Strengths:
Low cost structure Despite the state of the economy, IKEA has been able to maintain their profit margin because of their affordable products, since customers must assemble the product itself. The company buys in bulk from their suppliers so they are able to offer a lower price to their customers.
The completion offers a high price because they do not offer a do-it-yourself approach, IKEA has a competitive in that they have low price products and their furniture is stylish, modern, and functional. The company’s low cost structure is able to meet the consumers’ needs because of the downfall of the economy; therefore consumers are looking for affordable products. Sustainability IKEA is environmentally conscious and cost-effective. It is considered environmental friendly because they use renewable, reusable, and recycled materials as much as possible.
For example, wood is IKEA’s primary source of material, and they obtain it from responsibly managed forests. Their catalogues are printed on chlorine-free paper and contain at least 10-15% post-consumer waste. The pre-press process is 100% digital, meaning no film is used and it is associates no chemical use. All of their products come in cardboard, compact packaging for easy use and easy recyclability. The company does not use plastic bags, in an effort to maintain its environmental responsibilities. These strengths differentiate IKEA from their competitors ecause their employees understand the consumers’ needs and are aware of their company’s carbon footprint.
Weaknesses:
Size IKEA is a warehouse style shopping center. Because of its size IKEA is going to have a hard time breaking into smaller markets. There are not enough people in a smaller region to sustain a store the size of IKEA. The people in this region may be interested in purchasing and using IKEA’s products therefore limiting the access of their product to potential customers. The reason IKEA may not be able to penetrate a smaller market like Target would be able to, is because they only offer home furnishings. Target, on the other hand, is a massive “convenience” store essentially. A customer may visit Target for home furnishings but also for anything from clothing to groceries to technology.
Online Support Although IKEA does have a website, which is interactive for customers, it has a very limited supply of products available to order online. “IKEA basically forces consumers to shop at their nearest brick-andmortar locations. ” (Copeland, 497) This is a huge weakness considering their first weakness.
Not only can they not penetrate smaller markets with an actual location but they do not even facilitate an online store for customers in those regions to use. The competitor Bludot. com has a superior online shopping experience, because they deliver anywhere in North America and facilitate through small retailers which allows them to target customers in smaller regions, which IKEA cannot.
Opportunities:
Internet The American market uses a high amount of internet to complete daily task from email to online shopping. This opportunity will allow IKEA to pursue new marketing expedition and go after other competitors like bludot. om, if there online shopping experience provides a positive image to their customer like their Facebook Fan page. It will provide a new segment of customers and easier access for usual IKEA customers. Time: within 6 months to achieve better online shopping experience
Expansion With the Population distribution across the U. S it clearly shows areas of America that could possibly be developed for new stores. An area for great consideration would be California even though they are into more expense products, IKEA provides an edgy look for cheaper prices.
This will be an opportune time for them to achieve this market because of current economic times and the current raise prices of Raw Materials. With new stores opening it will improve customer traffic within the IKEA stores; this will provide a bigger image for the overall company and also an opportunity for reaching a new segmentation of wealthier customers. Time: within 3 years to achieve new stores and get buyers to get California type products
Threats:
Home Depot (competition) The Home Depot is a huge threat to IKEA because of its huge online site with all their products, ratings and prices it give them a physical advantage to them. Also Home Depot is the 2nd largest retailer in the world which means they have very strong brand name and people response very well to the name. One of the biggest problem is that Home Depot also goes after one of the same segments as IKEA (do it yourself).
The service of the customer will be met at different levels because of the different products provide in store: they provide hardware, lumber, kitchen appliances, furniture, and many other products. Time: with the opening of 176 stores across America in the next year, the threat will keep increasing to IKEA and there should be immediately action.
Raw Materials Increasing price for Raw materials, many importers and manufactures will have to increase final products prices to as much as 15%. While acknowledging increases in the cost of leather, wood, foam, glass, cardboard and even finishing sprays and coatings, and now with the increase of steel price it may be pushing suppliers to breaking points.
