Company overview of IKEA

Company overview of IKEAIKEA is an internationally known home furnishing retail merchant. It has grown rapidly since it was founded in 1943. Today it is the worlds largest article of article of furniture retailer, recognised for its Scandinavian style. The majority of IKEAs furniture is flat-pack, lively to be assembled by the consumer. This al impressions a reduction in costs and packaging. IKEA carries a range of 9,500 products, including home furniture and accessories. This wide range is available in all IKEA stores and customers can order much of the range online through IKEAs website. at that place are 18 stores in the UK to date, the first of which opened in Warrington in 1987. In July 2009 IKEA opened a store in Dublin as well as its first in Ireland.IKEA stores include restaurants and cafs serving typical Swedish food. They also kick in small food shops selling Swedish groceries, everything from the famous meatballs to jam. Stores are located worldwide. In August 200 8 the IKEA group had 253 stores in 24 countries, with a further 32 stores owned and run by franchisees. It welcomed a total of 565 million visitors to the stores during the year and a further 450 million visits were do to the IKEA website. IKEA gross sales reached 21.2 billion Euros in 2008 showing an increase of 7%. The biggest sales countries are Ger some(prenominal), USA, France, UK and Sweden. In 2008 IKEA opened 21 new stores in 11 countries and expects to open around 20 more in 2009 as pull up s mete outs of its strategy for growth.IKEA Vision and Business ideaThe IKEA vision is to create a get out everyday life for the many citizenry puts this concern at the heart of the parentage. Our business idea supports this vision by offering a wide range of well- figureed, functional home furnishing products at prices so little that as many people as possible will be able to afford them.Aims and objectivesSWOT (Strengths, Weaknesses, Opportunities, Threats)Strengths-Flat-pack te chnology-Numerous global suppliers-Focus on low price with meaning-Extra in-store perks restraunts, shop carts, pencils, etc.-Unique store environment-Modern design pieces as well as traditional piecesWeaknesses-Not doing appropriate grocery researach when biramous into a new cultures market-such as when IKEA came to America.-Ratio of sales representitives to consumersIKEAs self-service ethos, Americans are non used to this type of service.Opportunites-Saving money on labor by establishing supplier relationships with developing countries-Movement into other countries that do not have this type of retailer-Capitalize on good design with reasonable pricing-Capatalize on the anomalous and appealing shopping experienceThreats-Lower prices of general retailers homogeneous Target and Wal-Mart that have the ability to regain losses on other merchandise-Finiding slipway to appeal to a borader public-Scandinavian design and style is a street corner not specialisedally suited to eve ryones tastes. Therefore, IKEA must figure taboo how to do this earlier someone else does.PESTLE ANALYSIS External Environmental FactorsIKEA faces a miscellany of external environmental particularors when conducting business in a competitive, global furniture market.These protestent factors, provides an explanation of what faces IKEA (The Broad Environment)Research shows in the broad environment, an one-on-one firm can do little to directly influence these factors.In this study, IKEA is broken down by social, economical, technological and political/legal factors to break down the broad environment.Socioculturally it was ponderous for IKEA to integrate itself in the American market. The furniture market in the joined States contained a wide dichotomy between high-end and low-end design. at heart this fragmented market, the top 10 furniture retailers were only responsible for 14.2% of the finished market share. The general discount stores, i.e. Wal-Mart, Target, fleck Depot bring up the low-end market. These stores usually marketed their furniture on the basis of cut-rate pricing making margins low in for these channels. There were also smaller shops offering nickel-and-dime(prenominal) furniture to price-conscious customers such as college students. However, these stores reflected their low price focus with dreary, cloudy environments containing haphazard displays and poor, inconsistently managed inventories.Conversely, the high-end specialty markets offered luxurious store environments with clean, plush displays, conjure up affluence, prosperity and comfort. These specialty retailers include Ethan Allen, Thomasville, and Jordans Furniture. Many of these retailers offered easy salary credit options lessening the debate when considering big-ticket items. Also, these stores came complete with high-touch sales consultants who aided with measurements and product selection.These retailers offered interior design services for consumers whom were more interested in complete home makeovers. In addition, they boasted of huge inventories often containing many sub-styles within each specific style. Complete with delivery services, retailers could guarantee that consumers new purchases would be delivered and set up in their homes in a matter of weeks without them horizontal having to lift a finger. Lastly, these specialty retailers focused on the quality of the furniture touting that their quality pieces will last a lifetime hence the defense of steep prices-a customer would not or should not need to tack the piece again within their lifetime.The other large part of IKEAs crude entry to American culture was the lack of market research. Many Americans didnt like IKEA products because the beds and kitchen cabinets did not fit American sized sheets or appliances, sofas were too hard for American comfort, the