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IKEA SWOT ANALYSIS

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IKEA SWOT ANALYSIS
IKEA is a famous retailer worldwide for supplying home furnishing products. It was established in
1943 and became popular very fast. Now a day, it is recognised as one of the leading furniture
retailers due to its Scandinavian style. IKEA uses SWOT as a planning tool to achieve its goals and
keep its focus on major problems. SWOT considers Strengths, Weakness, Opportunities and Threats
that concerned in a business.

Strengths
Strengths are the capability and core abilities of a business that could enhance the value of the
company’s product. Some key strengths of IKEA are: It is a well known brand internationally which
attracts groups of customer towards itself and assures the same quality and variety; its major dream is
‘to provide an improved daily life for several people’; it offers variety of useful products having
balance design, function, price and quality at low cost (IKEA 2012).
In addition, IKEA also uses Key Performance Indicator (KPI) as another tool to measure its strengths
and evaluate its vision of progress by supervising the improvement towards the set goals (IKEA
Sustainability Report 2012). An example of KPIs of IKEA is a contractor’s percentage which is
recently approved by IWAY. The IWAY is the Way of IKEA of buying Home Related Products. It is a
guideline that describes the environmental and social needs, which IKEA anticipate for its trader.
IKEA has accurate strengths throughout its process of production. For example, IKEA has largely
enhanced its use of renewable materials from 71% to 75% from 2007 to 2009 respectively. It has
increased the use of raw material in production across all supplies from 84% to 90% in the years of
2007 to 2009 respectively. IKEA has strong faith in long-term partnership with its traders, so that it
can achieve its volume commitments with its traders. It mainly focuses on the budget spend on
transport and therefore deliver its product near to the supply chain. IKEA is using modern
technologies like IKEA’s OGLA chair since 1980. This chair has altered throughout the year for the
cost reduction of needed raw materials (IKEA 2011; IKEA Quality Improvement Group 2010).

Opportunities
To avail the opportunities, a company utilises its strengths. IKEA thinks that it has potential to get a
positive result in cost sensitive marketplace because of its keen focus on environmental factors of the
business. Some opportunities that IKEA avails throughout are: the supply of greener product is
increasing; the demand of IKEA’s low cost products is increasing and attracts many consumers; a
growing demand for lower carbon footprints and reduced water usage (The Times 100, 2010).
There are numerous areas of focus for IKEA which support it in different ways to continue its work
with sustainability. For example, IKEA helps people online by giving solutions, tips and ideas for a
better life at home. Additionally, IKEA takes some social responsibilities and support different
charities with funds in which UNICEF, Save the Children and World Wildlife Fund are included
(IKEA Foundation 2013). IKEA has an aim to use all resources intelligently by avoiding landfill
wastes and wastes of water and has started some programmes and treatments in this regard. The
company as set an aim to minimise the use of energy and use renewable energy (IKEA Resources
2012). This step decreases its packaging and reduces the use of air transport. IKEA’s green transport

decreases its business flights by 20% and 60% in 2010 and 2015 respectively. Moreover, IKEA offers
equal opportunity to all its stakeholders and it becomes possible only because of excellent
communication and trust with co-workers, the press and customers.

Weaknesses
Like other companies, IKEA has to admit its weakness so that it will be able to establish modern
strategies to recover and control them. Some weaknesses of IKEA include:


IKEA has become an international brand and because of large size business it is a not easy for
it to control and manage the quality and standards of the products.
It offers low priced products but with shaky balance in quality. There is no clear difference
between the products of IKEA and of other competitors (Baker and Hart 2007)
A sound communication with stakeholders and traders about environmental activities is very
important and become a need of IKEA, though it is hard for it to manage globally. To
communicate with different business audiences, IKEA is starting some radio and TV
campaigns and publishes publications online and in print as well. ‘People and the
Environment’ is an example of it (Ferrell and Hartline 2010).

Threats
To avoid any failure in the market, a company should aware of external threats, so it can make some
strategies, plans and create new ideas to work against them. IKEA can use its strengths to avoid its
market threats. Threats to IKEA may include social trends, market forces and economic factors
(Ferrell and Hartline 2010)
To achieve its aim of providing sustainable and better life for its customers, IKEA is helping its
supplier online and share some tips on its website. This helps it to control the budget IKEA enjoys a
large scale economy. It uses renewable energy and modern technology which helps it to reduce the
average price throughout. High scale financial system enhances the competition in the business world
and if a company provides its products with good quality in low price then it puts many difficulties in
the ways of entering smaller companies in the market (Baker and Hart 2007). In addition, IKEA offers
a low price furnishing product which is growing its demand amongst its consumers in this tough
financial system. At the time when retail sector is going down, there is a need to minimize costs as
much as possible. IKEA is one of the retailers which provide low price products with best design and
fine quality to its customers by utilising limited resources (IKEA Resources 2012).

Conclusion
IKEA is popular as an international brand all over the world. IKEA should evaluate its economical
and external environment to reach at the peaks of fame. This enables IKEA to avail opportunities and
deal with threats. IKEA is efficient enough to use its strength and minimize its weaknesses and play a
dynamic role in responding both external and internal issues. The vision of IKEA is to provide people
the best products having good qualities with low price. Processes, systems and products of IKEA
show its environmental position. For instance, IKEA cleverly packed items in crate to minimise its
transport’s budget. IKEA does not compromise in its business and reputation and wants to become a
prominent and responsible retailer by offering low cost products which is beneficial for both people
and company.

References
Baker, M.J. and Hart, S. (2007). The Marketing Book. Butterworth-Heinemann
Ferrell, O.C. and Hartline, M. (2010). Marketing Strategy. (5th Ed.) Cengage Learning
IKEA (2011). The IKEA Group approach to sustainability. [online]. Available from:
http://www.ikea.com/ms/en_GB/pdf/sustainability_report/group_approach_sustainability_fy11.pdf
(Accessed: 27 February 2014]
IKEA (2012). About IKEA. [online]. Available from:
http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/our_business_idea/a_better_everyday_life.
html (Accessed: 27 February 2014)
IKEA Foundation (2012). Frequently Asked Questions. [online]. Available from:
http://www.ikeafoundation.org/faq-frequently-asked-questions/ (Accessed: 28 February 2014)
IKEA Resources (2012). Doing business in a smart way. [online]. Available from:
http://www.ikea.com/ms/en_GB/about_ikea/people_and_planet/energy-and-resource.html (Accessed:
28 February 2014)
IKEA Sustainability Report (2011). Sustainability Report. [online]. Available from:
http://www.ikea.com/ms/en_GB/pdf/sustainability_report/sustainability_report_fy11.pdf (Accessed:
27 February 2014)
IKEA Quality Improvement Group (2010). IKEA Supplier Quality Standard. (2nd Ed.) [online].
Available from:
http://supplierportal.ikea.com/doingbusinesswithIKEA/quality/qualitypackage/Documents/Quality
%20Standard.pdf (Accessed: 27 February 2014)
The Times 100 (2010). Understanding Business Functions: case studies. The Times 100 [online].
Available from: http://businesscasestudies.co.uk/#axzz2uj7IaShI (Accessed: 28 February 2014)