Analysis of the market position of Ikea

Analysis of the commercialize plaza of IkeaIntroductionE genuinely manufacturing tries to use an unparalleled, competent, and effective line of origin dodge that will al embarrassed them to go on at a liberalist side in the free-enterprise(a) market, in particular in the orbiculate market. With esteem to this, the aim of this report is to indue a position analysis for the article of article of article of piece of furniture community IKEA. The position analysis will apply a mash analysis, capabilities analysis, resource based understand analysis, swot analysis and porters five forces on with IKEAs strategical issues and solutions to these issues. association OverviewIKEA was established in Sweden over 50 days ago back in 1943. Its founder Ingvar Kamprad tranquilize plays an eventful federal agency in the conjunction affairs today. IKEA is certainly one and only(a) of the top furniture retailers in the reality. Its core aspects argon affordably, functionalit y and note. Since their commencement, IKEA has persistently developed as a political party doneout the years and atomic number 18 presently seen as a distinguished successful worldwide affair entity in the furniture industry today. In 2010, IKEA opened 12 youthful blood lines in 7 countries which mature away give them an overall record of 318 stores in over 38 countries. IKEA has certainly met their strategic objects by executing diverse strategic market tools that has do them the success that they atomic number 18.MethodologyIKEAs SWOT AnalysisIn this report, the analysis of the present situation of IKEA will be carried out by victimisation antithetical marketing tools.With this, IKEA will be examined via the use of SWOT Analysis. The basis of external and subjective analysis is to construe meanss that fag pretend the said business to situate itself to buck advantage of opportunities, and manage threats discovered via an analysis of external environments. Par ticularly, it also aids in spotting present weaknesses and strengths that may affect the organizations capabilities.Strengths (Internal factors)A strong worldwide brand that attracts key consumer groups.A bear Vision to create a better everyday life for legion(predicate) peopleA strong concept. IKEA set ups a wide range of well-designed harvests at a terms, everyone can afford.Good product image. IKEA has an ideal balance mingled with function, quality, design and priceWeaknesses (Internal factors)Large global business. This makes quality control operose to control and it signifies a weak link in the chain of supply.The indispens competency of subaltern comprise products. Although products are at a low price, consumers still need to feel that they are getting value for their money.Cultural differences. modify markets Japan, China and the USARestricted manufacturingcapabilities. IKEA relies on sub ironed manufacturers.Opportunities (External factors)An increased demand fo r low cost merchandise. Due to trends in the present financial state of the global economy, consumers opt for less high-priced goods rather than shopping at expensive stores.The rapidly emergent Asian countries with wealthy middle-class population dally opportunities to enter and market the concept of afford fitted modern furniture to check into a particular life expressive style.Opportunity to enhance levels of customer service done E- Commerce as the added business capability.Threats (External factors)Social trends decelerate amount of number 1 time buyers coming into the ho exploitation market.Market forces more(prenominal) competitors incoming the low price class and furnishings markets.Imitated Concept -Within growing competitive retail markets mainstream retailers are beginning to mirror the modelEconomic factors the global financial crisis decrease disposable income and customer spending. We can see this from the table below. IKEAs turnover was the same(p) in 200 9 as it was in 2008.Source www.ikea.com (2010)Porters Five ForcesMarket immersionSeeing that IKEA has much(prenominal)(prenominal) a unequalled concept and brand allude it will be difficult to copy the IKEA way. However, an new(prenominal) furniture bon ton can enter the furniture industry with a low- cost schema inclusive of home delivery, opposing to IKEA non-home delivery method. IKEAs stores are not very much located in small t witnesss with small outlets so this is an prospect for new competitors to enter small towns with another low cost strategy with small outlets. This may attract a new sector of consumers.provider PowerAccording to IKEAs welcome inside y too soon summary , IKEA had 1,074 suppliers in 55 countries in 2010 Most of the suppliers operate in the IKEA group and cope with other suppliers, and they be establish a modest negociate power. Because of low pricing, IKEAs clams margin also affects the prices in raw materials than by prices in labour. The bar gaining power of a supplier could be a threat for the loot of the family, and both IKEA is very much aware of it. In light of this IKEA endeavours to take good relationships with its suppliers, in this IKEA ensure that the IKEA group benefits in the said contract while suppliers benefit from the mutual agreement. competitory RivalryIKEA is comfortable with its competitive position, and also trying to permit its competitive edge among rivals. IKEA operates in a extremely competitive industry, characterized by other low priced furniture producers such(prenominal) as Galiform of England and retailers such as Wal-Mart of the United States. Internally, the group has seen differences of opinion regarding product offerings and positioning. Because of powerful global competition, IKEA has intelligently attempted to compete by entering the markets which typically pose the liberalst competition, such as China and Japan.power of the buyersAmericans-the primary quill consumer base for I KEAs de exclusively in the American Market. The most likely IKEA shopper are those sort of people who travel abroad, like taking risks, sleep with first-rate food and wine, have a frequent flier plan, and are early adopters of trendy consumer technologies such as Discmans, laptops, and cell phones (Lyne, 2009). IKEAs perplexity ensures that their customers will be satisfied in all ways with the quality of service that they supply. Particularly, the