKEA produced 250,000 plastic placemats to commemorate the year of roosters (“IKEA: SWOT analysis”, 2010). IKEA’s promotional campaigns are based on exceptional marketing situations and cultural susceptibilities of each country, which differ radically across the markets.

For instance, European billboards and commercials, particularly in the UK, were more clear-cut than those in North America were, which were usually more humorous. IKEA stores have been available in some countries, such as Canada, Sweden, Australia, and Germany for more than twenty-five years. However, in countries, such as the United States, Russia, Britain, China, and Italy, the company has operated for only slightly more than a decade (“IKEA: SWOT analysis”, 2010). During all these years, IKEA has worked with numerous advertising agencies to carry out some of the most inspired and exceptional television advertisements across the globe.

Conclusion

IKEA is a globally perceived brand with many stores from one side of the planet to the other. From the examination of outer and inside factors, it very well may be expressed that this organization ought to embrace further assessment of its business sectors, while the contenders present new difficulties for it. It is fundamental for IKEA to make new methodologies for keeping areas of strength for its situation. This implies uncovering the fundamental open doors it can convey utilization of and the intimidations that ought to be managed to hold the piece of the pie. IKEA acts depending on its assets and chopping down its shortcomings. As the consequence of this methodology, the organization has had the option to take and safeguard areas of strength for an on the lookout. Throughout the long term, it has proceeded to plan and execute viable business advancement techniques.

IKEA’s assets incorporate plan, low costs, financially savvy utilization of assets, and responsibility for individuals and the climate. The organization’s items, movement, and design uncover its ecological position. For example, shrewd endeavor of bundling and configuration implies that more products can be put away in a carton and that diminishes the quantity of conveyance ventures, which reduces IKEA’s carbon impression. The organization additionally offers backing and help with outfitting homes and workplaces as well as gives a few important and outstanding ideas. The organization endeavors to offer the furniture that can accommodate one’s home as per how much space is accessible or which shade of backdrop will go with the furnishings. The client can outfit and beautify the whole home and office in light of data given by IKEA’s experts. The organization likewise offers conveyance administrations and elevated expectations for the item deliverability. Also, there are extraordinary offers (like gifts and extra highlights) which can make shopping experience significantly more pleasant. IKEA’s wide assortment of items alongside accommodation and high level client care has empowered purchasers to choose and put the best items in their homes and workplaces. Presently, the association is eminent for its item advancement, creativity, and capacity to answer and offer extraordinary assortments of merchandise across the landmasses.

Recommendations

IKEA is a globally perceived brand with many stores from one side of the planet to the other. From the examination of outer and inside factors, it very well may be expressed that this organization ought to embrace further assessment of its business sectors, while the contenders present new difficulties for it. It is fundamental for IKEA to make new methodologies for keeping areas of strength for its situation. This implies uncovering the fundamental open doors it can convey utilization of and the intimidations that ought to be managed to hold the piece of the pie. IKEA acts depending on its assets and chopping down its shortcomings. As the consequence of this methodology, the organization has had the option to take and safeguard areas of strength for an on the lookout. Throughout the long term, it has proceeded to plan and execute viable business advancement techniques.

IKEA’s assets incorporate plan, low costs, financially savvy utilization of assets, and responsibility for individuals and the climate. The organization’s items, movement, and design uncover its ecological position. For example, shrewd endeavor of bundling and configuration implies that more products can be put away in a carton and that diminishes the quantity of conveyance ventures, which reduces IKEA’s carbon impression. The organization additionally offers backing and help with outfitting homes and workplaces as well as gives a few important and outstanding ideas. The organization endeavors to offer the furniture that can accommodate one’s home as per how much space is accessible or which shade of backdrop will go with the furnishings. The client can outfit and beautify the whole home and office in light of data given by IKEA’s experts. The organization likewise offers conveyance administrations and elevated expectations for the item deliverability. Also, there are extraordinary offers (like gifts and extra highlights) which can make shopping experience significantly more pleasant. IKEA’s wide assortment of items alongside accommodation and high level client care has empowered purchasers to choose and put the best items in their homes and workplaces. Presently, the association is eminent for its item advancement, creativity, and capacity to answer and offer extraordinary assortments of merchandise across the landmasses.