Ikea Swot Analysis 6a3t36

IKEA SWOT ANALYSIS

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IKEA SWOT ANALYSIS IKEA is a famous retailer worldwide for supplying home furnishing products. It was established in 1943 and became popular very fast. Now a day, it is recognised as one of the leading furniture retailers due to its Scandinavian style. IKEA uses SWOT as a planning tool to achieve its goals and keep its focus on major problems. SWOT considers Strengths, Weakness, Opportunities and Threats that concerned in a business.

Strengths Strengths are the capability and core abilities of a business that could enhance the value of the company’s product. Some key strengths of IKEA are: It is a well known brand internationally which attracts groups of customer towards itself and assures the same quality and variety; its major dream is ‘to provide an improved daily life for several people’; it offers variety of useful products having balance design, function, price and quality at low cost (IKEA 2012). In addition, IKEA also uses Key Performance Indicator (KPI) as another tool to measure its strengths and evaluate its vision of progress by supervising the improvement towards the set goals (IKEA Sustainability Report 2012). An example of KPIs of IKEA is a contractor’s percentage which is recently approved by IWAY. The IWAY is the Way of IKEA of buying Home Related Products. It is a guideline that describes the environmental and social needs, which IKEA anticipate for its trader. IKEA has accurate strengths throughout its process of production. For example, IKEA has largely enhanced its use of renewable materials from 71% to 75% from 2007 to 2009 respectively. It has increased the use of raw material in production across all supplies from 84% to 90% in the years of 2007 to 2009 respectively. IKEA has strong faith in long-term partnership with its traders, so that it can achieve its volume commitments with its traders. It mainly focuses on the budget spend on transport and therefore deliver its product near to the supply chain. IKEA is using modern technologies like IKEA’s OGLA chair since 1980. This chair has altered throughout the year for the cost reduction of needed raw materials (IKEA 2011; IKEA Quality Improvement Group 2010).

Opportunities To avail the opportunities, a company utilises its strengths. IKEA thinks that it has potential to get a positive result in cost sensitive marketplace because of its keen focus on environmental factors of the business. Some opportunities that IKEA avails throughout are: the supply of greener product is increasing; the demand of IKEA’s low cost products is increasing and attracts many consumers; a growing demand for lower carbon footprints and reduced water usage (The Times 100, 2010). There are numerous areas of focus for IKEA which it in different ways to continue its work with sustainability. For example, IKEA helps people online by giving solutions, tips and ideas for a better life at home. Additionally, IKEA takes some social responsibilities and different charities with funds in which UNICEF, Save the Children and World Wildlife Fund are included (IKEA Foundation 2013). IKEA has an aim to use all resources intelligently by avoiding landfill wastes and wastes of water and has started some programmes and treatments in this regard. The company as set an aim to minimise the use of energy and use renewable energy (IKEA Resources 2012). This step decreases its packaging and reduces the use of air transport. IKEA’s green transport

decreases its business flights by 20% and 60% in 2010 and 2015 respectively. Moreover, IKEA offers equal opportunity to all its stakeholders and it becomes possible only because of excellent communication and trust with co-workers, the press and customers.

Weaknesses Like other companies, IKEA has to it its weakness so that it will be able to establish modern strategies to recover and control them. Some weaknesses of IKEA include:   

IKEA has become an international brand and because of large size business it is a not easy for it to control and manage the quality and standards of the products. It offers low priced products but with shaky balance in quality. There is no clear difference between the products of IKEA and of other competitors (Baker and Hart 2007) A sound communication with stakeholders and traders about environmental activities is very important and become a need of IKEA, though it is hard for it to manage globally. To communicate with different business audiences, IKEA is starting some radio and TV campaigns and publishes publications online and in print as well. ‘People and the Environment’ is an example of it (Ferrell and Hartline 2010).

Threats To avoid any failure in the market, a company should aware of external threats, so it can make some strategies, plans and create new ideas to work against them. IKEA can use its strengths to avoid its market threats. Threats to IKEA may include social trends, market forces and economic factors (Ferrell and Hartline 2010) To achieve its aim of providing sustainable and better life for its customers, IKEA is helping its supplier online and share some tips on its website. This helps it to control the budget IKEA enjoys a large scale economy. It uses renewable energy and modern technology which helps it to reduce the average price throughout. High scale financial system enhances the competition in the business world and if a company provides its products with good quality in low price then it puts many difficulties in the ways of entering smaller companies in the market (Baker and Hart 2007). In addition, IKEA offers a low price furnishing product which is growing its demand amongst its consumers in this tough financial system. At the time when retail sector is going down, there is a need to minimize costs as much as possible. IKEA is one of the retailers which provide low price products with best design and fine quality to its customers by utilising limited resources (IKEA Resources 2012).

Conclusion IKEA is popular as an international brand all over the world. IKEA should evaluate its economical and external environment to reach at the peaks of fame. This enables IKEA to avail opportunities and deal with threats. IKEA is efficient enough to use its strength and minimize its weaknesses and play a dynamic role in responding both external and internal issues. The vision of IKEA is to provide people the best products having good qualities with low price. Processes, systems and products of IKEA show its environmental position. For instance, IKEA cleverly packed items in crate to minimise its transport’s budget. IKEA does not compromise in its business and reputation and wants to become a prominent and responsible retailer by offering low cost products which is beneficial for both people and company.

References Baker, M.J. and Hart, S. (2007). The Marketing Book. Butterworth-Heinemann Ferrell, O.C. and Hartline, M. (2010). Marketing Strategy. (5th Ed.) Cengage Learning IKEA (2011). The IKEA Group approach to sustainability. [online]. Available from: http://www.ikea.com/ms/en_GB/pdf/sustainability_report/group_approach_sustainability_fy11.pdf (Accessed: 27 February 2014] IKEA (2012). About IKEA. [online]. Available from: http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/our_business_idea/a_better_everyday_life. html (Accessed: 27 February 2014) IKEA Foundation (2012). Frequently Asked Questions. [online]. Available from: http://www.ikeafoundation.org/faq-frequently-asked-questions/ (Accessed: 28 February 2014) IKEA Resources (2012). Doing business in a smart way. [online]. Available from: http://www.ikea.com/ms/en_GB/about_ikea/people_and_planet/energy-and-resource.html (Accessed: 28 February 2014) IKEA Sustainability Report (2011). Sustainability Report. [online]. Available from: http://www.ikea.com/ms/en_GB/pdf/sustainability_report/sustainability_report_fy11.pdf (Accessed: 27 February 2014) IKEA Quality Improvement Group (2010). IKEA Supplier Quality Standard. (2nd Ed.) [online]. Available from: http://supplierportal.ikea.com/doingbusinesswithIKEA/quality/qualitypackage/Documents/Quality %20Standard.pdf (Accessed: 27 February 2014) The Times 100 (2010). Understanding Business Functions: case studies. The Times 100 [online]. Available from: http://businesscasestudies.co.uk/#axzz2uj7IaShI (Accessed: 28 February 2014)