ikea case study swot analysis

SWOT Analysis of IKEA 2023

This is IKEA International Group SWOT analysis. For more information on how to do a SWOT analysis please refer to our article.

Company Overview

You can find more information about the business in its official website or Wikipedia’s article .

IKEA SWOT Analysis

• Customer knowledge. One of the key competitive advantages IKEA has is its extensive knowledge about the customers. The company understands the purchasing factors that influence customers to buy and implements the best practices to induce that decision. IKEA offers low prices and a huge range of products. Designers constantly introduce new design products that look stylish in the eyes of customers. All the products are designed so it would be easy to transport and assemble. Moreover, the company offers the widest product range and positive shopping experience. All of these factors are aligned with what customers want and need and which results in higher sales. Without such extensive customer knowledge and best practices to benefit from that knowledge, IKEA would be unable to outcompete its current competitors.
• Constantly using innovations to drive costs down. Low prices are the cornerstone of IKEA business idea and the the company always try to do things as efficient and cost-effective as possible. To drive costs down all the time, the company must find new and innovative ways to do that and to incorporate them in its businesses model. The business’ innovations include new materials that contribute more to sustainable environment and are less costly or using newest ways of packaging, handling and transporting materials.
• Supply chain integration. IKEA is committed to long lasting relationships with its suppliers. In this way, the company can order large volumes and benefit from lower prices and greater quality while suppliers are assured of guaranteed orders. IKEA sources its materials close to suppliers to reduce transporting costs. The company also uses IWAY approach to closely integrate suppliers with its supply chain. All the efforts of closely integrating supply chain results in lower costs and a competitive advantage.
• Brand reputation and market presence. According to Interbrand, IKEA is the most valuable furniture retailer brand in the world, valued at nearly $US 12.8 billion in 2012. The business operates 332 stores in 38 countries and is present in the major world markets. More than 600 million customers visit IKEA stores every year. Worldwide market presence and strong brand reputation ensures that customers will often choose IKEA over its competitors.
• Diversified product portfolio. Unlike IKEA’s largest competitors, the company has fairly diversified businesses. In addition to its furniture products, the company operates restaurants, houses and flats. Although, firm’s main business is designing, manufacturing and selling furniture it is not so affected by the changing forces in this market as other furniture retailers.
• Negative publicity. The company has been criticized many times for issues like poor treatment of employees, questionable advertising practices or lobbying government authorities. Negative publicity decreases brand reputation and customer loyalty.
• Low quality of products and services. IKEA is unable to find compromise between continuous cost reductions while maintaining the same quality of products. According to UK Customer Insights report on IKEA by Verdict, IKEA’s customers are less satisfied with its product and services quality than the average customer in UK buying at other stores. Firm’s cost reductions lead to decreasing product quality, which was followed by higher number of products returned and damaged brand.
• Standard products. IKEA’s main competitive advantage derives from low costs, which in part are achieved due to standardized products. Standardized products attract fewer customer segments. Therefore, the business inability to offer better quality more customized products allows its competitors to fill that niche and fortify their position in it.

Opportunities

• Further expansion into developing economies. Retail markets grew by at least 5% on average in emerging markets in the last year, opening huge opportunities for IKEA’s revenue growth. The company currently operates in most of the developed economies but hasn’t firmly stepped into developing economies, except China. There are great opportunities for IKEA to expand into Brazil, Mexico, Indonesia and Malaysia to increase its presence in these markets to sustain future growth.
• Growing online sales. Online retail sales account for 17% and 4% of total retail sales in UK and US respectively. Online sales grow constantly and with 870 million visitors to its website IKEA could exploit this opportunity and benefit from increased sales and lower costs.
• Expansion to growing grocery market. The current trend of eating healthier food has resulted in higher demand for grocery products in many developed economies. IKEA has an opportunity to expand its grocery business by introducing more grocery stores in its current retail places. The company is already successfully managing its food outlets, so this expansion opportunity would be well aligned with the current operations.
• Intensifying competition. Many low cost retailers such as Walmart, ASDA or Tesco are entering homeware specialists market where IKEA operates. These large retailers have similar specifics as IKEA, including low costs, well managed supply chain and huge market presence and can easily gain some market share from IKEA.
• Growth of average consumer income. Growth of average consumer income means that people buy less low price and low quality products, which is exactly what IKEA offers in its stores. With the rising income people will be less attracted to IKEA and will turn to retailers that offer higher quality homeware products.
• IKEA (2013). About IKEA. Available at: http://www.ikea.com/ms/en_GB/about_ikea/index.html
• The Times 100 (2012). Business Case Studies. Ikea case study. Available at: http://businesscasestudies.co.uk/ikea/swot-analysis-and-sustainable-business-planning/strengths.html#axzz2VB9TPpjz
• Interbrand (2012). Best Global Brands in 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx
• Wikipedia (2013). IKEA. Available at: http://en.wikipedia.org/wiki/IKEA
• IKEA Mission Statement
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IKEA SWOT ANALYSIS: Comprehensively Deconstructing a Furniture Giant

Introduction.

IKEA SWOT ANALYSIS : In the realm of home furnishing, IKEA has established itself as a global powerhouse, redefining the concept of affordable and stylish furniture. This Swedish retail giant has a unique business model that sets it apart from competitors, and it has continued to thrive over the years. To understand how IKEA has achieved such success, it is essential to conduct a thorough SWOT analysis , examining its strengths, weaknesses, opportunities, and threats.

IKEA SWOT ANALYSIS

Ikea strengths.

1. Global Market Presence:

IKEA’s global market presence is not only reflected in the number of stores but also in its market share. As of 2019, IKEA held approximately 33% of the US furniture market, solidifying its position as a dominant player. This market share allows for economies of scale, enabling-IKEA-to negotiate better deals with suppliers and maintain competitive prices.

2. Cost Leadership:

One of the key components of IKEA’s cost leadership strategy is its vertical integration. By owning various stages of the supply chain, including production facilities and forestry operations, IKEA reduces costs by cutting out middlemen. In addition, the company’s massive purchasing power gives it a significant advantage in negotiating lower prices from suppliers. These cost advantages are further amplified by efficient inventory management and logistics practices, allowing IKEA to pass on savings to customers.

3. Product Design and Innovation:

IKEA’s commitment to product design and innovation is evident in its vast range of products across different categories. The company invests heavily in research and development to create functional, stylish, and affordable furniture solutions. Moreover, IKEA’s flat-pack concept not only saves costs but also offers convenience for customers, enabling them to transport and assemble products easily. The company’s emphasis on innovative solutions has consistently garnered attention and resulted in numerous design awards and recognitions.

4. Sustainable Practices:

IKEA’s sustainability initiatives extend beyond its operations and supply chain. The company actively engages in partnerships with organizations such as WWF and UNICEF to promote sustainability and social responsibility. In terms of materials sourcing, IKEA aims to use renewable and recyclable materials, reducing its reliance on virgin resources. Additionally, the company implements energy-efficient measures in all stages of the product lifecycle, from production to transportation. By establishing itself as a leader in sustainability, IKEA not only aligns with consumer values but also gains a competitive advantage in a market increasingly driven by environmentally conscious buying behavior.

Additional Strength: Customer Loyalty Program

IKEA’s customer loyalty program, IKEA Family, contributes to its competitive advantage . This program offers various benefits, such as member discounts, extended warranties, free product insurance, and exclusive access to events and promotions. By nurturing a loyal customer base, IKEA can not only drive repeat purchases but also gather valuable customer data to enhance its marketing efforts and improve the overall shopping experience.

IKEA Weaknesses

1. Complex Store Layouts:

IKEA’s store layouts are intentionally designed to encourage customers to explore and engage with the products. However, the intricate maze-like layout can lead to inefficient navigation and difficulty finding specific items. This challenge is particularly pronounced during peak shopping periods, when crowds can further contribute to a confusing shopping experience. Streamlining the layout and providing clear signage can help alleviate this weakness and enhance customer satisfaction.

2. Criticisms Surrounding Quality:

While IKEA strives to offer products of good quality, some customers have expressed concerns about certain items’ durability and long-term performance. Improving quality control measures throughout the production process, enhancing product testing procedures, and adopting advanced manufacturing techniques can help address these concerns. Furthermore, investing in better packaging materials and providing clear instructions for assembly can minimize customer frustrations and enhance the overall perception of quality.

Additional Weakness: Limited Customization Options

One potential weakness for IKEA is the limited customization options available for its products. While the company offers a range of styles and configurations, customers who desire more personalized furniture choices may opt for competitors that provide greater flexibility. To address this weakness, IKEA can explore the introduction of customizable components or partnering with third-party vendors to offer additional customization options.

IKEA Opportunities

1. E-commerce Growth:

As the global e-commerce market continues to expand, IKEA has the opportunity to invest in its online channels and enhance the digital shopping experience. By leveraging technology, including augmented reality and 3D visualization tools, customers can virtually explore IKEA’s products and visualize them in their own spaces. Expanding e-commerce operations also allows IKEA to reach customers in geographically remote areas and adapt to changing consumer preferences for convenient and contactless shopping experiences.

2. Expansion in Emerging Markets:

Emerging markets, especially in Asia and Africa, present significant growth opportunities for IKEA. These regions are experiencing rising incomes, urbanization, and a growing middle class, leading to increased demand for affordable yet functional furniture solutions. By tailoring its product offerings, marketing campaigns, and store formats to meet the specific needs and preferences of consumers in these markets, IKEA can tap into new customer bases and establish a strong foothold.

