The Background

IKEA is an exclusive team that operates selling household furnishings. INGKA Holding BV

is the parent firm, plus produces IKEA household goods. The team functions inside Europe, the

US in addition to Asia. Its main office is in Helsingborg, Sweden and has about 127,800

employees. Below is a TOWS analysis of IKEA (Figure-1).

The Analysis

Internal Strengths Internal Weaknesses

1. A strong global brand. 1. The size and scale of its

global business.
2. Its vision, to create a better

everyday life for many 2. The need for low cost

people. products because this needs to

be balanced against optimal

3. A strong concept base on
quality.
offering a wide rage of well

designed functional products 3. IKEA needs to keep good

at low prices. communication with its

customers, since the scale of

4. Economies of Scale
online and regular print makes

5. A democratic design with this problematic.

cost consciousness in mind.


External Opportunities
1. A request for greener
merchandise.
2. A growing demand for low
priced products.
3. Demand for reduced water
usage and lower carbon
footprints.
4. Increasing online sales.
5. Sourcing from China
6. New store openings.
External Threats
1. A slowdown in the first
time buyers entering the
6. Close to supply chains to
reduce costs.
7. Expected increase in online
sales.
SO WO
1. Initiate a greener, global 1. Build low priced green
brand (O1, S1, S2, and S3). products globally (O1, O2,
W1, and W2).
2. Expand small priced
products globally (O2, S1, S2, 2. Build environmentally safe
S3, and S4). products for customer
approval, with a consistent
3. Diversify into products
dispersal of advertising (O3,
globally, which are cost
W3).
efficient (O2, O3, 05, O6, S1,
S2, and S3).
ST WT
1. Get rid of the company.
1. Diversify into a different
segmentation with a new
housing market, since this is a product (T1, T2, T3, S1, S2,

core market for IKEA and S3).

products.
2. Offer more products with

2. More competitors entering greater utility (T1, T2, T3, S1,

the household good markets. S2, and S3).

3. The recession is

diminishing consumer

spending and disposable

income.

Figure-1 IKEA TOWS Analysis

Target China that is functionally engrossed, Internet users, thrifty shoppers,

and shoppers with limited financial resources.

Profile Older, rural and urban, wider socio-economic outline (established

homeowners).
Positioning Wider range of environmentally safe products (toxin free).

Excellent service.

Situate away from fresh entrants.

Competitor targetstraditional good manufacturers.

Product Standard variety.
 Satisfactory service and plenty of time for product choice.

Longer store hours.

Place Focus on medium and/or smaller sized towns.
Promotion Local newspapers, PR, direct mail and Internet.
Price Stay competitive with traditional household good manufacturers not

fresh entrants.

Figure-2 IKEA Target Segment and 4Ps

The target segment (See Figure-2 above) is evaluating and putting the segments into groups

by attractiveness. IKEA should focus on the following segments:

IKEA should focus on global Internet users because an online help guide would

accommodate the necessary social trends. For example, it could focus on home

improvement, in the housing marketplace. It could as well give tips on how to save and

be environmentally friendly because of the sluggish economy.

IKEA must segment customers that want to save money globally, since it is large enough

to enjoy economies of scale. For example, this lowers the average costs inside semi-

permanent periods. Economies of scale will give IKEA a competitive advantage because

the savings is passed on to patrons, with diminished prices.

IKEA should target customer segments that have limited financial resources globally

because IKEAs low prices create appeal amidst its customers, within this financial

downturn in the economy.

 IKEA must target segments that have higher budgets globally, since it has good quality

and design. For effectiveness, IKEA must communicate and get this out in the open. For

example, IKEA should include this inside online and print advertising, to reach this

segment.

Ethical Issues

IKEA is dealing with the following ethical issues:

IKEA recalled IRIS ALVIN tents due to a lack of application cords. IKEA recalled

accessory drawers KVIBY due to injury threat with glass knobs.

IKEA as well recalled baby sleeping bags on safety grounds (Data Monitor, 2009)

IKEA recalled Parodi and Apelsin glass vases from supplier #18347 due to a faulty base.

Parodi has been sold on all IKEA sales markets and Apelsin has been sold in the EU only.

IKEA recalled food labeled jars of marinated herring as a large piece of glass was found

in it by two customers.

Recalls can affect brand-equity and sales that could have a negative impact on revenues

because of litigation expenses (Data Monitor, 2009). Past the impressions of a products

characteristics derived from the COM (Country of Manufacturer), purchasers might abstain

from buying merchandises on account of any animosity (Kanuk & Schiffman, 2009).