Ikea Business Case
Essay Preview: Ikea Business Case
Report this essay
Over the years IKEA has expanded from a domestic business into and international one, with many sustainable partnerships and suppliers all over the world. Their development has also led to an increased buying power and helped with costs.
When IKEA was only catering to the domestic market they were missing out on global sales, and even then they only expanded into Western Europe and the United States, so were missing out on the Asian market.
Their position to enhance image by introducing a code of conduct and sustainable partnerships with charities have helped them to be perceived to be an ethical company and therefore they will profit from this.
MBV ANALYSIS
Numerous tools have been utilized to critically analyse IKEA from the market base view. These analytical tools utilized include Porters 5 Forces, PESTEL Analysis, SWOT Analysis and others which will be presented in this section to provide an analysis of IKEAs current standing and the industry within which it operates. The MBV Analysis conducted in this section provides the basis upon which certain strategic issues have been outlined in the latter part of this report.
The dominant economic features of the Home Furnishings Industry are as follows:
KEY FEATURES
HOME FURNISHINGS INDUSTRY
ISSUE
STRATEGIC IMPLICATIONS FOR COMPANY STRATEGY
Market Size
Home furnishings market is a huge worldwide market with retail sales in excess of $600bn.
Which country to enter in and which target market.
Companies have the opportunity to enter into numerous host countries and target markets worldwide.
Market growth rate
The market growth rate has drastically slowed given the collapse in the furniture market worldwide.
Difficult for companies to increase sales.
A slowdown in growth has increased rivalry, resulted in trading down and the elimination of smaller rivals.
Scope of competitive rivalry
Competition has taken place on a local dimension rather than globally. Competitors include other multinational furniture retailers who are smaller than IKEA, companies that specialize in certain parts of the furniture product range, multi-branch retail furniture outlets based primarily in one country and non-specialist companies that carry furniture as part of their broader product range.
Companies need to choose which rivals to compete with.
Rivals such as Bath, Bed & Beyond (US) as well as DFS (UK) and Argos (UK) have tailored their strategies to serve specific market needs in their home markets. Nonetheless, the basis of competition is predominately similar across most markets. As a result, IKEA has focused on implementing the same strategy in different global markets.
The number of rivals and their relative