3. Sustainability as a Competitive Advantage:

As consumers become more environmentally conscious, sustainability initiatives can serve as a powerful marketing and differentiation tool. IKEA can further amplify its sustainability practices by exploring innovative solutions, such as utilizing recycled materials in product manufacturing or adopting circular economy principles. Embedding sustainability into its brand strategy and effectively communicating these efforts to customers will position IKEA as a leader in environmental responsibility and attract consumers seeking authentic sustainable choices.

Additional Opportunity: Home Office Solutions

With the rise of remote work and the increasing number of people working from home, IKEA has the opportunity to develop and promote home office solutions. By offering a range of ergonomic furniture, innovative storage solutions, and efficient workspace designs, IKEA can cater to the evolving needs of customers in the post-pandemic era. Capitalizing on this trend can drive demand and stimulate growth in a rapidly expanding market segment.

IKEA Threats

1. Intense Competition:

IKEA operates in a highly competitive market, facing both traditional and online competitors. Established furniture retailers, online marketplaces, and niche players pose constant challenges to IKEA’s market share. To stay ahead, IKEA must continue to invest in research and development, product innovation, and marketing efforts that promote the unique value propositions of its brand.

2. Economic Uncertainty:

Global economic downturns, fluctuations in consumer spending patterns, and currency exchange rate fluctuations can adversely affect IKEA’s revenue. During times of economic uncertainty, consumers tend to defer non-essential purchases, impacting the demand for furniture. Adapting pricing strategies, new market penetration efforts, and diversification into ancillary services or product segments can help mitigate the risks associated with economic fluctuations.

3. Copycat Brands:

Given IKEA’s successful business model, it faces the threat of copycat brands seeking to replicate its success and undercut prices. These brands often focus on imitating IKEA’s designs and offering similar products at lower costs, eroding IKEA’s market share. To combat this threat, IKEA must continue to differentiate itself through a combination of unique product offerings, strong brand loyalty, and ongoing investment in design innovation.

With its global market presence, cost leadership strategy, product design excellence, and commitment to sustainability, IKEA has carved a distinct niche in the home furnishings industry. By addressing weaknesses related to complex store layouts, product quality, and customization options, IKEA can enhance its customer experience and maintain its competitive advantage. Furthermore, seizing opportunities in e-commerce growth, expansion in emerging markets, sustainability, and home office solutions will allow IKEA to drive future growth. Mitigating threats from intense competition, economic uncertainties, and copycat brands requires proactive measures and continuous innovation. As IKEA continues to leverage its strengths, address weaknesses, and adapt to changing consumer preferences, it will remain a globally recognized leader in the flat-packed furniture market

Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page

• In-Depth SWOT Analysis of IKEA

Introduction

IKEA has grown from humble beginnings to become the world's largest home furnishings retailer, with over 300 locations in a variety of nations. IKEA capitalizes on its strengths and mitigates certain shortcomings thanks to strong resource planning and allocation. The purpose of this IKEA SWOT analysis is to show the strengths, opportunities, and threats that exist in the home furnishing business, as well as how IKEA has succeeded to rise through the ranks. With its first store opening in Norway in 1963, the company entered the flat-pack furniture business. Following that, the business has been able to attract millions of new clients each year.

Indeed, IKEA has made great success over the world. In this IKEA SWOT analysis, we'll take a closer look at a variety of elements that have influenced the company's decision-making throughout the years. A significant emphasis is placed on the company's strengths as well as the numerous prospects. Meanwhile, some vulnerabilities and risks need to be addressed in the future.

2. IKEA's Strengths

IKEA's greatest strength is its clear vision, which is to provide value to its consumers regardless of market situations. This has resulted in a clear and well-defined company strategy and retailing method that is innovative in its simplicity, lethal in its competition targeting, and successful in its positioning.

Another significant asset of the firm is its straightforward idea, which converts into a variety of items that consumers can build themselves, resulting in massive cost savings that are then carried on to the consumers. IKEA has risen to become the world's biggest furniture retailer because of its single-minded concentration on cost leadership.

Increased use of recycled resources, wiser use of raw resources, creating and sustaining long-term partnerships with suppliers, and exploiting the efficiencies and synergies from economies of scale are some of the criteria used by IKEA to assess its strengths.

Moreover, this large selection of designs is reasonable for the typical person, and after acquiring the furniture, it assists in the delivery of your items to your house, thereby lowering consumer expenses.

3. IKEA's Weaknesses

Given that IKEA operates in several nations throughout the world, it is a large-scale and large-scale business, making it challenging to maintain consistent standards across sites. Though the organization makes every effort to ensure consistent quality across its product line and its locations, quality assurance that is reproducible and scalable is a major flaw.

Quality occasionally suffers as a result of the company's obsessive focus on cost leadership, especially in the current environment, when the costs of numerous inputs and raw materials have risen, affecting the company's financial performance. It's worth noting that maintaining quality in the face of rising expenses might be challenging at times.

The poor quality of their items has been the main source of worry. Many consumers have complained about their furniture falling within a few days after it was set up. When it comes to necessities in people's everyday lives, quality appears to be significantly more crucial when making purchasing selections.

IKEA's operations raise environmental issues, and the firm has difficulty explaining and expressing its environmental policy to consumers, shareholders, and other stakeholders.

4. IKEA's Opportunities

With its "green" marketing strategy, the business has a big possibility to attract clients who are interested in purchasing such items. The emergence of the ethical consumer, or the "Ethical Chic" purchase process, which indicates that buyers would want to buy ecologically aware items, is an opportunity waiting to be unleashed for the organization.

The company's cost leadership, which entails a single-minded concentration on cost at the detriment of all else, is maybe its largest opportunity. While this has generated quality issues, customers do not appear to mind because they are receiving their money's worth, and adding value to customers is another important possibility.

IKEA benefits from being a well-established market player, despite the severe rivalry in the furniture business. As a result, the corporation will have a better understanding of how to operate the business. As a result, expanding into additional nations may result in more new clients, resulting in more revenue. With the growth of the internet, more businesses are relocating their operations online.

The company's development into emerging countries and the developing globe, where it has an untapped client base that can be used for effective profitability, is the second potential. IKEA is already planning to enter areas such as China and India with a defined cost leadership strategy, which it expects would benefit the firm.

5. IKEA's Threats

IKEA's low-cost business strategy has been copied and duplicated by competitors, implying that the corporation must continually innovate to stay ahead of the pack. For example, some regional and local businesses have jumped on the DIY bandwagon and are concentrating on cost-cutting, forcing IKEA to develop new methods to remain flexible and adaptable.

DIY as a primary driver of strategic success is no longer the sole Unique Selling Proposition of IKEA, and the growth of online merchants that can provide even lower costs since they do not have a real presence means that they are closing in on IKEA.

Another issue is employee unhappiness, which has led to litigation and may cost the corporation millions in settlements and legal bills due to claims of maltreatment and unpaid overtime.

IKEA is also seeing a decrease in the number of new customers. Given the risks facing IKEA, it would be disastrous for the company's future if it did not come up with specific remedies to retain its market dominance.

6. Mind Map

The SWOT Analysis is used to examine the strategy of IKEA, the world's largest furniture store. The Do It Yourself (DIY) concept ensures that the company keeps costs low and passes on the value to customers. The company was founded in 1943 and is known for its simple yet effective approach to retailing with the DIY or Do It Yourself concept, which ensures that the company keeps costs low and passes on the value to customers. IKEA's items are typically ready to use and flat packaged, which means that buyers may put them together themselves. The corporation is also active in the internet realm, with annual revenues of more than a billion dollars from both online and offline operations.

7. Key Takeaways

A corporation may use a SWOT Analysis to get a thorough look at the aspects to consider while making decisions. As new possibilities arise, a corporation can learn how to take advantage of them. IKEA might also concentrate on potential risks and challenges to their business. IKEA can make their products models more adaptable and responsive to changing market conditions by making full use of the possibilities that occur. IKEA is a well-known worldwide trend, and it has managed to stay ahead of the competition in the furniture retailing market because of its creative business strategy and concentration on goods, processes, and systems.

The company may diversify into other items and product lines since its business model can be replicated in other areas. To do so, it would take new thinking and a new approach to its strategy, combining low-cost leadership with other success factors such as scalability and quality emphasis. Finally, the corporation may expand into new areas, where its products and business strategy are more likely to succeed, and an untapped client base can be exploited. It can all be summarized in a mind map diagram, just like below. You can make one or edit any template available in EdrawMind, and not only that, but you can also make the mind map diagram from scratch.

8. References

• SWOT Analysis of IKEA 2021: Strengths & Weaknesses

In-Depth SWOT Analysis of Tesla

In-Depth SWOT Analysis of Nike

McDonald's SWOT Analysis 2023

SWOT Analysis of Gucci

In-Depth SWOT Analysis of Netflix

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How IKEA Evolved Its Strategy While Keeping Its Culture Constant

If you’re leading your team through big changes, this episode is for you.

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The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, the company was at a crossroads. Its beloved founder had died, and the exponential rise of online shopping posed a new challenge.

In this episode, Harvard Business School professors Juan Alcacer and Cynthia Montgomery break down how IKEA developed, selected, and embraced new strategic initiatives, while fortifying its internal culture. They studied how IKEA made big changes for the future and wrote a business case about it.

They explain how the company reworked its franchise agreements to ensure consistency among its global stores. They also discuss how IKEA balanced global growth with localization, developing all-new supply chains.

Key episode topics include: strategy, growth strategy, disruptive innovation, emerging markets, leadership transition, competitive strategy, company culture, succession.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the original HBR Cold Call episode: IKEA Navigates the Future While Staying True to Its Culture (2021)
• Find more episodes of Cold Call
• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, they were at a crossroads. Their beloved founder had died, and the exponential rise of online shopping posed a new challenge. Today, we bring you a conversation about how to develop, select, and embrace a new strategic initiative – with Harvard Business School professors Juan Alcacer and Cynthia Montgomery. They studied how IKEA made big changes for the future while fortifying its internal culture and its external identity. In this episode, you’ll learn how the company reworked its franchise agreements to create a more managerial and modern culture, and ensure consistency among its global stores. You’ll also learn how they balanced global growth with localization – including new supply chains. This episode originally aired on Cold Call in June 2021. Here it is.

