IKEA strategic analysis

Topics: Marketing, IKEA, Strategic management Pages: 12 (5574 words) Published: September 27, 2014

IKEA and the furniture industry
Case study 3

The following report presents an analysis of the furniture industry as well as a study of IKEA. First, an overview of the business will be presented followed by the analysis of the current market. The third chapter is dedicated to the study of Porter’s forces. Then, the segmentation of the market will be detailed followed by a SWOT analysis. In the next part, the chain value of IKEA will be analyzed. Finally, the core competences of IKEA will be presented before concluding this document. I Overview of the current situation

A) Furniture market evolution
Since the non-nomadic cultures, the furniture hasalways been a part of the human history. Many evidences have been found that furniture have been used in every era: paintings, sculpture… it is during the Italian Renaissance that the design got back its prestige, inspired from the Greco-Roman tradition.Later, during the seventeenth century, the Baroque design was used a lot for vegetal and scrolling ornament, in Europe. Since the eighteenth century, the furniture designs havedevelopedfaster. During the twentieth century theModernismemerged. At that time, the mass-market retailing appeared, with the industrial revolution, threatening the small workmen that used to build the furniture. Nowadays, the furniture market is design oriented. The design can be inspired from an artistic movement, tradition or focusing on some specific values. For example, many designers focus on the conception of furniture with a high sustainability based on environmentally design.Moreover, the governments are more and more involved in the control of the produced furniture. Indeed, many norms about functionality and safety are established every year. Some of them concern also some specific users, for instance the children furniture. Today, to succeed manufacturers have to focus on quality, prices and design. B) IKEAhistory

In 1943, Ingvar Kamprad founded IKEA, as a mostly mail-order sales business. Since 1947, IKEA has sold furniture basing its strategy on out sourcing. However, it is in 1955 that it started to conceive products with a specific design. One year later, it was renowned in whole Sweden for its low prices and it began to test the flat packages. In 1958, the first store opened in Älmhult. Then the company extends its position in Norway, in 1963, and in Denmark, six years later. It is only from 1970 that the brand started to establish in the rest of the Europe.In few years, IKEA expanded whole other the world. Nowadays, its biggest markets are Germany and United States. II Environment analysis

1) Political factors
Tax policy
Employment laws
Environmental regulations
Trade restrictions
Government stability
2) Economic factors
The economic crisis
Exchange rate
Transportation fees
Raw material cost
Importations taxes
3) Social factors
Cultural values, traditions and lifestyle
Age and Gender
Safety concern
Health consciousness
4) Technological factors
The web platforms that permit online order
New information technologies
Development of automation system
B) Analysis
1) Political
First of all, the government policies impact on the trade restriction. For example, a country can decide to not accept product from another one.Government stability is also an important factor, which affects the flow of the economy in a country. A war in a supplying country can have a huge impact on the business. Moreover, the firms have to respect the employment law, like the working duration per week. Others regulation like the environmental ones can block the introduction of a product on a market if it doesn’t fulfill some requirements. 2) Economic

The changes in the global economy have affected the purchasing power of the customers. The exchange rates and the taxes on the products are an important part of the product price. This can be an advantage or a drawback according to the country where the product...

Bibliography: Encyclopedia Britannica, Furniture industry, http://global.britannica.com/EBchecked/topic/222678/furniture-industry/66828/HistoryInnovation Leaders, profile IKEA, http://fp05-527.web.dircon.net/ikea_company_profile.htmlInter IKEA Systems B.V., What we do,http://franchisor.ikea.com/Whatwedo/Pages/Providing-a-pattern-for-success.aspxhttp://www.ikea.com/ms/en_GB/about_ikea/facts_and_figures/
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