IKEA is a Dutch company that has a Swedish origin and is involved with manufacturing ready to assemble furniture. Ingvar Kampard founded the company in 1943. However, it began to venture into the furniture business five years after its formation. The company established its first mobile store in 1958 at Almhult. Denmark and Norway experienced the establishment of first stores outside the territorial jurisdiction of Sweden. In the 1970s, more retail stores were established across Europe. The first store outside the Scandinavia was established in Switzerland in 1973. As from 1974, the company started opening stores all over the world in countries like Australia, Japan, Canada, Hongkong, United States, and Singapore among others (Stenebo, 2014).  Currently, Germany holds IKEA’s largest market with a total of 44 stores while the United States follows closely with around 42 stores. The first Latin America store was established in 2010 in the Dominican Republic. IKEA opened its largest store of 59,000 square meters in South Korea in 2014. The company’s operations in developing countries have remained minimal since its inception (Stenebo, 2014).

IKEA has a variety of products that it offers to its clients. They range from beds, chairs, desks, children products, bathroom storage, mirrors, decoration, storage furniture, tools and hardware among others products (Dahlvig, 2012). The comapany designs and manufactures all these products by itself. They are usually packaged in a manner that makes them easy to assemble for any client that purchases them. IKEA has competitors in all the markets that it operates. Among the competitors is Walmart, which is much larger compared to IKEA and does not deal with home furnishings exclusively. Some of its furniture products are of similar quality and design as those of IKEA (Dahlvig, 2012). The company also competes with Lowe and Home Depot when it comes to wood and appliance items. In the category of children’s toys the company’s biggest competitor is Toys R Us. Tesco also qualifies as a major competitor since IKEA has followed the path that was established by this company. IKEA’s competitors are many, and they depend on the category of products under consideration.

SWOT Analysis

Strengths

The company’s global brand is among the strengths that emanate from the company. It has been vital in attracting consumers from all parts of the world. The brand has always been associated with delivering high-quality products all over the world. The concept of offering a wide range of products at low costs has also been regarded as company strength. Consumers are usually sure that with any furniture need they have, they will be able to satisfy their wants with IKEA due to the availability of a wide range to choose from. Usage of innovation in order to drive costs down also comes in handy. Offering low prices has always been the cornerstone of the company prompting it to operate cost-effectively and efficiently at all times (Ferrell & Hartline, 2011). To drive costs down at all times, the company has invested a lot in matters regarding innovation. IKEA’s ability to enhance supply chain integration also acts as a strength factor.  The company has always strived to enhance long lasting relationships with existing suppliers.

Weaknesses

The scale and size of its global business act as a weakness. At times it becomes difficult to control the quality and standard due to the global operation. Some countries where the company operates do not have legislations that control working conditions. This aspect has the potential of bringing a weak link in the company’s supply chain. The company is also experiencing negative publicity in some of its stores. There are instances of questionable advertising practices, treatment of employees and lobbying of government authorities. This type of publicity might result in the reduction of consumer loyalty and brand reputation. Instances of low-quality products have also been on the rise. This is because the company is finding it difficult to compromise the continuous cost reduction and deliver similar quality of products at the same time. A report by UK Customer Insights shows that most customers are not satisfied with IKEA’s products compared to customers buying in other stores (Ferrell & Hartline, 2011).

Opportunities

Among the opportunities that IKEA has is a growing demand for ‘green’ products. In an attempt to reduce environment pollution this has become the order of the day. The emphasis on lower carbon footprints is being advocated for by different governments. There is also an opportunity for expanding into developing economies. The company is yet to explore the developing countries’ markets. Venturing into these markets will increase the company’s market share in the industry. Growth in online sales also creates a favorable opportunity for IKEA to increase its sales hence expand its market share (Stenebo, 2014).

Threats

Among the threats facing the company is the intensifying competition in the market. Recently numerous low-cost retailers like Tesco, Walmart and ASDA are entering the homeware market in which IKEA operates. Growth of consumer income also acts as a threat to the company. This is because the company deals with low quality, low price products (Ferrell & Hartline, 2011). When consumers have more money on their disposal, they will desire higher quality products regardless of the prices.

References

Abraham, S. C. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education, Inc.

Dahlvig, A. (2012). The IKEA Edge: building global growth and socialgood at the world’s most iconic home store. New York: McGraw-Hill.

Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy (5th ed.). Mason, OH: South-Western Cengage Learning.

Stenebo, J. (2014). The truth aboutIKEA: how IKEA built its globalfurniture empire. London: Gibson Square.

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