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A SWOT and PESTEL analysis of IKEA

The company chosen for analysing is IKEA, a leading home furnishing retailer in world wide. The creation of better life for several people every day is the vision of the company. In UK there are 18 stores of IKEA and through its website it has online shopping and ordering. IKEA has retorted to the society’s mounting concern to sustainability. To make the business practise strong it believes in strong eco-friendly stance. Being the company in world business it has to overcome more barriers and face more competition.

SWOT Analysis

The SWOT analysis is done in order to identify the strength, weakness, opportunities and threats for the strategic assessment of the company. The assessments carry a vital data of reliability. This is the assessment technique of the internal, external, negative and positive situation assessment. Strengths, weaknesses, opportunities and threats are to be identified by the company in order to make the necessary changes the organisation need in order to improve its performance. Businesses need to produce occasions and pledge threats by exploiting their powers (strengths) and handling weaknesses.

Strengths

Strengths are characteristics of a trade that add worth to its products or amenities. The strengths of IKEA are

A strong international brand. IKEA has gained an international brand through its quality and service.

Vision with clear aim.

Strong perception.

Design which suits the democratic balance of quality, purpose, plan and price. The performance of IKEA is measured by a special tool of key performance indicators (KPI). This measurement shows how far IKEA is been progressing in the direction of its vision.

The strength IKEA possess throughout the process of production are as follows

As an eco-friendly manner it has made its hand in increasing the materials of renewable resources.

They are minimising the waste of the raw materials by smarter use way.

The relation with them and the supplier are of long-term.

They have their economy to the scale.

Opportunities

The following are the opportunities of IKEA by using its strengths. Here the customer demand plays a key role for their strength. They are

Increase of demand for the eco-friendly products which do not harm the customers, company and the environment as whole.

As IKEA provides with the low price it makes an evergreen demand for their products.

The utilisation of less water while producing the products and reduction of the carbon footprint has increased demand for their products.

Beyond their products IKEA too provides the following.

Tips and ideas are provided through online for the solution of the home life.

The non-waste use of the resources with the aim of nil landfill waste and water reduction.

The cost of cutting down the transportation and packing the goods.

It supports for the charity which helps to develop social obligation platforms in communities.

Threats

The recognition of the potential drawbacks is required for the improvement and managing them. They are

Control of the standards may become difficult due to the scale and the size of their business throughout the global.

The maintenances of the quality should be done for the low-cost.

As they have a large scale of business the communication to their stakeholders and the consumers of the company regarding its environmental activities will be difficult.

The company should also be conciseness about the possible external threats. This issue has to be managed in order to overcome the weakness and threats and to create a possible positive environment.

Social trends are keep on changing for example there are few consumers who buy products for once in their life for house.

As more competitors offer the same products there comes the market force. The competitor for IKEA in UK is B&Q.

The economic factor. The economic situation of the people is not same throughout the world. Throughout the world it changes. So IKEA has to monitor the economic condition of a country carefully before entering into the market and after entering.

IKEA can be evaluated by the use of porter’s five force value as follows

Consumers

The customers of IKEA are from both household and office background. There are customers who buy furniture for life being. So the threat of minimising the business is possible. The low prices will surely pull people of all economy.

Suppliers

As IKEA is global brand it has to depend on the suppliers all over the world. As soon as IKEA implicates its base charge for a product, IKEA then pursue to steady of economical labour with the firm's quality goods standards. In the same manner it does with 1,800 suppliers around 50 countries. In various occasions, IKEA parties its idea among supplier rings and inspires them to participate for the manufacture package. In some situation in order to meet the basic price, from many suppliers IKEA gets one design with pieces.

Existing Competitors

In every country there are more authentic furniture stores. Beyond this there are stores of modern furniture as IKEA do. But the condition of offering low price furniture with good quality is only possible from IKEA. So the possibility of the customers who looks for modern furniture with designed future and with fewer prices will be surely attracted to IKEA.

Potential competitors-barrier during entry

The duplication of the idea of IKEA is not possible. Because a company can duplicate the entire product IKEA has but the duplication of the work on the furniture cannot be duplicated in more accurate and prescribed manner. It is even easy to duplicate the atmosphere of IKEA but it becomes hard to duplicate each and every idea of IKEA.

Indirect competitors or the substitutes

Many low-cost local suppliers are in UK and in every part of the world where IKEA has setup its branches. In UK for example Argos which sells IKEA’s product as well as the product of Argos which seems to be cheaper for certain goods. This is major substitutes for IKEA. IKEA as the retailer do only specific retailing for home goods but all other do general retailer activity.

Conclusion

IKEA is a successful global brand. In order to make its business successful IKEA should look into both its internal and external environmental situation. These will analysis its threats and opportunities. When we look into IKEA they demonstrate how they are keen about the people and eco-friendly environment. IKEA as overall combines the factor of design, cost effective and environmental friendly uses of the resources. It considers the sustainable factor all together for customers, earth and the business.


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