Strengths and weaknesses are internal aspects. This means that they are within the control of the business. They may refer to aspects of marketing, finance, manufacturing or organisation. Opportunities and threats are external factors. This means that they are outside the control of the business. These may include the environment, the economic situation, social changes or technological advances.
A business can create opportunities and counter threats by making the most of its strengths and addressing its weaknesses. For example, one of IKEA's key strengths is its strategic aim to use no more material than necessary in the production of each item. In addition, it develops its product plans to increase its use of waste or recycled materials.
IKEA's low cost concept keeps it ahead of its competitors.
IKEA is the cost leader in the furniture industry. A living room furnished with IKEA products are as much as 65% less expensive than one furnished with equivalent products from other stores. Its target market are the young married couples, college students, 20 to 30-something singles and middle class families. They are basically price sensitive customers who are more concern in their expends. So, if they can get furniture at a much lower price, they will opt for that. Thus, this concept gives IKEA its biggest competitive advantage keeping it ahead of its competitors.
IKEA has successfully combined low cost with good quality.
Generally people have an idea that price and quality are directly proportional as in, the higher the price, the better is the quality and lower the price, the lower is the quality. However, IKEA has successfully changed this idea related to furniture. Not only is its furniture much lower priced than other stores, they also have great quality. It has productively combined low cost with good quality. For instance, one particular table, the NORDEN table, uses knotty birch wood. The knots in this wood usually mean it is rejected by other retailers and manufacturers as unsuitable for use. However, IKEA has made the knots part of its design feature. Besides, OGLA chairs are made using wood waste from saw mills and LACK tables use a 'sandwich' of stiff card between wood sheets to reduce the amount of solid wood needed. It emphasize on the usage of waste or recycled materials which are low cost to produce furnitures which are good in its quality. It increases the usage of renewable materials as raw materials.
Its "democratic designs" which balances function, quality, design and price gives IKEA the competitive edge.
IKEA uses cheap labour which keeps its costs down and gives them a competitive advantage.
Starting from the days when it discovered that furniture manufactured in Poland was as much as 50% cheaper than furniture made in Sweden, IKEA has started looking for cheap labour. Its top five supplying countries are China (21% of supplies), Poland (17%), Italy (8%), Sweden (6%) and Germany (6%). China, as everyone knows, provides really cheap labour so IKEA gets its largest chunk of furniture manufactured from there. Cheap labour keeps the costs down and allow them to charge customers at a lower price and helps IKEA sustain its competitive advantage.
Its strong long-term relationship with its suppliers gives it a competitive edge.
IKEA has built a strong long-term relationship with its suppliers over the years. The relationship that IKEA established with the Poles has become the archetype for relationship with suppliers. This is one of their biggest strengths. A strong relationship established with the suppliers provides a very smooth supply chain of materials which saves IKEA from quite a lot of additional costs and hassles. Due to this strong relationship IKEA can put in a lot of additional advice regarding production. It is widely seen that companies have always been benefited by a strong long-term relationship with their suppliers.
IKEA's research and development team finds ways to alter designs to save on manufacturing costs.
Starting with the designer Gillis Lundgren, IKEA's research and development team always finds ways to change its designs to save on manufacturing costs. The goal of the research and development team is to come up with stylish functional designs with minimalist lines that can be cost-efficiently manufactured. This keeps the cost down and allows for the prices to be much lower than that of the competitors.
A key feature of IKEA furniture is self-assembly.
A key feature of IKEA furniture is self-assembly. This proves to be a very efficient concept for both the parties - IKEA as well as its customers. The furniture pieces are taken off and flat packed and then assembled by the customers at their homes. It reduces IKEA transport and warehouse costs as well as saves additional hassles related to transporting a big piece of furniture, and the customers are also willing to take on the task of assembly in return for lower prices. Due to this, the furniture are always readily available which means the customers do not have to wait 2/3 days after purchase for their furniture. This is a breath of fresh air for the customers.
IKEA has the ability to adapt its tactics according to the market.
Another of IKEA's strengths lies in its ability to adjust its tactics according to the market. An example of this can be seen in what it did in the American market. At the time that IKEA launched itself in USA, it noticed a change in American culture. Something was shifting in American culture. To adapt into this shifting culture of America, IKEA redesigned its marketing strategies adjusting it according to what would be suitable in this cultural shift. This results the double revenues in a four-year period.
IKEA is a global brand.
From the Scandinavian countries to Germany, Switzerland, UK, to the Asian countries like China, Japan and Russia and all the way across the Atlantic to USA and Canada, IKEA is everywhere. It has expanded all over the world. With its stylish unique designs and strong and conquered cost leadership concept, it has conquered all of these territories. Thus, IKEA has become a global brand. Its reputation and brand image acts as one of its greatest strengths.
IKEA can expand its product line by producing high end products
From the very beginning IKEA's target market has been the middle class to lower middle class people. This strategy has been worked for a long time but IKEA never wondered about how farther they can reach.In USA, the trend was changing, people were longing for elegant design. IKEA can develop products that are designed for the high class people who are sensible about the design and quality and do not care about the price.
IKEA can expand its business into food related products
Since Ikea has an in store food court, shoppers can take their time and look around the store without having to leave to get food. Food court helps Ikea to sell more food items, which generates additional money for the company. Besides, IKEA does sell food product in its stores.
IKEA can expand its business into interior designing and home products
IKEA can expand its core business of furniture to a next level. IKEA can place crockery items with the kitchenware furniture. This way when a customer walks through the kitchenware department he or she will surely be attracted to these products and may end up buying some.
IKEA can develop environment friendly technology and produces greener products
Customers nowadays are now more concerned about the environment. So IKEA chose to produce products that are environment friendly, that consume less water so the carbon footprint will be at minimum. For example, IKEA produces furnitures from the waste or recycled materials which are surely eco-friendly.
Product customization can boost up IKEA's sales
IKEA can call for idea from its customers. This will definitely bring in some unique idea to the tent. IKEA can initiate a service that will allow customers to order customized products for some extra charges. This will help IKEA to capture the particular segment of the market who loves customization.