abhishreshthaa
Abhijeet S
SWOT ANALYSIS ON IKEA : IKEA (Ingvar Kamprad Elmtaryd Agunnaryd) is a privately held, international home products company that designs and sells ready-to-assemble furniture, appliances and home accessories. The company is now the world's largest furniture retailer.
IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden, named as an acronym comprising the initials of the founder's name (Ingvar Kamprad), the farm where he grew up (Elmtaryd), and his home parish (Agunnaryd, in Småland, South Sweden)
The groups of companies that form IKEA are all controlled by INGKA Holding B.V., a Dutch corporation, which in turn is controlled by a tax-exempt, not-for-profit Dutch foundation The intellectual property of IKEA is controlled by a series of obscure corporations that can be traced to the Netherlands Antilles
INGKA Holding B.V. owns the industrial group Swedwood, which sources the manufacturing of IKEA furniture, the sales companies that run IKEA stores, as well as purchasing and supply functions, and IKEA of Sweden, which is responsible for the design and development of products in the IKEA range. INGKA Holding B.V. is wholly owned by Stichting INGKA Foundation, which is a non-profit foundation registered in Leiden, Netherlands. The logistics center Europe is located in Dortmund, Germany and Asian Logistic center is located in Singapore along with its IT base.
Inter IKEA Systems B.V. in Delft, also in the Netherlands, owns the IKEA concept and trademark, and there is a franchising agreement with every IKEA store in the world. The IKEA Group is the biggest franchisee of Inter IKEA Systems B.V. Inter IKEA Systems B.V. is not owned by INGKA Holding B.V., but by Inter IKEA Holding S.A. registered in Luxembourg, which in turn is part of Inter IKEA Holding registered in the Netherlands Antilles. The ownership of the holding companies has not been disclosed.
Strengths
* Brand recognition
* Marketing strategy
* Real estate
* Defined strategy: differentiated low cost provider
* Designer product at mass market pricing
* Strong brand image
* Economies of Scale
* Highly focus on training for management and staff
* IKEA have a strong internationally known brand attracting key demographic customer groups.
* The IKEA business model is unique in its construction and execution with little direct competition on a like for like basis.
Success has been driven from the price architecture offering value to the customer in innovative but functional products.
* Despite the large shed operations IKEA operate there is a degree of specialist knowledge within key product areas where purchases are more considered and require assistance such as kitchen installations.
Weaknesses
* No direct competition
* Real estate - requires extremely large areas
* Privately owned - restricts capital
* Not for the elderly-DIYggg
* Whilst an international brand there is a level of reliance on European markets with 90% of the stores based in Europe and the balance across America, Middle East and Asia.
* Although the model promotes low prices it has been identified there is an associated low level of customer service which couples this suggesting there is a need to work on service to ensure a complete shopping experience and ensure repeat business within the existing customer base.
* As a reaction to marketplace movement the development of Ecommerce has been necessary to compete in a modern technological world however there is also a consideration this movement into multi channel retailing moves away from the fundamental vision of the customer being able to see and touch the product.
Opportunities
* International expansion
* Smaller stores
* E-commerce
* IKEA are moving from International to global status through the development of Asia and Eastern European models.
* Traditional product for IKEA has been within value, low price high volume product however the movement into mid and higher price points will see an opportunity to move the demographic base and increase the average basket value with less reliance on a limited demographic group.
* Although there are negative associations within the development of the IKEA Ecommerce site there is an associated opportunity to achieve growth and increase levels of customer service as the additional transactional capability will reduce pressure from stores to a certain degree.
Threats
* Competitors - direct (furniture stores) and indirect (Wal-Mart, Target)
* Rising commodity & shipping prices
* Aging population on key shopper segments
* Within growing competitive retail markets mainstream retailers are beginning to mirror the model of low cost value flat packed furniture which will impact on the buoyancy of IKEA.
* With economic concerns over rising living costs and depleting disposable income there is an overall threat to the performance of the business in UK and American markets specifically.
IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden, named as an acronym comprising the initials of the founder's name (Ingvar Kamprad), the farm where he grew up (Elmtaryd), and his home parish (Agunnaryd, in Småland, South Sweden)
The groups of companies that form IKEA are all controlled by INGKA Holding B.V., a Dutch corporation, which in turn is controlled by a tax-exempt, not-for-profit Dutch foundation The intellectual property of IKEA is controlled by a series of obscure corporations that can be traced to the Netherlands Antilles
INGKA Holding B.V. owns the industrial group Swedwood, which sources the manufacturing of IKEA furniture, the sales companies that run IKEA stores, as well as purchasing and supply functions, and IKEA of Sweden, which is responsible for the design and development of products in the IKEA range. INGKA Holding B.V. is wholly owned by Stichting INGKA Foundation, which is a non-profit foundation registered in Leiden, Netherlands. The logistics center Europe is located in Dortmund, Germany and Asian Logistic center is located in Singapore along with its IT base.
Inter IKEA Systems B.V. in Delft, also in the Netherlands, owns the IKEA concept and trademark, and there is a franchising agreement with every IKEA store in the world. The IKEA Group is the biggest franchisee of Inter IKEA Systems B.V. Inter IKEA Systems B.V. is not owned by INGKA Holding B.V., but by Inter IKEA Holding S.A. registered in Luxembourg, which in turn is part of Inter IKEA Holding registered in the Netherlands Antilles. The ownership of the holding companies has not been disclosed.
Strengths
* Brand recognition
* Marketing strategy
* Real estate
* Defined strategy: differentiated low cost provider
* Designer product at mass market pricing
* Strong brand image
* Economies of Scale
* Highly focus on training for management and staff
* IKEA have a strong internationally known brand attracting key demographic customer groups.
* The IKEA business model is unique in its construction and execution with little direct competition on a like for like basis.
Success has been driven from the price architecture offering value to the customer in innovative but functional products.
* Despite the large shed operations IKEA operate there is a degree of specialist knowledge within key product areas where purchases are more considered and require assistance such as kitchen installations.
Weaknesses
* No direct competition
* Real estate - requires extremely large areas
* Privately owned - restricts capital
* Not for the elderly-DIYggg
* Whilst an international brand there is a level of reliance on European markets with 90% of the stores based in Europe and the balance across America, Middle East and Asia.
* Although the model promotes low prices it has been identified there is an associated low level of customer service which couples this suggesting there is a need to work on service to ensure a complete shopping experience and ensure repeat business within the existing customer base.
* As a reaction to marketplace movement the development of Ecommerce has been necessary to compete in a modern technological world however there is also a consideration this movement into multi channel retailing moves away from the fundamental vision of the customer being able to see and touch the product.
Opportunities
* International expansion
* Smaller stores
* E-commerce
* IKEA are moving from International to global status through the development of Asia and Eastern European models.
* Traditional product for IKEA has been within value, low price high volume product however the movement into mid and higher price points will see an opportunity to move the demographic base and increase the average basket value with less reliance on a limited demographic group.
* Although there are negative associations within the development of the IKEA Ecommerce site there is an associated opportunity to achieve growth and increase levels of customer service as the additional transactional capability will reduce pressure from stores to a certain degree.
Threats
* Competitors - direct (furniture stores) and indirect (Wal-Mart, Target)
* Rising commodity & shipping prices
* Aging population on key shopper segments
* Within growing competitive retail markets mainstream retailers are beginning to mirror the model of low cost value flat packed furniture which will impact on the buoyancy of IKEA.
* With economic concerns over rising living costs and depleting disposable income there is an overall threat to the performance of the business in UK and American markets specifically.
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