company has focused their marketing approach on the demands and needs of the buyer for household furniture as well as food service sources that satisfies them, and firmly positioned their products in this segment.Threats of substitutesThere is no particular furniture substitute merely IKEA has to keep up with the latest trends and advances so that their quality furniture does not go out of style and become irrelevant. Wal-mart, Target, Office Depot and other low-cost suppliers are indirect competitors in the fact they do offer low-pr iced furniture that consumers pull together themselves. Conversely, these indirect substitutes vary in detail because these are general retailers instead of being a particularized retailer as IKEA is a retailer of household furniture.PESTEL Analysis governmental As part of the national or global trends and changes, IKEA is just one example of firms that are successful in both domestic and supranational business . The Swedish furniture retailer has found the Scandinavian style of furniture that was combined with do-it-youself flat packaging became popular and set a global cult brand .Economic The Company, due to the economic changes and trends are adopting different kind of strategies that will take an appeal on their customers and aiming to own the customer faithfulness . Economically, IKEA is low cost. This is a big piece of breakage into the American market. IKEA had to focus and advertising campaign directed specifically to botch Americans unwillingness to part with their styling of furniture.Social The IKEA contributed much in the society as they provide opportunities in people and the employees are entitled in different benefits such as insurance and pensions ( 2005). Moreover, the company promises to provide more high quality furniture that sticks to their original concept stylish furniture at low prices.Technological IKEA uses superior applied science and systems to encourage shorter waiting quantify, absolute scheduling, tracking and trading patterns, and staffing. The system made the IKEA in a position to ensure the right number of staff in a right place and in a right time to total the unique trading pattern s at separately stores of IKEA. The company view in optimizing everything from the supply chain is also optimizing and managing the workforce to create an efficient store environment and keep customers happy .Environmental Concerning the environmental factors such as the air, noise, and water, inspections are put in place to ensu re the company provides remedial actions within a stipulated time. The environmental inspection consists of effectual documents and environmental authorities as the business operations are continuing.Legal The legal compliance of IKEA is sternly implemented with pertinent laws and regulations that affect to the environment, social and working conditions. The company also scheduled the most demanding requirements to be specific in maintaining the list of laws and regulations and with the procedures.Analyzing IKEAs CapabilityBased on the given synopsis of the IKEA Company it is recognized that IKEA exerts a strategic approach in rewrite to maintain their competitive edge in the furniture industry. The management of the company is able to identify the priorities of the business and make decisions in line with the strategic direction, by placing considerations of the business and its stakeholders.IKEA is competent as it focuses on the significance of both internal and external custo mers to guarantee that these customers remain satisfied and loyal. The company also ensures that they motivate, coach, guide, and support their staff to realise the mission of the IKEA. Additionally, IKEAs capability to identify its suppliers is another factor that maintains the companys competitive advantage. The ability of management to differentiate and diversify their business strategy to dominate the global market can also be considered as major capabilities of IKEAResource Based View AnalysisIKEA selects the most operable position when it comes to delivery of items. Their warehouse is smartly located with different sectors to have greater control of activities. This strategy analyses the deployment of resources, processing time and queue times for various actions. IKEAs staff is rotated in order to complete customers orders from each picking area. Resources are simulated at higher levels and are utilize and detailed in applicable working schedules.Stakeholders AnalysisOther than what is already cognize about IKEA, it is observed that besides the management of the business, IKEAs customers play an important mathematical function in the accomplishment of the organisational goals. The management skills and capabilities of the pioneers of the company have propelled IKEA into being a powerful entity in the furniture industry today. Furthermore, the loyalty of its customers has also greatly assisted IKEA in maintaining its competitive edge. Customers and workforce entities go hand in hand, as IKEAs employees are the ones who work effortlessly ensuring that the company satisfies the demands of its customers. Therefore, when customers are satisfied, as they get value for their money with IKEA, they will remain loyal and hence build IKEAs value chain. The suppliers and stakeholder s can be considered an additional factor that made IKEA the success they are at present.IKEAs strategical Issues and ChallengesCompetitionThe IKEAs furniture competitors offers dif ferent styles and functionality. Conrin targets a new low cost in terms of furniture line Cratel Barrel offers a furniture in a box which is subject in higher prices Ethan Allen aimed at a more upscale market Wal-Mart is equipped in a big box furniture that is categorized under the general store must-have-items, but dont have much of a style. IKEA is the most successful in delivering the complete package for the customers that reflects on weak rivalries.Natural ResourcesIKEA is the biggest furnishing company world wide, so it needs al lot of wood. This implicates, that thither are confrontations with constitution protecting organisations.The IKEA ConceptThe IKEA concept is easy to take up. Companies like scouring Industries in the USA have taken over the concept of forte furniture, but they adopted their products to the American habits.Reaching Limited CustomersThe