dimensions were in centimeters, and the kitchenware was too small for American serving preferences. A manger of the first store in Philadelphia (1985) recalled people drinking out of the vases instead of the serving glasses.Economically, IKEA is low cost. This is a big piece of recess into the American market. IKEA had to focus and advertising campaign directed specifically to blow Americans unwillingness to part with their furniture. Part of this angle is the low cost. It is only furniture, transmute it. By being willing to listen to consumer feedback and changing the way Americans looked at furniture, during the mid-1990s IKEAs profit share in American markets improved.Technologically, IKEAs Flat Pack is contrasted any other furniture retailers shipping method-IKEA claims that they do not privation to pay to ship air. This is precisely why they can be self-service and do not have to employ as many people as someone would think. These flat packs make it possible for people to tug their packages home without having to wait weeks for delivery. IKEA provides pencils, measuring tapes, store guides, catalo gs, shopping carts, bags, and strollers to assist with the shopping experience. Customers are expected to transport their own purchases as well as assemble them on their own. The method in which IKEAs stores are lined up are ingenious. A customer will shop displays and and then take their selections (jotting their item numbers) down to the warehouse to pick up their flat jammed items before proceeding to check out.Utilizing Porters Five-Forces Model of Industry Competition, IKEA can be evaluated in the following way1. CustomersAmericans-the primary consumer base for IKEAs debut in the American Market. The most likely IKEA shopper are those sort of people who give-up the ghost abroad, like fetching risks, enjoy fine food and wine, have a frequent flier plan, and are early adopters of trendy consumer technologies such as Discmans, laptops, and cell phones (incidentally, IKEAs most atypical customer would be they type of soulfulness who collects guns).2. SuppliersIKEA relies heavi ly on global suppliers. Once IKEA sets its base price for an item, they then seek to balance cost-effective labor with the friendships quality product standards. It does so by workings with 1,800 suppliers in over 50 countries. In many instances, IKEA circulates its idea within supplier rings and encourages them to compete for the production package. sometimes to meet the base price, IKEA will have one design with pieces from some(prenominal) different suppliers.3. Existing CompetitorsTraditional Furniture stores are abundant in America. There are none exactly like IKEA in the United States. Therefore IKEA has an advantage over those traditional stores that have high priced furniture. If that is notwhat the consumer is looking for, then they can go to IKEA for quality, less expensive furniture with a modern design edge.4. Potential Competitors/Entry BarriersSince IKEA is such a unique, original idea/store it would be very hard to copy the totality of IKEAs culture. A store could probably duplicate one or two of the things which compose IKEAs atmosphere but they would fail in other aspects. Like, a store could try and copy the Scandinavian design niche but it would be hard and unauthentic (like what IKEA embodies) without the Scandinavian heritage.5. Indirect Competitors/SubstitutesWal-mart, Target, Office Depot and other low-cost suppliers are indirect competitors in the fact they do offer low-priced furniture that consumers assemble themselves. However, these indirect substitutes differ in the fact that these are general retailers instead of where IKEA is a specific retailer of home goods. Target, for instance, retails apparel, accessories, home goods, groceries, office products and cleaning supplies.IKEA Strategy and strategic optionsCompany visionIKEAs vision has from the start been To create a get out everyday life for the majority of people.IKEAs business concept originates in the closing to meet a need that no other company appeared implicated with and led it to develop a niche market manufacturing beautiful, inexpensive and long-wearing furniture for the majority of people.27 I. Kamprad states that IKEA should stand on the sideof the majority of people, which involves taking on more responsibility than might at first bet to bethe case.28 A recent example is the companys exceptionally costly fall upon into the Russian market,but considered necessary as affordable furniture is a pressing need for the Russian population.29 Thedemocratic design also involves representing the interests of intermediate people and getting rid ofdesigns, which are difficult and expensive to produce, nonetheless if it is easy to sell.30 The concept wasformalized in 1976 in Ingvar Kamprads thesis will of a Furniture Dealer, which became animportant way to spread the IKEA philosophy.31 The fundamental finis was and is to provideaffordable furniture for the people and cost cutting is come upon to achieving this. Cost-consciousness is astrong part of the business idea and the waste of resources is considered a mortal sin at IKEA32. Byensuring that ordinary people are able to afford to furnish their homes beautifully, many associateIKEA with a company that stands on the side of the little person and this is a positive public figure for acompany to have. In addition to this, I. Kamprad had another daydream the dream of good capitalismwhich is the idea that the good in a profit-making business can be combined with a lasting socialvision. This implies the coating of developing and achieving a better future for IKEAs customers as wellas people working for IKEA believing that by working for IKEA, they are working for a better societyand thereby contributing to a better world.33