BRIAN KENNY: For some of the world’s most celebrated founders, the entrepreneurial drive kicks off at an early age. Mark Zuckerberg developed Facebook in his Harvard dorm room at the age of 18. Michael Dell made $200,000 upgrading computers in his first year of business, he was 19. Before Jack Dorsey founded Twitter, he created a dispatch routing platform for taxis in his hometown of St. Louis, while he was in middle school. But then there’s Ingvar Kamprad who began selling matches at the age of five to neighbors in his rural Swedish homestead. By the age of seven, he was buying matches in bulk in Stockholm and selling them at a profit back home. Ingvar learned early on that you can sell things at a low price and still make a good profit. A philosophy that fueled the success of his next business venture, IKEA. Today on Cold Call , we welcome professors, Juan Alcacer, and Cynthia Montgomery to discuss their case entitled, “What IKEA Do We Want?” I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network. Juan Alcacer’s research focuses on the international strategies of firms in the telecommunications industry and Cynthia Montgomery studies the unique roles leaders play in developing and implementing strategy. They are both members of the Strategy unit at Harvard Business School. And thank you both for joining me today. It’s great to have you on the show.

CYNTHIA MONTGOMERY: Thanks Brian.

JUAN ALCACER: Thank you for having us.

BRIAN KENNY: You’re both here for the first time, so we’ll try and make it painless so we can get you to come back on. I think people are going to love hearing about IKEA and getting an inside view. Most of us have had that experience of being like mice in a maze. When you go into an IKEA store, you are compelled to walk through the whole place. It’s really brilliant, so many of the touches and things that they’ve done. And this case helps to shine a light, I think, on some of those decisions and how they were made. I had no idea how old the company was. So just starting with its history, it’s going to be good to hear about that. Juan, I want you to start, if you could, by telling us what would your cold call be to start this case in the classroom?

JUAN ALCACER: I like to start the case, bringing in the emotions of the students and their relationship with IKEA. So most of our students have had some experience with IKEA. So I’d just start asking how many of you have been in IKEA, and then I’d start asking why? Why did you go to IKEA? And this time telling you all the things that you just mentioned, for instance, walking through the maze, going to eat the meatballs. So they started bringing all these small, decisions that were made through the years, that made IKEA, IKEA.

BRIAN KENNY: Who doesn’t love the meatballs? Cynthia, let me ask you, you’re both in the Strategy unit at Harvard Business School, there’s a lot of strategy underlying this whole case. I’m curious as to what made you decide to look at IKEA and sort of, how does it relate to your scholarship and the things that you think about; the questions you try to answer?

CYNTHIA MONTGOMERY: I’m really interested in the choices firms make about who they will be and why they will matter? The core questions at the identity of a company. In 1976 Kamprad laid out very, very carefully. What IKEA would do, who it would be. He identified its product range. The customers it would serve, the company’s pricing policy, all in a document called, The Testament of a Furniture Dealer. And he described it as, “the essence of our work.” And 45 years later, it was still required reading for all of the IKEA’s employees. It’s probably the most compelling statement of corporate purpose I’ve ever seen.

BRIAN KENNY: Remarkable in a company that’s based on furniture. It was a very, sort of powerful thing. There’s an exhibit in the case that shows the whole Testament. Maybe we can dig a little bit into the history here. I alluded to the fact that it’s been around for a long time. Cynthia, just tell us a little bit about how the company came to be and how it evolved over time.

CYNTHIA MONTGOMERY: IKEA started actually as a mail-order business in Sweden and in the late 1940s Kamprad noticed that despite a lot of demand for furniture, agreements between the furniture manufacturers and retailers were keeping furniture prices real high. He was interested in a different set of customers. And he decided that to attract farmers and working class customers, he needed to be able to offer quality furniture at lower prices.

BRIAN KENNY: What were some of the early challenges that they faced. I’m also curious a little bit about the Swedish culture and how that sort of factors in here. Because there was definitely undertones of that factoring into the way they set this up.

CYNTHIA MONTGOMERY: It’s a virtue to be frugal and to be very careful about how you spend your money. And that made a huge impression, particularly given his background, growing up on a farm for Kamprad, he decided he really wanted to lower the prices of furniture and began to do so. And it turned out that there was a very, very strong response from other furniture manufacturers who basically said that they were going to boycott him. They wouldn’t allow him into their furniture fairs, him personally, as well as his company. And so in turn, what happened was that they also pressured local suppliers not to sell to a IKEA anymore, basically trying to force him out of the market. And what happened was that that actually drove Kamprad to Poland as a source of supply because local firms wouldn’t supply him anymore. And in the process, he discovered that Polish manufacturers could actually make furniture at far, far lower costs than Swedish manufacturers. And that essentially gave IKEA a cost structure that was more like a difference in kind, than a difference in degree. And that proved enormously important to building almost insurmountable competitive advantage for IKEA.

BRIAN KENNY: He was also really keen with innovations early on that things like the restaurant area and the childcare space, what were some of the insights that drove him to make those kinds of decisions?

CYNTHIA MONTGOMERY: One of the things that he decided quite early on is that he wanted to have the stores located out of town. And the reason is because land there was much, much cheaper. So he built these ,as you described earlier, Brian, these gigantic stores on the outskirts of town and they had lots and lots of square footage and lots and lots of merchandise, but you know, it took time to get there. It took time to shop there and what he wanted to do was make it worth it for the customers to make the trip, worth it for them to spend a lot of time in the stores. So he decided to add restaurants and the now famous meatballs, which come in several flavors, actually around the world, and to add childcare centers that would care for young children while the parents shopped. On the low cost front, he was innovative in other ways, he actually borrowed the idea of flat pack from another innovator, but he’s the one that actually brought it to life in such a big way. Then he discovered that if you let the clients go in and pick off the furniture packs themselves, they could even save more money and lower the costs in the store.

BRIAN KENNY: So they have a pretty complicated org structure, when we start to dig into some of the nuance of the case. Juan, could you describe for us, how they’re set up from an org structure standpoint?

JUAN ALCACER: You have to realize that coming from Sweden, which is one of the countries with the highest taxation for corporations in the world. So early on, they decided to find some organization structure and legal structure that would allow them to lower taxes. And that created basically an ownership based on foundations, based in the Netherlands. And they decided, early on, to separate the company into pieces. One is the franchise store, which is basically running the brand and running the management image of the brand. And then the operational part of the company, which is a franchisee. And for many years, those two things were separated. The franchisee was also in charge of manufacturing and so forth. So it was a very strange structure, that was put in place in part by the charisma and the leadership style of Ingvar Kamprad. If I can go back to your question about the Swedish culture. One of the things that, at least for me, is very striking is that when you look at multinationals, there’s a thing called the liability of being a foreigner, which means that when you go to another country, you have some disadvantages. And you try to mitigate that liability of being a foreigner, by pretending to be of that particular country. IKEA went with a totally different approach, they’re totally Swedish. Names of their products are impossible to pronounce. The fact that they have meatballs, they have their Swedish flags all over the place. They embrace the Swedish spirit as a part of the brand. You don’t see many multinationals with that. That makes IKEA what it is today.

BRIAN KENNY: I definitely think that’s part of the appeal here in the US, for sure, is people being exposed to the Swedish culture in a way they never had before. What is the culture of the company like, what’s it like to work there?

JUAN ALCACER: We went to both the Netherlands and to Sweden and we had a great time. It’s a very egalitarian culture. All the VP’s, high-level managers, none of them have an assistant. Only the CEO has an assistant. They don’t have offices, so everybody shares an open space. The whole place is decorated with IKEA furniture, everybody talks to each other by their first name. It’s very collegial, very friendly.

CYNTHIA MONTGOMERY: I would add to that. I think IKEA was incredibly generous to us, in the sense that they shared all kinds of confidential, internal documents and were really willing to talk in a very open and forthright way, about both their strengths and their challenges, which was incredibly refreshing. And as Juan said, that it was very egalitarian, and not surprisingly IKEA was one of the first companies to embrace democratic design. And that spirit was everywhere in the company.

BRIAN KENNY: Cynthia, what would you say are some of the keys to their success over the years?

CYNTHIA MONTGOMERY: I’d say that IKEA basically picked a lane and stuck with it. They had clarified, as I said at the top of the show, very, very carefully about what they wanted to do, who they wanted to be. And what they said is, look, this is what we’re going to be about. We’re going to offer an extensive range of practical, well-designed furnishings at low prices. And we’re going to serve the many, not the few. And the many are those with limited financial resources. When you have such clarity about what you want to do, then you can set out and try to maximize how you approach that. Essentially IKEA built a system, to do exactly that, extremely well and their distinctiveness made them truly an iconic firm. And it’s great when you talk with students about, what’s the purpose of your business?, What are you doing? What’s interesting is that oftentimes they can describe much more carefully what IKEA is doing, than what their own businesses doing. The last thing I would add, is that as Juan one said, they’re really synonymous with Sweden and they put that right out there. It’s almost like the way that Coca-Cola is synonymous with the US. And that has been a big part of their advantage.

BRIAN KENNY: Okay. So we’ve painted a very rosy picture for IKEA, but it’s an HBS case. So there’s tension, inevitably. So let’s dig in a little bit to where the case brings us. I’m going to mispronounce his name. I hope I don’t, but Torbjörn Lööf is that close?

