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SWOT Analysis of IKEA

This discussion presents the SWOT Analysis of IKEA International Group. Please continue reading in order to learn more about IKEA SWOT Analysis and learn how to do SWOT.

Company’s Background:

The IKEA International Group founded in 1943 serves the retail industry worldwide. It has its headquarters in the Netherlands.

Company Name: IKEA

Founder: Ingvar Kamprad

Founded: July 28, 1943, Älmhult, Sweden

Headquarter: Delft, Netherlands

Parent Companies: Stichting INGKA Foundation, Inter IKEA Holding

CEO: Jesper Brodin (Sep 1, 2017–)

Industry: Retail. Furnishing, ready to make furniture, home accessories, food products

Number of employees: 225,000 (2021)

Number of Locations: 445 (2021)

Revenue: 41.9 billion Euros (2021)

Net Income: 1,189 million Euros (2020)

Features of SWOT Analysis by IKEA:

Strengths:

1. Customer database.

2. Frequently using the latest methods to drive expenses down.

3. Integration of supply chains.

4. Market presence and brand reputation.

5. Diversified product/service portfolio.

Weaknesses IKEA SWOT Analysis:

1. Standard products.

2. Decreasing quality.

3. Negative marketing.

Opportunity:

1. Ability to work in developing economies.

2. Increasing online sales.

3. Integration with growing grocery stores and markets.

Main Threats:

1. It may intensify the competition.

2. It grows the average consumer revenue.

Read on: PESTLE ANALYSIS OF IKEA | THE WORLD’S LARGEST FURNITURE MANUFACTURING GROUP

Strength:

1. Customer Database:

One of the leading corporate advantages of the IKEA SWOT Analysis is the extensive knowledge about users and customers. This group understands the buying factors that impact the buyers and provides the best conditions to decide. It also offers a huge range of products with low prices. Designers produce new choices with modern designs that feel useful and easy. All the products have easy-to-transport and assemble features.

Moreover, this company provides the most extensive range of products with a positive shopping experience. All these factors are associated with the customer’s demands and requirements. It also eliminates the factors that may disturb the customers or their purchasing powers. This is why IKEA has the best set of products to beat its competitors in the markets.

2. Frequently Using Latest Methods To Drive Expenses Down:

The second most important feature of the IKEA SWOT Analysis is the low price. It is the main business idea this company always tries to impose. This makes things more efficient and affordable. The company knows that bringing the costs down is the main requirement and customers love to see this feature whenever there is a new product. They use modern methods, technologies, and innovations in a sustainable environment to drive the cost down. This includes the modern techniques to pack, handle and transport the goods.

3. Integration of Supply Chains:

This group is committed to bringing new economic methods to improve the corporate relationship with customers and suppliers. IKEA always utilizes the IWAY technique to integrate its customers’ supply chain. In this way, it can order big volumes and get more advantages from the lower prices. On the other hand, it improves the transportation techniques in order to minimize the costs. Suppliers who want to see these efficient results should focus on the competitive advantages of the IKEA SWOT Analysis.

4. Market Presence and Brand Reputation:

According to the reports by Interbrand, this company offers a valuable furniture retailer brand. The value is around $12.8 billion. This business is operating in more than 38 countries where more than 332 stores are using it. The IKEA stores have the highest rate of visits per year. For example, reports confirm that more than 600 million users access these stores worldwide. A strong brand reputation and worldwide market recognition ensure that users will often select this group over its potential competitors.

5. Diversified Product/Service Portfolio.

Unlike IKEA’s biggest network of competitors, this group operates a diversified business. In addition to the largest collection of furniture products, it also offers houses, flats, restaurants, and other services. The main business theme of this group is designing, selling furniture, and manufacturing but it has no effect on the changing forces in the international markets.

Weaknesses | SWOT Analysis of IKEA

1. Standard Products:

The main feature of IKEA products is the low cost. The company achieves this goal with the help of product standardization. However, standard products are attractive for a limited number of buyers. Therefore, the business is unable to offer some competitive market plans to allow the customers to continue visiting this store while ignoring the potential customers in the markets.

2. Decreasing Quality:

Recently, the IKEA officials admitted that they were unable to discover the methods to reduce costs while keeping the quality up. According to some customers in the UK, IKEA customers are not feeling satisfied when they compare the services and products with other groups. This group’s cost reduction policies or strategies may result in quality degradation. This is why customers want the group to make something strong that maintains the quality while keeping the prices down.

3. Negative Marketing:

The company faced poor treatment of its employees, lobbying public authorities, and questionable marketing practices. Brand reputation faces a negative impact due to these factors. However, this is just a minor factor.

Opportunity | SWOT Analysis of IKEA

1. Ability to Work in Developing Economies:

Retail markets are growing with an average speed of 5% in emerging economies. This is a great opportunity for IKEA to collect more revenue. The group currently works with some developed countries such as China. However, this doesn’t mean that IKEA doesn’t want to work in the emerging economies. It has excellent potential to adjust in developing countries. It is now expanding its business in developing countries such as Malaysia, Indonesia, Mexico, and Brazil. This is a strategy to increase the market presence in a sustainable system.

2. Increasing Online Sales:

Online retail markets and stores are equal to 4% and 17% of total retail sales in the US and UK. After the pandemic, online sales increased, and more than 870 million new users are approaching the IKEA stores. This is a great time to improve sales while minimizing operational costs.

3. Integration with Growing Grocery Stores and Markets:

The latest trend of buying healthy and organic foods makes grocery stores focus on sustainable choices. IKEA has the command to expand its grocery store network in this situation. This company is managing the food outlets in different countries so there are more options for expansion.

Main Threats | SWOT Analysis of IKEA

1. It May Intensify The Competition:

Many retailers with low cost working such as ASDA, Walmart, or Tesco are bringing homeware collections to the markets. These are the same places where IKEA works. These retailers are offering similar benefits. However, they have the advantage of an improved supply chain.

2. It Grows The Average Consumer Revenue:

The average income of consumers is not increasing, but they are spending more. This is not due to the increasing demands but due to the high quality of products. The prices are reducing, so there are more options for the retail stores to compete with IKEA. With the improvement in per capita income, there will be less attractive IKEA because customers will divert to other stores offering high-quality products. These are some main threats IKEA faces when it comes to the quality of products. SWOT Analysis of IKEA reveals that IKEA has to maintain the quality of homeware collections when reducing costs.

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