IKEA Case Study and SWOT Analysis
The aim of this report is to provide an analysis of the current situation of the case company IKEA as well as future trends. It does so by providing a brief overview of the company, a detailed SWOT analysis as well as company recommendations.
The case company
IKEA is a home furnishing and accessories company founded in Sweden in 1943. It is known around the globe as a one-stop shop to furnish an apartment fast and cheap with reliable and nice-looking furniture. Today the company has over 590 million visitors per year in their stores all around the globe, which lead to $4.46 billion in profits last year (IKEA 2017). The success is often also attributed to the founders inspiring vision as well as the Scandinavian management style present throughout the company. Recently the company has also increasingly invested into corporate social responsibility and sustainable resources in an effort to position itself as a conscious brand.
The SWOT
The following paragraphs will identify the company’s strengths, weaknesses, opportunities and threats as well as analyze how these affect the company overall. Table 1 shows an overview of the SWOT presented.
IKEA has a well known and globally recognized brand that is was recently recognized by Forbes magazine as the #41 most valuable brand worldwide (Forbes 2017). Having a brand like this allows the company to benefit from the trust customers are displaying everyday which can directly translate to growth in sales. In addition the company is based on a very convincing mission – ‘to create a better everyday life for many people’ (IKEA 2017). In today’s world customers respond more and more to the values and missions companies display. Standing up and trying to improve the lives of everyday people shows IKEA’s customers that they can rely on the company to have their best interest at heart. Another important strength is the highly diverse product portfolio available at IKEA. Through the years the company has successful expanded from classic furniture to accessories, food, decorations etc. which can be a great asset in case of losses in any one of these product portfolios as the company relies less on one specific area. Finally, as mentioned before IKEA has grown into a furniture giant, which means the company’s operations, and purchase departments can make use of an immense economy of scale.
Yet, there are also a number of weaknesses the IKEA management needs to be aware of. First of all, while global scale is important for the company it can also be a significant weakness. Retailing techniques and marketing approaches differ significantly from country to country and as a global force IKEA might lack the ability to adapt its approach to each location. In addition the entry costs are enormous for IKEA, which relies on large retailing spaces in each location. These high entry costs might limit the flexibility to enter and leave markets. Compared to other competitors in the low-price furniture market, the company is set on its promise never …