CYNTHIA MONTGOMERY: Yeah.

BRIAN KENNY: He is the protagonist in the case. And he is stepping into a leadership role here really after an iconic leader has stepped back and that’s a challenge. Any time that happens, and a leader has to step in. And as he starts to sort of peek underneath the hood a little bit, he starts to see some of the challenges that IKEA is facing in this now seventh decade, I guess, of their existence. So Juan, maybe you can set that up for us a little bit.

JUAN ALCACER: It’s not only that he is stepping in the shadow of a leader that created the company. It’s that the company is still controlled by the family. So this is not a public firm, this is a private firm. So, he had to basically walk a very, very thin line, trying to take IKEA towards the future, but still preserving the past. And he had basically two main tasks, one is short term, that organization restructure that we were talking about, that was very complicated was created products. As I said before, the franchisee, which is basically the one that was running all the operations, was also the manufacturer. But there were other franchises. So for instance, the operations in Middle East are run by another company. So they wanted to create a system of transparency, that all the franchises are run the same way. When you have a franchisee that has basically represented 80% of your sales, and the ones that are representing 2% or 3%, there is an imbalance of power. So they tried to create a structure that is more managerial, that is more modern, that will allow to create incentives for new franchisees to come into the system. So that transaction was basically transferring production and transferring the functions that were in the franchisee back to the franchisor. There were 25,000 people that have to move from one place to another.

BRIAN KENNY: Wow.

JUAN ALCACER: They didn’t move physically, but in terms of the legal status they shift around. And the second is to bring IKEA to the world. What they observed is that there were some changes in demographics, they were targeting the low-income, what they call the thin wallets of the world, but it turned out that people that would go to IKEA are not thin wallets anymore. These people have already moved towards the middle-class and they also have this whole, to increase the number of consumers to three billion, and that meant that they have to basically grow globally, at a rate that they have never done, before they had two or three markets, like China and India. They also have the issue of eCommerce, to pick up and every retailer in the world is dealing with that. So, it’s two steps. One, getting the house in order, and second one, creating a path for the future for IKEA to become an icon for the next 75 years.

BRIAN KENNY: Yeah. And I also think at some level it’s hard to sustain that original mission that they set out with, when you’re trying to expand so rapidly and bring in a much larger audience. Cynthia, I don’t know if you have other observations about these changes they were facing.

CYNTHIA MONTGOMERY: Absolutely. Because one thing is that you can look at the challenges that came from expanding into new geographies. But the other thing that they found in a large study that they did, is that there were challenges in their core business as well, that the countries they’d been in for a number of years, and what I’ll call the big blue box stores, mostly in developed countries. What they found is that increasingly many of their customers in those markets wanted new conveniences. They wanted stores that were located closer to city centers because a number of people say in their late twenties, early thirties are not driving and don’t have cars. And they found that there was an increasing demand for delivery and assembly services for shopping online. These trends are worrying to a huge number of retailers, but particularly a challenge to IKEA because low price, low, low price, so low that that people can recognize the difference. That being at the heart of their strategy. And customers’ willingness to spend time getting to the store, hauling furniture about, ultimately assembling it. Those are at the very, very heart of their low-cost strategy and their very distinctive value proposition. It was a big challenge within the developed markets as well.

BRIAN KENNY: And depending on where they went in the world, a different set of challenges pops up almost everywhere. Juan, you mentioned earlier that they pushed back against localization, but is that a sustainable strategy? When you’re trying to go into entirely new markets like China and India.

JUAN ALCACER: The beauty of IKEA is that they found a segment across different cultures that was very similar. College students the United States, that needed to have furniture for a few years only, it could be young couples that are opening a new house, in some places it’s immigrants that are moving from one country to another country that need to buy furniture, but they don’t have the money to do so. So there was this very common segment across the world that they were able to then define, that allows them to have basically 80% of their line, of their range, is common across countries. And they have around 10% to 20% that varies by country. Now, when they go to China, and they go to India, they find that the changes have to be of a higher scale for three reasons. One, the tastes are different, also the materials, when you are going to India and you are going to houses that are in a high humidity environment, the type of wood that you can use is different. Now you start, not only changing the look of the product but you also have to change how you made it. And the third big challenge is when you look at what is defined as thin wallet, in these markets, is really thin. It’s not thin wallet in Sweden, it’s not thin wallet in the United States. So, you have to go to prices that are really, really low. And that means that you are already a low cost producer but you have to go even lower. That means that you have to change your supplier, so it starts changing the fundamental parts of the business model that they created through the years.

BRIAN KENNY: And it could probably, pretty easily, get away from you. So this does call for a strategy. Cynthia, can you describe for us what the three roads forward are? This was sort of underpinned their strategy going forward and how they were going to deal with some of these challenges.

CYNTHIA MONTGOMERY: Basically, the three roads, the first was affordability, as Juan said, this isn’t affordability in the way that they, at the level at which they’ve traditionally thought about it. This is affordability for wallets that are either very thin or actually where the willingness to pay just isn’t as high, because they’re accustomed to having goods that are at very low prices. So they wanted to attack affordability for people who could not afford IKEA today. They cared a lot about accessibility. They’ve got to reach and interact with people where they are. And the last is sustainability, and they felt really, really strongly about this. And I think much in line with what you see with a number of other countries in Europe, that they cared a lot about the sustainability of the products and wanted to make a positive impact for people, society and the planet. And they’re taking on all three of these aspirations at once.

BRIAN KENNY: You have written many cases, I’m sure that parallel this, what are some other firms that have faced similar challenges and maybe figured out a way to deal with the same sets of challenges?

JUAN ALCACER: The challenge of going overseas, we didn’t write cases about multinationals for many years. They always have this tension between coordination in headquarters and adaptability in each one of the subsidiaries. So IKEA was very good at playing that game for many, many years. In a way they were going to countries that were somehow similar to Sweden. Now that they are venturing to countries that are farther away in many dimensions, not only physically, but also in terms of economic distribution, in terms of taste. They are seeing this tension to be amplified. We have seen that in many companies, Procter and Gamble has been doing that for years and years, Unilever has been doing that for years and years. IKEA has done it for 75 years. They went overseas very early on. But now the challenge is a little bit higher. The other challenge is that Cynthia also mentioned, which is basically adapting to new technologies and new demographics. Every retailer is facing that. Any supermarket, any chain that has been selling in brick and mortar is facing those challenges. So, what is interesting about IKEA is that they are facing these all at the same time and they’re facing this during the process of transition from the leader that created the company to a new set of managers that are more professional and are not part of the family.

BRIAN KENNY: You mentioned technology. I’m just curious, the role that the internet plays in this, because now everybody can see, you know, through YouTube and other things, what the experience is like from one place to the other, and how important is consistency across all those geographies, versus a little bit of localization to make it feel a little bit more like this is the China version of IKEA versus the European version of IKEA. Cynthia, do you have thoughts on that?

CYNTHIA MONTGOMERY: That’s the real challenge here in the sense that, how do you take this whole model that has been developed over so many years? And it’s very, very hard to imitate, which has given them a lot of strength over the years, but when the environment changes, instead of responding in a piecemeal way to all kinds of external stimuli, it’s how do you take this whole model and evolve it in some coherent way that stays true to the iconic sense of who IKEA is? I really see it fundamentally, as an existential question for IKEA.

BRIAN KENNY: Such a great point. Look, I want to thank both of you. This has been a really interesting discussion about a brand that we all know and have experienced many times firsthand. I have one more question for each of you before we part ways. And that would be if there’s one thing you want people to take away from this case, what would it be? Juan, let’s start with you.

JUAN ALCACER: What I would like listeners to take from this, is we have this mentality of growth, growth, growth, and expanding and doing different things, and when you look at IKEA, you have to wonder, is it better that IKEA stays doing what they do well, or do they have to keep growing and entering all these markets and adapt to overseas. We have this basic assumption that growth at any cost should be the goal. I would like the listeners, when they look at the case and think about the cases, to question that very basic assumption.

BRIAN KENNY: Cynthia?

CYNTHIA MONTGOMERY: One of the things about IKEA that I think it’s really, really important to know is that they really brought something different to the world and they did it in a very compelling way. So at the heart, to do something that’s distinctive, that adds value. It comes through really strong in the IKEA story. At the same time, when the environment changes, how do you evolve, is really challenging. And so the fact that they’re being so open in how they’re confronting this, I think there’s a lot to learn there. It’s a challenge. I think it’s really important to remember what’s at the heart of this company, is that they’re really bringing something that’s very unique and they need to continue to do that.

BRIAN KENNY: Juan Alcacer, Cynthia Montgomery, thank you so much for joining me. The case is called, “What IKEA do we want?” Thanks again.

JUAN ALCACER: Thank you.

HANNAH BATES: You just heard Harvard Business School professors Juan Alcacer and Cynthia Montgomery in conversation with Brian Kenny on Cold Call .  We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review. If you want more podcasts, articles, case studies, books, and videos like this, find it all at HBR dot org. This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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Introduction

This article analyzes the strategy of the world’s leading furniture retailer, IKEA using the SWOT Methodology. The company was founded in 1943 and is known for its simple yet effective approach to retailing with the DIY or the Do It Yourself concept, which ensures that the company keeps costs to a minimum and passes on the value to the customers.

The products sold by IKEA are mostly ready to use and flat packed meaning that they can be assembled by the customers themselves. The company has a presence in the online world as well and the total sales from its online and offline businesses are more than a Billion Dollars per year. The key strategic driver of IKEA’s success is it’s no nonsense approach to retailing that has paid rich dividends for the company and its shareholders (literally and metaphorically).

