Ikea Five Forces

Topics: Competition, Home, Perfect competition Pages: 2 (303 words) Published: November 6, 2010

Potential entrants, threat of entry:
The furniture market is already highly competitive. The risk of new entrants is not extremely high because of the huge capital needed to start the business. Demand of household furniture is high. IKEA furnitures don't have a such significant competitor but other areas like textile and kitchenware have. Alongside Kodin Ykkönen becomes one competitor as a full department store but it doesn't compete in price.

Buyers, bargaining power:
Ikea ensure that their customers in all aspects will be satisfied for quality service they provide. Ikea has focused their marketing approach on demands and needs of the buyer for households furniture as food service that satisfy them and positioned heavily their products in this segment. Ikea uses their corporate responsibility as a good public image to their customers. Regular customers have IKEA Family -card as a membership.

Suppliers, bargaining power
IKEA has a wide network of 1300 suppliers. It is carefully selecting the manufacturer of its products. The company has own production factories and designers which makes it less dependent on others. Bargaining power of supplier could be threat for the profit of the company. High level competion in this in business.

Substitutes, threat of substitutes:

Competive Rivalry:
Ikea still dominates the competition among other household furnitures as food retail companies in world. Trying to sustain its competive advantage among rivals.
There will always be substitutes for furnitures but IKEA competes with price and there isn't competitors in same price range. Entering to IKEA faces competitors when people decide whether to go to a concert/cinema rather than visiting IKEA. Companies around Finland arrange bus trips to IKEA where rare are going to buy sofa, you probably grap lots of small items in to your basket, but it's still profit for IKEA.
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