In performing a SWOT analysis of IKEA, we determined that the major strengths of IKEA are a

strong brand image accentuated by strong differentiation of low pricing, business philosophy,
efficient supply chain, and innovation. The contributing factors to IKEA’s strengths are
versatility, market growth, market leadership and availability of resources.

One of IKEAs weaknesses is in dealing with different regulations in different countries. This is
due to its global presence. By becoming an international company, IKEA needs to do more
research on the culture and history of the country it intends to do business with. Another
weakness IKEA experienced was the product recalls associated with excess formaldehyde in
some of its products, which has hurt its sales and reputation.

An opportunity that is available to IKEA is to be more proactive towards child labour issues and
to take strategic plans to provide more exposure to their stores. We believe that IKEA should
sign on to Rugmark. It would be a good step to ensure that IKEA avoids having the major
responsibilities of being a child labour monitoring company and more of an accountable
corporation who deals with suppliers who produce products that are certified to have not been
worked on by children. Another opportunity that IKEA could seize upon is to provide more
exposure to their stores by building numerous smaller stores where the consumer is gets to see
the products without the warehouse onsite, or provide online shopping.

Some of the threats that IKEA faces are quite common in many large companies. New entrants
and competition such as Walmart and Target will take away from IKEA’s market share. Other
threats such as an economic downturn and future recalls of products could cause lower sales
targets. In addition, increase in commodity prices could also affect IKEA in product costing and
its profit margins.
Strengths Weaknesses

- Efficient production systems, reduction - Dealing with different regulations in

of waste different countries

- Strong brand image - Underdeveloped countries have history

with child labour
- Differentiator Low pricing due to
business strategy (warehouse is the - Product recalls and allegations hurt
showroom, consumers deliver and company sales
assemble furniture, low cost of labour

- Excellent relationship with suppliers

- Low supplier power

- Buy unused production capacity

- Philosophy and business strategy

- Innovation and quality

- Learn from mistakes

- Environmental

Opportunities Threats

- Proactive stand and signing up with - New entrants

Rugmark
- Commodity prices
- Smaller stores
- Economic downturn
- Store expansions