The point to be noted here is that it is sometimes difficult to maintain quality in the context of increasing costs and the need to replicate standards across its locations worldwide.

Opportunities

IKEA is a well-known global trend and through its innovative business model and its focus on products, processes, and systems , it has managed to stay ahead of the competition in the furniture retailing business.

The company can diversify into other products and product lines as it can replicate its business model in other realms as well. To do this would require fresh thinking and a new approach to its strategy that would combine low cost leadership with additional drivers of success like scalability and focus on quality.

Finally, the company can enter the emerging markets where its products and its business model are likely to be met with success and the untapped customer base can be leveraged.

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Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team . MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider . To Know more, click on About Us . The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

• Strategic Management - Introduction
• Strategy - Definition and Features
• Components of a Strategy Statement
• Vision & Mission Statements
• Strategic Management Process
• Environmental Scanning
• Strategy Formulation
• Strategy Implementation
• Strategy Formulation vs Implementation
• Strategy Evaluation
• Strategic Decisions
• Benefits of Strategic Management
• Business Policy
• SWOT Analysis of Blackberry
• Personal SWOT Analysis
• SWOT Analysis of China Mobile
• Human, Social, and Intellectual Capital as a Means of Competitive Advantage
• Blue Ocean Strategy and its Implications for Businesses
• Overfished Ocean Strategy: How to Drive Growth and Attain Profitability
• Porters Five Forces Analysis of the Airlines Industry in the United States
• Porters Five Forces Analysis of Samsung
• Porters Five Forces Analysis of Virgin Atlantic
• Porters Five Forces Analysis of China Mobile
• Strategic Leadership
• Some Pitfalls to be Avoided
• Corporate Governance
• Business Ethics
• Social Responsibilities of Managers
• Core Competencies
• Core Competency Theory of Strategy
• Ansoff Matrix
• Routes to Strategic Growth
• Diversification as a Viable Corporate Strategy
• 5 Configurations of Strategic Management
• Role of Planning, Plans and Planners
• Reasons for Avoiding Strategic Planning
• Strategic Management for the Millennials
• Strategizing for the Future
• PESTLE Analysis of the Global Aviation Industry
• PESTLE Analysis of Starbucks
• PESTLE Analysis of Samsung
• SWOT Analysis of Unilever
• Business Strategies to Beat the Downturn
• Analysis of Amazon’s Corporate Strategy
• How Amazon Can Improve its Corporate Strategy
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• Actualizing Business as Usual Strategies for Mission Critical Organizations and Functions
• Why Indian Firms Must Strive for Strategic Autonomy in Their Geoeconomic Strategies

IKEA SWOT Analysis – an overview

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. SWOT analysis is a strategic tool that helps businesses to analyse internal and external factors affecting the bottom line. Strengths and weaknesses are internal factors that can be influenced by the company. Opportunities and threats, on the other hand, are external factors that have to be taken into account in strategic decision-making by the senior management.  The following table illustrates IKEA SWOT analysis:

SWOT Analysis summary for IKEA

Strengths in IKEA SWOT Analysis

1. IKEA is an undisputed market leader in the global market of home improvement and furnishing. The Swedish furniture chain has 11 franchisees operating in more than 500 locations in 63 countries. [1] Additionally, the furniture retailer has 22 Pick-up and Order Points in 11 countries, 41 Shopping Centres in 15 countries and 38 Distribution sites in 18 countries. [2] The current leadership position of the company provides substantial advantages in terms of the economies of scale and at the same time creating a substantial entry barrier for new competitors. This is the most considerable strength for SWOT Analysis for IKEA

2. IKEA has developed the notion of democratic design which implies achieving an attractive form, quality, function and sustainability at a low price. The company attempts to integrate this notion to all of its products. Consistently increasing revenues of the business is an indication of successful outcome of such attempts. IKEA works with more than 1,000 designers globally through their suppliers who operate under democratic design culture and implement the concept in practice on a daily basis. Furthermore, the Swedish furniture chain has 18 in-house designers working with product development across the entire range [3] . The home improvement and furnishing chain also organizes annual democratic design days to build upon its success with positive implications on the bottom line.

3. IKEA has been able to deliver attractively designed products at low costs thanks to its product innovation capabilities. Innovations by IKEA play an instrumental role in terms of achieving democratic design as discussed above. The company has an innovation lab dubbed Space 10 in Copenhagen which conducts a wide range of futuristic projects such as 3D-printed meatballs, urban farming, energy-harvesting furniture and air-improving windows.

The list of innovative products introduced by IKEA include, but not limited to Vava lamps made of leaves, adhesive-free furnishings, severed seat storage, building block kitchens, flat-pack funerals etc.

However, the most important innovation introduced by IKEA is a process innovation of selling furniture in the flat pack form. Specifically, the world’s largest furniture retailer pioneered the practice of selling furniture in flat pack forms, where assembly is done by customers following clear instructions and illustrations provided by the company. This process innovation can be specified as the biggest factor that enabled IKEA to offer its products at the lowest prices.

4. IKEA generated operating income of EUR 25,6 billion during financial year 2021 an increase of 8,5% compared to the previous year [4] . The company has a healthy profit margin and strong cash reserves. Thanks to its solid financial position, the company is able to commit to considerable R&D expenses to further strengthen its presence in the global marketplace. Moreover, IKEA’s financial strengths can play an important role of cushion in times of recessions and decline in demand. Furthermore, in 2021 Interbrand and Forbes estimated IKEA brand value as USD 20,03 billion and USD 15,80 billion respectively. Strong brand value is a convincing indicator of a high level of customer loyalty and an overall strength of the business.

 5. IKEA offers about 12000 products, yet apart from food products its product portfolio is efficiently focused. Specifically, the company offers a wide range of furniture and home appliances products that share the common set of features such as innovative design, low price and a high level of practicality. Moreover, IKEA stays up-to-date with changes in customer needs and preferences. Highly focused pattern of IKEA product portfolio increases the effectiveness of brand identity with positive implications on consumer loyalty.

Weaknesses in IKEA SWOT Analysis

1. During FY2021 only 11,3% of global sales were generated in Asia region, at the same time when 71% of sales were generated in Europe’s saturating market [5] (see figure below). Taking into account rapidly expanding economies of Asian region and prolonging economic stagnation in Europe, it can be argued that IKEA’s current weak presence in Asian market might weaken the share of the business in the global marketplace in medium-term perspective. This is a major weakness within IKEA SWOT Analysis framework.

IKEA sales per region in FY21

2. IKEA brand image is yet to fully recover from a series of ethics-related incidents the company had to deal with during the past years. The most controversial incidents include using Photoshop to alter the images of women in its Saudi Arabia catalogue in September 2012. Revelations by Ernst & Young in the same year that IKEA did have businesses with suppliers based in communist East Germany 30 years ago that used forced labour to produce IKEA products also considerably weakened the brand image.

Furthermore, in February 2013 IKEA had to recall its meatballs after it was found that some of them contained traces of horse meat. [6] The global furniture retailer has also been accused of avoiding EUR 1 billion taxes according to a report the European parliament. [7] Most recently, The Swedish furniture chain had another blow to its brand image when the company was fined EUR 1 million over staff spying scandal, ex-France chief handed suspended sentence. [8] These and other similar incidents have weakened IKEA’s brand image to a considerable extent.

IKEA Group Report contains a full version of IKEA SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Inter IKEA Holding B.V. Annual report FY21

[2] Group Yearly Summary (2016) IKEA Group

[3] IKEA invests in doubling its in-house design department (2020) IKEA, Available at: https://about.ikea.com/en/newsroom/2020/03/11/ikea-invests-in-doubling-its-inhouse-design-department

[4] Inter IKEA Holding B.V. Annual report FY21

[5] Facts & Figures (2019) IKEA, Available at: https://www.ikea.com/ms/en_AU/about_ikea/facts_and_figures/

[6] Business Insider (2013) Available at: http://www.businessinsider.com/ikeas-reputation-has-taken-a-beating-2013

[7] Shen, L. (2016) “Ikea Has Been Accused of Avoiding 1 Billion Euros in Taxes” Fortune, Available at: http://fortune.com/2016/02/12/ikea-tax-avoidance/

[8] Ikea fined €1 million over staff spying scandal, ex-France chief handed suspended sentence (2021) France 24, Available at: https://www.france24.com/en/france/20210615-ikea-fined-%E2%82%AC1-million-ex-france-chief-handed-suspended-sentence-over-staff-spying-scandal

SWOT Analysis of IKEA

The Swedish-founded and Dutch-headquartered multinational conglomerate IKEA has become one of the most recognized brands in the world thanks to its iconic and relatively affordable ready-to-assemble furniture items, modern-looking kitchen appliances, and a wide selection of home accessories and home improvement solutions.

Nevertheless, a situational analysis of IKEA using the SWOT framework provides an insight into how it operates as a multinational business organization, as well as its key strengths and opportunities available for furthering its success, and its weaknesses and pressing threats that undermine its short-term and long-term viability.

Situational Analysis of IKEA: Insights into Its Strengths, Weaknesses, Opportunities, and Threats

Strengths of ikea, 1. low costs through economies of scale.

One of the strengths of IKEA is its large-scale manufacturing and distribution capabilities that have allowed it to lower the costs associated with production and overall operations. This also sets the company apart from other furniture-makers and similar companies.

The aforesaid strength is a fundamental competitive advantage of the company compared with other furniture manufacturers, especially small-sized and medium-sized ones. Its business is relatively cheaper to operate due to its scale, thereby allowing it to market mass-produced products at lower price tags.

2. Cost Leadership and Penetration Pricing

Remember that the company is known for selling affordable home furnishing products. The scale of its operations has also enabled it to maintain its cost leadership in the industry.

