Ikea Report

Topics: Financial ratio, Financial ratios, IKEA Pages: 13 (5044 words) Published: August 23, 2013
Subject: Entrepreneurship
Code: DS3008
Lecturer: Mr. Bernard

Student’s name| ID|
Irwan Shah Bin Ibrahim| 110051-00773-010|
Boon Jia Zhi| 110051-00828-010|
Wee Chun Kiat| 111051-05232-010|
Kew Yi Zhe| 111051-05400-010|

Feasibility Analysis
A feasibility of a company determines the ability of a company to achieve its vision and mission successfully by analyzing their financial stability, organizational flow, product and service effectiveness and market efficiency. By looking at all the feasibility analysis, we can determine how smooth and successful can the company be. Financial feasibility

Firstly, financial feasibility explains how IKEA controls their assets and liability with their cash flows. IKEA started off with a small amount of capital and now it is clearly noted that IKEA’s financial stability is going smoothly where in was recorded that they earn €25.2 billion in 2011 compared to the year 2005 which is almost €10 billion lesser. In their website, IKEA stated that they finance all the investment in 2011 with their own cash flow, (IKEA, 2011) where this shows that their company has a strong financial reliability compared to most of its competitors such as Boconcept and Tema. As IKEA have a stable finance, investors would be more interested to invest as they have a higher possibility to generate more income.

Next would be the feasibility of the organizational itself where it is concern with how the company operates and how they organize their resources to achieve their competitive priority. Generally, in order to evaluate IKEA’s organizational feasibility two primary issues need to be taken into account which are management prowess and resource sufficiency. IKEA started when founder Ingvar Kamprad had an idea of selling furniture in a different way and introduced a new concept of showroom display where it allows customers to experience their furniture by testing and feeling them before buying. IKEA had been using this concept since 1951 until now which means that the management is efficient enough to keep up with the challenges faced. Besides that, IKEA’s resources efficiency analyzes no financial resources such as the availability of suppliers, quality employees and location to operate its business. According to IKEA’s website, they mentioned that their ‘suppliers and service providers covers a wide range of products’, (IKEA, 2011) which proved that they have a stable resource for their products. IKEA believed that ‘a key success factor has been the recruitment of committed individuals’, (IKEA, 2011) to become its employees and IKEA managed to do that as they have a supply of around 127,000 employees in 2010. Furthermore, IKEA proved to be one of the biggest furniture stores worldwide as it has 316 stores in 38 countries which prove that they manage to obtain effective locations for their stores. Besides that, the feasibility analysis is also known as “the process of determining if a business idea is viable” (Barringer & Ireland, 2006).Well, feasibility analysis takes the guess work which also provides an entrepreneur with a more secure notion that a business idea is feasible or viable. A feasibility analysis need to be conducted for a new business is early in thinking through the prospects for a new business is the proper timing for conducting feasibility analysis. Anyway, there are four components/forms of feasibility analysis and they are product/service feasibility analysis, industry/market feasibility analysis, organizational feasibility analysis and financial feasibility analysis. Product Feasibility

First of all, product feasibility analysis is an assessment of the overall appeal of the product that is being proposed which is also the idea or plan of the product before a prospective firm rushes a product into development. This is to ensure that the product or services that are going to be offered is what prospective customers want (Diane M. Sullivan, 2010). Well, the...
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