fundamental job which IKEA is currently facing is that they are only reaching a moderate amount of customers due t o their few store locations.Event that founder retires or diesMajor challenge to keep the core values alive especially when the company becomes larger and more diverse and the founder retires from the business.Catalogue diffusionIKEA want to increase the return on investment for the catalogue distribution, which is a substantial investment, and remain ahead of the competition in terms of business strategySolutions to IKEAs constraintsCatalougeIKEA needs to make sure than they distribute their catalogues who can be potential IKEA customers in terms of where they are located and ther demographic attributes. IKEA can also sell its catalogue at a low price to help generate some revenue as its catalogue is its biggest marketing mechanism.Low priceThe company must ensure that it is always known for having the lowest prices on the market in the future. Communication plays an important role here. IKEA must main its low cost leadership by using the low cost leadership strategy.Market forces IKEA is large enough to enjoy economies of scale. This lowers average costs in the end by means of, for instance, better use of technology or outsoucing specialized managers. Economies of scale also gives a business a competitive edge if cost savings are then passed on to customers in the form of lower prices. This puts up high barriers to entry for smaller companies entering the market.Communications.IKEA needs to maintain communication with its consumers and other stakeholders about its environmental actions.Store Locations.IKEA needs to strategically place its outlets where it has never been before. IKEA usually has large outlets in large cities. However, a tactical approach will be to launch smaller outlets in smaller towns. This will attract a new sector of customers hence increasing IKEAs kaleably in the furniture industry.A new organizational structure will be essential because of moving the organization from a global perspective towards a multinational perspective. Where the global organization is designed as to increase production efficiencies using global economies of scale and scope concepts, the transnational organization combines efficiency, local responsiveness and organizational learning.In order to assist the transition process towards such an organization, the IKEA group has to drastically transform its approach on the function of its subsidiaries. At present, IKEAs subsidiaries are barely no more than expansions of the business head situation in Sweden.The responsibility of the subsidiaries is not to sway parent company strategies, but moderately follow instructions from home country Sweden. High localization pressures emerging due to demographic and cultural differences will compel subsidiaries to take strategic initiatives to act in response to local market requirements. The new organization would be easier to follow and pass on more office to subsidiaries. The centralized research and development department would have form strategic in-house networks with these subsidiaries and, in a mutual approach, develop products that are adopted to match country level requirements.Strategic corporate direction has to be maintained, since there is a need to safeguard its market niche. The changes projected in the organizational structure will have promising impacts on the company culture, which is currently founded on the IKEA concept or the IKEA way. A reduced amount of management from Sweden will trigger the incursion of new principles, values, and measures into the IKEA way. This will boost the intricacy of the operational culture, but will improve decision-making based on a spot on international dimension.CONCLUSIONTo conclude, with this position analysis, appropriate evaluation has been considered using different marketing tools, which lead to the determination of the present position of the IKEA Company. This analysis has revealed which parts of the IKEA business entity that requires development and altering in orde r to maintain the competitive edge. The IKEA strategy is unique but it works, as IKEA is a leader in the global market. IKEA places its focus on further profit creation and growth and development.It can be said that based on the given case, IKEA strategy is something which is different but effective to achieve their goal of dominating the global market. Giving value to their stakeholders is one of the vital approaches that the company had used. In addition, their ability to innovate and diversify their products has also been identified as part of the strategy of IKEA.In addition, because of the competitive situation of the company, there is a strong barrier to entry for a new household furniture as well as food market that would compete with IKEA. As the company is competing in both local and large-scale market environment, IKEAs feasibility is to achieve more customers from altered areas of the world and to provide each customers quality and resourceful household furniture product s and will satisfy their needs while enjoying reasonable and reasonable prices. The company is looking forward to give the customers more from what they are expecting via technological innovations.In addition, the strategy of the company also includes their ability to adapt to the changing needs and demands of their target market even in different parts of the world. IKEA is in a favourable position to carryon operations in the years ahead.BibliographyDe Wit, Bob and Meyer, Ron (2005) Strategy Synthesis. Second edition. London Thomson Learning. fool ISBN 1 86152 965 1.Johnson, Gerry Scholes, Kevan and Whittington, Richard (2005) Exploring Corporate Strategy. 7th edition. Harlow, Essex Pearson Education. Print ISBN 0 273 68734 4. Available through Voyager (UH LIS main catalogue) as an electronic resource.Mintzberg, Henry Ahlstrand, Bruce and Lampel, Joseph (1998) Strategy Safari The stark(a) Guide Through the Wilds of Strategic Management. Harlow, Essex Pearson Education. Print ISB N 0 273 65636 8.Porter, Michael E (1979) How Competitive Forces Shape Strategy. Harvard Business Review, March/ April, Volume 57, Issue 2. Available through UH LIS electronic journals (Business Source Complete).IKEA Sustainability Report for Fiscal division 2009 and Fiscal Year 2010. Welcome Inside