Furthermore, considering the scale and costs of its operations, the company has maximized the marketability of its products to the mass consumers through a penetration pricing strategy. Its inexpensive price tags also serve as one of the major barriers to entry in the entire furniture-making industry.

3. Strong Vertical Integration Strategy

Another strength of IKEA is that it has a considerable amount of control over its supply chain and distribution channels. Its capability to order production inputs at large volumes has enabled it to minimize the bargaining powers of its suppliers .

Furthermore, the company sources inputs closer to its outsourced manufacturing facilities, thus lowering acquisition and transportation costs. Its distribution strategy utilizes principles and practices from the retail and e-commerce industries such as warehouse automation and merged sales channels.

4. Unique Value Proposition of Its Products

Of course, central to its brand identity is its unique value proposition that centers on designing and marketing affordable and modernist ready-to-assemble furniture products.

The ready-to-assemble nature of its products makes them easier to transport while also providing consumers with a unique product experience that comes from purchasing and assembling their chosen items. Furthermore, the modernist design principles and the low price tags make these products attractive to middle-income households.

5. Established Global Market Presence

It is also important to consider the global distribution channels of IKEA as one of its strengths, especially when compared with local furniture makers and authorized distributors of global furniture brands. Remember that it operates similarly to a big box retail store.

The Swedish company has made significant investments in establishing its retail footprint in key regional markets outside Europe. These include North America and emerging markets in South Asia, East Asia, the Pacific, and Southeast Asia. This global presence allows it to maximize the advantages of mass production.

Weaknesses of IKEA

1. standardization of production and output.

IKEA has achieved economies of scale in manufacturing and low-cost production due in part to the standardization of its production processes that in turn, result in the creation of standardized products. Remember that its products are intended for the mass market.

However, standardization can also be a disadvantage or weakness of IKEA, especially when compared to other companies offering bespoke or tailor-fitted home furnishing solutions and services. The company also does not cater to specific segments in the market who are looking for non-modernist designs.

2. Focus on Cost Leadership Over Quality

Another weakness of the company is that it is having a hard time balancing between keeping down the cost of its production and operations while maintaining the quality of its outputs.

One of the prevailing criticisms of IKEA is that some of its products have shorter lifespans due to the quality of material used and the overall level of craftsmanship. Note that this problem can be traced back either to its suppliers, the outsourced manufacturing facilities, or both. The company has less control over these aspects.

3. Multiple Global Operations and Complications

Remember that the company sources its production inputs or raw materials from different suppliers across the world. Furthermore, its outsourced manufacturers are also located in different countries. It also has an expansive chain of retail stores around the globe.

The problem with this multi-faceted multiple global operations is that it creates complications. Note that it has a complicated corporate structure. Furthermore, its large scale also creates problems in maintaining uniform control standards. It also has to address issues hurled toward its suppliers or outsourced partners.

4. Notable Criticisms and Negative Publicity

The entire brand image and corporate reputation of IKEA have also been tainted with several criticisms and instances of negative publicity transpiring in the previous years.

The company has to deal with allegations of unfair labor practices in its outsourced facilities, biased branding and marketing communications, tax avoidance strategies and relevant revenue strategies, negative influence on local businesses involved in making and distributing furniture, and undesirable impacts on the environment.

Opportunities for IKEA

1. emerging markets in developing countries.

The middle class is rising across the world, especially in developing countries. Hence, as the income of the greater population increases, so as the demand for residential real estate properties and related goods and services. This is one of the opportunities for IKEA.

The company can strengthen its presence in Southeast Asian countries such as the Philippines and Indonesia and expand further in other metropolitan areas in countries where it operates. It can also explore and expand in untapped countries in South America, the Near East and the Middle East, and Africa.

2. Possibilities from Electronic Commerce

The growth of electronic commerce also opens another opportunity for the company to expand its market reach. Note that the company has robust online stores in the United States and the United Kingdom.

Improving its e-commerce capabilities and presence can help improve its sales while lowering its operational costs. There is no need for IKEA to build and maintain several brick-and-mortar stores in a particular country if it can maximize the advantage of online or digital sales channels such as its official website.

3. Product Diversification and Business Expansion

Remember that IKEA markets not only ready-to-assemble furniture but also kitchen appliances and home accessories, as well as other home improvement products or homeware. Note that it also markets smart home accessories and residential solar panels.

There is an opportunity for it to expand its smart home product line or enter into partnerships with technology companies such as Amazon and Google to create and market different products for a smart home system. It can also explore developing hypermarkets or grocery stores within its existing retail stores.

4. Green Business Model for Ethical Consumers

A sizeable number of consumers around the world have become more conscious about their consumption and behavior and choices. Countries are also promoting environment-related initiatives.

Part of the existing corporate social responsibility program of IKEA is its numerous environmental initiatives aimed at minimizing the negative environmental impacts of its business. It can maximize this program by integrating its sustainable business model into its branding and its marketing messages.

Threats to IKEA

1. disruptions in supply chain and logistics.

The COVID-19 pandemic proved to be detrimental to the short-term to medium-term viability of manufacturers and retailers after the global public health crisis disrupted global trade. IKEA was not spared. It had to increase its retail prices to cover the increasing cost of its supply chain.

Furthermore, the company also suffered from more specific logistical problems that include delays in the shipment of production inputs, as well as the forwarding of processed inputs and final outputs. Note that Brexit and the Suez Canal blockage also disrupted the supply chain and logistics of the company.

2. Exposure to Foreign Currency Risks

The prices of IKEA products do not drastically change with the fluctuations of the value of the currency of a particular country. However, in some instances, similar products appear to be more expensive in another country.

Nevertheless, because it markets its products across the globe, in addition to the fact that it also secures supplies from different suppliers in several countries, it has exposure to the risks associated with the volatility in the foreign exchange market to ensure that its expenditures are optimized to keep them as low as possible.

3. Regional and Global Economic Downturns

The disruptions in global trade due to notable events such as the COVID-19 pandemic and volatility in the foreign currency exchange market demonstrate how economic problems in a particular country, a global region, or the entire world can affect the sales performance of IKEA.

The company is dependent on a growing economy as determined by the vibrancy of the consumers in a particular country and the strength of their purchasing capabilities. Widescale economic problems such as the 2007-2008 Financial Crisis or the Eurozone Debt Crisis would significantly affect retail-oriented companies.

4. Increasing Intensity of Industry Competition

Another significant threat to IKEA is the seeming increasing intensity of competition in the industry or market in which it operates. The barriers to entry are not significantly high enough.

To illustrate further, note that other multinational retailers such as Walmart, Target, and Tesco have already ventured into the home furnishing market with similar value propositions. The market is also populated by other giants such as Amazon and the more reputable and established brands such as Sears and Wayfair.

5. Various Exposures to Regulatory Hurdles

Remember that the company has a global operation. It has to comply with different laws and varied specific regulations in different countries. Some countries or markets can be too stringent. IKEA needs to keep itself extensively informed about regulatory developments across its markets.

Note that there are countries that limit the store size of retailers. Also, in other countries, there are special policies related to labeling and packaging requirements, especially for consumer-grade products. It is also possible for other countries to change their trade and business regulations depending on the economic and political climate.

Marketing91

SWOT Analysis of Ikea 2023

May 3, 2023 | By Hitesh Bhasin | Filed Under: SWOT of Brands

IKEA is a provider of well-designed, functional, and affordable, high-quality home furnishing, developed with care for people and the environment. There are many companies with different owners, working under the IKEA Brand , with the same vision , to create a better everyday life for the many people. Not only are their products different, but they also employ a broad range of innovative design techniques and a well-known self-assembly policy, which means that customers have to assemble the furniture themselves.

IKEA formed as a furniture company by Ingvar Kamprad in 1943. Since then, the brand grew steadily over the years to become the world’s largest furniture retailer and a respected conglomerate with a wide investment portfolio.

It includes stakes in a broad range of areas such as the food and dining industry, AI-based interior design, real estate, and even smart home technology. As of February 2023, there were 460 IKEA stores in around 62 countries throughout the world. IKEA is headquartered in Delft, Netherlands.

Here are some IKEA statistics:

• Established on – 1943
• Headquarters – Netherlands
• Industry – Retail
• Revenue – EUR 44.6 billion as of December 31, 2022
• Stores – 460 stores in 62 countries
• Number of employees – 231,000 employees in 2022

Let’s take a look at the SWOT analysis of IKEA, highlighting its strengths, weaknesses, opportunities and threats. It involves identifying the internal and external factors that can affect the brand’s success or failure and analysing them to develop a strategic plan.

Table of Contents

IKEA Strengths

1. High Brand Value

IKEA is the world’s largest and most successful furniture retailers. Its minimalistic Scandinavian design, affordable prices, and innovative furniture and home goods approach have made it a household name throughout the world. During 2022, the brand was valued at approximately $17.4 billion.

Currently, the brand is at 46th position in the world in brand value of Forbes list. This gives the company a competitive edge over other players in the market .

2. Strong Financial Performance

Due to its brand reputation , low-cost strategy , design and innovation capabilities, IKEA’s sales has seen a growth during 2022. The company reported sales of EUR 44.6 billion in 2022, representing an increase of 6.4% over 2021.

Its strong financial performance helps enhance investors’ confidence and improve the growth prospects.

3. Global Presence

Since its inception, IKEA has expanded its operation with more than 460 stores, operating in 62 countries across the world. In addition to its local stores, the brand also has a digital platform, enabling the customers to buy products online with their convenience and delivering them directly at their homes.

The global presence helps the brand to reduce exposure to economic and political risks in any one market.

4. Diversified Product Portfolio

IKEA provides a diverse range of products, such as furniture, storage solutions, lighting, textiles, kitchen appliances, and decorative items. Its products are very cost effective. The products purchased are transported to customer’s home, which can effectively reduce customers’ costs.

This broad portfolio enables it to cater to a wide range of customers and meet the needs of different customers.

IKEA Weaknesses

1. difficulty for assembling.

IKEA allows the customers to assemble their furniture themselves, which though reduces shipping and storage costs, it has also led to some controversies with customers encountering difficulty during the assembly process.

This may be due to faulty design or a failure to follow the instructions during setup. This may lead to an unsatisfactory product with a shorter lifespan or even injury due to faulty furniture.

2. Poor Product Quality

Few customers may identify IKEA products as being lower quality than more expensive alternatives due to its focus on affordability. This perception could limit the brand’s appeal to customers seeking higher-end or longer-lasting furniture.

IKEA’s cost reductions lead to decreasing product quality , which was followed by higher number of products returned and damaged brand.

IKEA Opportunities

1. New Store Opening

During fiscal year 2022, IKEA opened retail operations in new markets, including the very first IKEA store and online channel in South America. It further plans to open its operations in Colombia and Peru in the near future.

The Philippines also became a new IKEA market, and the first IKEA stores in Estonia, Puerto Rico and Oman opened their doors. In total, 38 new IKEA sales locations opened around the globe in 2022. This will help the brand to reach new customers.

2. Range Development

In August 2022, IKEA launched ABACKEN water nozzle, which enable people to save water at home. This nozzle can fit any IKEA tap or most standard taps on the market, and can save up to 95% of water in mist mode. Innovations in water saving are becoming more important.

Globally, 1 in 3 people do not have access to safe drinking water, and by 2030, billions of people will lack access to safe water, sanitation, and hygiene. Around 10% of the world’s freshwater supply is used in households. IKEA is committed to helping people to save water in their homes.

3. Product Customization

IKEA can provide its customers more options to customize and personalize their furniture. This will differentiate itself from competitors and cater to the increasing demand for personalized products.

4. Enhancing Online Presence

IKEA has seen significant growth in its e- commerce capabilities, with the proportion of online sales climbing steadily over the years. Digital sales is fast becoming the most popular way people purchase items.

By investing in its e-commerce platform and digital marketing efforts, IKEA can cater to the increasing number of customers who prefer shopping online. This will help IKEA broaden its customer base and remain relevant in the digital age.

IKEA Threats

1. regulatory changes.

Changes in regulations related to emissions, safety standards, or trade policies could impact the brand’s business . Non-compliance by the company with applicable laws and regulations or failure to maintain, renew or obtain necessary permits and licenses could hamper the results of its operations and financial performance.

2. Highly Competitive Market

The brand operates in a highly competitive retail market. Competitive pressures can lead to high operating costs and reduced profit margins. The competitors may have established brands, larger resources, and lower costs, which could make it more difficult for IKEA to maintain its market share .

3. Impact of the Pandemic

The coronavirus (COVID-19) is not only a global public health emergency but also a cause of a number of regional and global economic disruption. The COVID-19 pandemic has had an adverse impact on its business and operations.

4. Fluctuation in Raw Material Prices

IKEA depends largely on raw materials, such as wood, textiles, and metals, to produce its products. Any disruptions to the supply chain , such as shortages of raw materials or components, could impact the company’s production and profitability. Also, fluctuations in the raw material prices can lead to increased production costs and potentially affect IKEA’s profitability and competitive pricing .

5. Changing Consumer Preference

A shift in consumer preferences toward more sustainable products could impact the demand for its products. Consumer tastes, furniture, and home goods preferences can change rapidly. Failure to adapt to these changes and provide products that resonate with customers can decrease sales and market share.

IKEA’s innovative design techniques, unique business model , and clear vision are some of its biggest strengths. However, the recent global pandemic, changing consumer preference and poor product quality may be a significant threat to its position as a market leader.

Liked this post? Check out the complete series on SWOT

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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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IKEA Case Study: Pestel & Swot Analysis with Solution

Exploring the ikea case study: business model, swot & pestle analysis, marketing and advertising strategies with solutions.

IKEA Case Study: Swot Analysis, Business Model, Marketing and Advertising Strategies

IKEA is a Sweden-based global retailer offering assembled furniture, home decor, and kitchenware. Initially, the brand offered wallets, pens, and jewellery for 5 years before it started selling furniture.

If you take IKEA case study help , you will know that IKEA uses the price-leadership business model. The 5c analysis of business model explains its revolution around offering a wide selection of useful and beautifully crafted home furnishings at reasonable prices.

IKEA mainly uses social media platforms for advertising, and its digital presence is impressive.

The business model of IKEA is renowned for its creative designs for a range of appliances and services. The IKEA case study solution explains that interior design service is high due to its emphasis on sustainability. The success of IKEA's business model is founded on its focus on cost management, regular product development, and operational aspects that enable the business model to lower its product pricing.

MyAssignmenthelp.com has a large team of case study helpers familiar with current topics such as IKEA SWOT Analysis and can solve IKEA questions and answers. They will respond to all of your questions and provide top-notch materials as they assist you in obtaining an IKEA case study solution. Our assistance with the IKEA case study won’t make a hole in your pockets.

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List of Sections:

IKEA History and Origin

Ikea business model, ikea mission statement, core values, and strategy statement, ikea swot analysis, ikea marketing and advertising strategies, ikea distribution strategy and pricing strategy.

• IKEA 5C Analysis
• IKEA Case Study Questions and Answers

The history of IKEA

IKEA is named after the founder, Ingvar Kamprad, the farm where he was raised, Elmtaryd, and the nearby village of Agunnaryd.

The IKEA history timeline at a glance

If you want an extensive explanation of IKEA origin and history, ask our professionals for IKEA case study help. We will provide you with the best IKEA case study solution per your requirement.

The IKEA business model is built to create financial and commercial value. It includes each essential element needed to run a business successfully.

IKEA Value Proposition

IKEA value proposition is an original strategy used to expand the market for its products.

• Flatpack DIY system: This system can be put together anywhere to fit the dimensions of the current apartment.
• Use of renewable resources: It helps in keeping a balance between business and the environment.

IKEA supply chain

To create a product, IKEA first determined a target price. IKEA designers had to account for all costs, including raw materials, manufacturing, and shipping, until the product arrived in the stores at the specified target price. Our IKEA case study help experts can make you understand the supply chain by providing you IKEA case study solution.

• Supply Chain Planning

At IKEA, IoS was crucial to decision-making. IoS handled the majority of the supply chain planning process. (Refer to Exhibit II for Supply Chain Planning Process at IKEA)

• Relationship Management with Suppliers

Trading offices worldwide were given instructions to locate suppliers in their respective regions and request bids from them after the product's design and the material to be used had been decided.

• Storage Management

The DCs at IKEA were highly automated, utilising conveyor belts and automated storage and retrieval systems (AS/RS). Using AS/RS significantly increased IKEA's warehousing operations' efficiency.

IKEA cost efficiency price strategies

• IKEA product designers consider pricing. In other words, IKEA decides what it wants to charge for a product and then collaborates with suppliers and designers to make that price possible.
• IKEA explains that it layers wood sheets like a honeycomb structure to create its furniture.
• Everything is produced in bulk at IKEA. IKEA can obtain production discounts and maintain lower prices by large volume production.
• There aren't many employees which saves money and sustain lower prices.
• Product information is typically on the price tag rather than hiring more staff.

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Mission Statement for IKEA

“ Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them .”

IKEA mission statement reflects the course of action and strategy to be used by the entity to achieve the prescribed vision from a long-term perspective.

In IKEA case study solution mission is to achieve sustainable long-term growth through investment in the future, ultimately benefiting its employees, suppliers and clients

IKEA Vision Statement

IKEA's vision statement is a brief one-liner that reads as follows:

“To create a better everyday life for the many people.”

Further reflecting on it, the company's business idea and model are consistent with this vision statement. IKEA case study help experts can demonstrate this. They explain that the business concept of the entity supports this vision by offering a extensive selection of useful and beautifully designed furniture at competitive prices.

IKEA Core Value (Analysis)

The following is a list of the shared values that govern actions and operations at IKEA:

• Humility and Resilience: IKEA has a reputation for being a humble brand in its business operations, which is especially clear in how it treats suppliers and customers.
• Cohesion and Enthusiasm: Cohesion and enthusiasm are essential, and they are of greater value because they help resolve problems in a big way.
• Constant Need for Renewal: The desire to seek innovation and creativity is a significant core value at IKEA. IKEA continues to innovate as it can guarantee that its customers will always receive high-quality goods at reasonable prices.
• Cost Awareness: Regarding the application of IKEA's daily core values, cost consciousness is, in fact, a key value and an important part of the IKEA sustainable competitive advantage.

Getting confused about the best one?

A SWOT analysis is useful for examining the factors that support a company's growth or success. Strengths, Weaknesses, Opportunities, and Threats are referred to as SWOT. While IKEA opportunities and threats are external factors, IKEA strengths and weaknesses are internal ones.

• Design And Creation
• Affordability
• Brand Recognition
• Market Research
• Poor Product Quality
• Difficulty For Assembling
• Shipping Problem
• Negative Press

OPPORTUNITIES

• Online Shopping
• More Storefronts
• Strong Competition
• Disgruntled Employees
• Sustainability Problem
• Lower Market Penetration

IKEA competitive advantage in the furniture retail industry

IKEA's long-term competitive advantage stems from various factors, includes:

• Operational effectiveness
• Strong network of suppliers
• Brand recognition
• Cost leadership
• Wide range of products

Comparison of IKEA with competitors

IKEA faces fierce competition from a number of businesses, including Amazon, Tesco, Wayfair, Home Depot, American Woodmark, etc., despite having a strong reputation as a brand. To offer products that appeal to a wider range of customers, IKEA must keep innovating.

IKEA is a major player in the retail furniture industry. Its ability to satisfy customer needs by utilising a broad product portfolio and cutting-edge design concepts gives it a competitive advantage.

Fear of missing deadline?

IKEA is among the world's top producers of accessories and furniture for homes. IKEA's marketing case study examples are explained on the basis of sophisticated customer and market research. Because of its stylish, economical products and innovative marketing strategies, the company has built a strong reputation.

IKEA sends design experts into people's homes to listen to their concerns and provide feedback. This enables IKEA advocates to base marketing choices on consumers' experiences rather than just data or surveys.

IKEA marketing and advertising campaigns

IKEA frequently releases heartwarming advertisements. If you've been paying attention to the advertisements and IKEA marketing campaigns, the goal isn't to sell a product so much as an idea. The advertisements put together the IKEA case study help solution that can be used for better understanding.

The power of a ‘bookbook’

Moving? Ikea’s there to help

IKEA’s Take On Augmented Reality

Hyper-Localised Campaigns

Let play unwind your mind

IKEA target audience and brand positioning

Ikea caters to the specific practical requirements of each target market, focusing on adults between the ages of 16 and 34. It offers answers for:

• Singles living away from home
• Recently wed couple
• Families with children
• Older parents with dependent children
• Nuclear Families
• Members of army
• The retired
• Professionals

Following are the categories of IKEA brand positioning:

• Mono-segment positioning: This kind of positioning is linked to appealing to the requirements and desires of a specific customer segment.
• Adaptive positioning: This positioning strategy is founded on routinely shifting the positioning of goods and services to consider shifting consumer preferences.
• Aesthetic positioning: The biggest furniture retailer in the world creates its products using the "democratic design" idea.

IKEA advertising & marketing case study examples

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IKEA distribution strategy and store layout design

IKEA's suppliers ship their goods to different IKEA sites using outside logistics firms as part of the distribution strategy.

• Transport plays a significant part in enabling goods to move between these organisations' facilities by acting as the vital link between them.
• The Swedish furniture and home accessory division at the IKEA distribution centre in Valls, Spain, is managed by the international logistics services provider Maersk Logistics.
• A similar collaboration between Maersk Logistics and IKEA exists in Malaysia and Sweden.

The layouts of many IKEA stores are comparable, and they generally have the same amenities and spaces.

• Parking lot
• Smaland Children's Corner
• IKEA Family booths
• Food counter
• Self-service checkout options
• Market Hall
• Self-serve area
• As-is section
• Counters for home delivery
• A station for merchandise pick-up
• A counter for exchanges and returns
• Recycling service

IKEA pricing strategy and price positioning

IKEA incorporates the following into its selling strategy:

• Cost leadership: The cornerstone of IKEA's pricing approach is competitive prices. "At prices so low that as many people as possible will be able to afford them," the business says of its product prices. Due to the pricing scale, the business enjoys a global reach, and the home improvement and furniture chain can maintain its cheap prices.
• Psychological pricing: IKEA's pricing explained in IKEA case study solution approach includes psychological pricing as a key component in which the retailer appeals to customers' emotions rather than their rational side.
• Geographical pricing: Geographical pricing is used by IKEA, so prices vary among the chain's various home furnishings and renovation stores.

Comparison of pricing strategy with IKEA’s competitors

According to Statista.com, IKEA made 1.189 billion euros in net profit and 39.6 billion euros in total sales in 2020.

And its competitors

It was the largest online furniture vendor in the USA in 2019, with a market share of 33% . In 2020, Wayfair generated $14.145 Billion in sales and posted a net profit of $9.127 billion.

According to Statista data, about 30% of the market share was owned by Amazon in 2019. Wayfair was responsible for about 33% of all online furniture purchases in the same year.

It generated a total profit of 7.961 billion British pounds and 53 billion British pounds in sales during the fiscal year that concluded in 2021.

• American Woodmark

The company increased its sales from $1.65 billion in 2020 to $1.74 billion for the financial year that concluded in 2021, according to Marketwatch. The market capitalization on Ycharts as of August 16 was $79.23.

Confused about pricing strategy?

Send your queries

IKEA 5C Analysis (Company, Customers, Competitors, Collaborators, Climate)

The 5C model is focused on 5 important "C's." Each C stands for a significant component of your overall company model.

The 5 C's of Marketing include:

• Collaborators
• Competitors

You can get a broad overview of your company by analysing these aspects of it.

The 5C Marketing Analysis Process

An evaluation of a company might be a smart place to start if you want to learn more about it. During this process, it's also crucial to be open and truthful, particularly about your flaws and the areas where your rivals outperform you.

Include a list of all the people and services your company works with. Consider it your company's directory; you can consult it to determine who to contact to have it fixed swiftly. Note each collaborator's main contact person, email address, phone number, and any other pertinent information.

Of the 5 Cs, customers are the most crucial. You'll be much more successful in delivering products your customers want to purchase if you clearly understand who your customers are, what they want, and how well your product meets their needs.

As important as knowing your own business is understanding your competitors' businesses. You'll have a huge advantage if you know your competitor's general market position, strengths, and flaws; after all, you can't compete successfully if you don't know who your actual competitors are.

Focus on variables outside of your own company that might have an impact on how you conduct business when analysing the environment. Industry patterns, societal trends, legal trends, and emerging or new technologies will all fall under this category. As for example you can consider how people feel and think, as well as the kinds of things that are essential to them, when examining societal trends.

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Table of Contents

Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.

Become a Certified Marketing Expert in 8 Months

Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:

• Single people not living at home
• Newly married couples
• Families with the youngest child under six
• Older married couples with dependent children
• No children families
• Labor force
• Professionals 

Thus, it uses the following types of product positioning :

• Mono-segment positioning. It appeals to the needs and wants of a single customer segment that is cost-conscious and prefers value for money.
• Adaptive positioning. It believes in periodically repositioning products and services to adapt to changes in customer preferences. Its Swedish furniture chain considers the dynamic nature of customer preferences. For instance, its latest products reflect increasing minimalism on the global scale. 

Ikea utilizes the power of the following marketing channels: 

• Mobile Application
• WebEngage: Email, SMS, and Whatsapp Marketing
• Social Media
• Telecalling
• Commercials

The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.

A Creative, Consistent Brand Theme

From the Swedish national colors on its buildings to rich meatballs in its store cafeterias, Ikea's marketing strategy reflects its cultural heritage proudly. It infuses all elements of their identity with a sense of self-assuredness that maintains their identity in the market of stiff competition. 

Emphasizing Affordability and Sustainability 

Understanding that a simple tiered strategy won't encourage repeat business, Ikea extends customization, flexibility, and mix-and-match furniture modules. It effectively combines the elements of affordability and sustainability in its marketing strategy to ensure success.

While the furniture options don't pledge a lifelong guarantee, the products are built to last. Even its reusable shopping bags reflect its commitment to sustainability.

Sponsorship and Influencers 

IKEA-sponsored comedic series Easy to Assemble. Its innovative content marketing was way different from a furniture product demo. Incorporating sponsored digital marketing campaigns and social media influencers have boosted the Ikea marketing strategy. 

Ikea’s Easy to Assemble Series

Exceptional In-store Experience

Ikea brilliantly displays products employing the best lighting systems to generate more sales. It strategically arranges best-matched items in mock rooms to encourage impulse purchases and inspire decor. The company also extends excellent customer service to provide a memorable experience and incite customers to come back for more.

Ikea’s Store Decor for Inspiration

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Website and Mobile Application Marketing

Ikea ensures an optimal mobile website's speed, button displays and gesture controls on its website and mobile app to retain and attract individuals to the site. It carefully invests in its UI/UX , enquiry-based chatbot, and regular updates on new offers, discounts, and promotions. 

One of the most successful marketing moves includes downloading its 3D modeling app to envision a dream home. It's one of its most successful marketing moves that allows IKEA to upsell its low-demand items by creating a desire in its customers to revamp the room.

Ikea’s Website With Engaging Content

Ikea's SEO (Search Engine Optimization)

Ikea's marketing strategy aims at enhancing the site's visibility for relevant searches to attract the attention of new and existing customers. It includes the right product-specific keywords and Google advertisements to further augment its organic ranking .  

Ikea Ranking for Bookcases on Google’s First Page

Ikea's SMM (Social Media Marketing)

Ikea's handles are very active on digital marketing platforms like Facebook, Instagram , Twitter, and Youtube . Their digital presence is impressive, with more than 30 Million likes on Facebook, 1 Million followers on Instagram, 5.3k followers on Twitter, and 41.2k subscribers on YouTube.

Ikea’s Instagram Profile

Its Instagram bio links to its website. The website also has links to its various social media posts. Its 'view shop' and 'call' options for product catalog and direct assistance, respectively, are a testament to a well-crafted Ikea marketing strategy.   

Ikea’s Youtube Advertisements 

IKEA also conducts free online workshops that lure lots of enthusiastic customers, resulting in gaining leads.

Ikea’s Online Workshop Ad

Content Marketing

Ikea relies on its content marketing strategy to create a distinguished presence amongst furniture brands. Its commercials, print ads, social media, and website stands out with attention-grabbing content. It combines innovation and humor to present the brand's core values and inspire people. 

Ikea’s Captivating Commercial 

Ikea Marketing Strategy bears testimony to a well-thought and structured marketing venture. Sign-up for our Digital Marketing Specialist and learn more about marketing case studies published by Harvard Business. You will be taught by experts from facebook and Purdue University. Sign-up for the course TODAY!

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