Ikea Swot Analysis
KStrengths 1. Supply chain strategies. 1. 1. Packaging concept. The flat packaging is known of its IKEA which is very effective for transporting products because more products can be shipped at the same time. Consequently, transportation cost will be cheaper. Furthermore, the flat packaging reduces some materials usage. However, it has some weak areas to work on such as protection and unitization. 1. 2. New unit load carrier. IKEA has created new carrier which is called “Loading ledge”, is a flexible unit load carrier.
It can save money as a part of total logistic solution and also make the transport be more volume. The loading ledge has been used for two years within IKEA’s supply chain and the result has satisfied for IKEA because it can reduce damages in good processes. 1. 3. Direct delivery. IKEA’s products are delivered directly from supplier to different stores because this is the cheapest way for distribution. Furthermore, it can decrease the transportation distance and lower carbon release. In term of process, the goods do not transport to distribution center because it can be directly to stores.
This process is very efficiency and special one. So, they can save the cost of one time transport. Figure 1 Direct delivery distribution. 1. 4 Sustainable relationships. IKEA focuses on long-term supplier relationship. IKEA usually buy a large volume for a plenty of years. As a result, they can negotiate at low price. Moreover, the suppliers also gain advantages because their products are guaranteed ordering. 2. IKEA’s culture and concept. 2. 1. Powerful worldwide company. IKEA has strong global brand and concept which is guaranteed good quality at lower price. . 2. IKEA’s vision IKEA notes their goal that “to create a better everyday life for many people”. 3. Environmental perspectives. 3. 1. Green process. IKEA uses materials that are environmentally friendly. For example, renewable materials, recycling waste products, etc. 3. 2. New technology. Using new technology to reduce the amount of raw material needed. 3. 3 Effective transportation. IKEA transports their products by using rail and sea as much as possible to reduce the impact on environment. Opportunities 1. Environmentally business.
IKEA believes that “environmentally focused business conduct will results in good return even in a price sensitive market”. Nowadays, consumers demand in green products is continue to increase. 2. Low price products. IKEA depends on the low-cost manufacturing countries as China and India. This is provided IKEA’s products to be cheaper. Moreover, customer’s demand of low price products is higher because the serious current financial issues. 3. Working on sustainability This is the main part of IKEA brand. This statement can be supported by: 3. 1. Relationship
Building relationship and good communication with stakeholders, consumers, and co-workers are IKEA’s concept. 3. 2. Cooperate social responsibility. IKEA participate in social responsibility this include to be supporter for many charities. 3. 3 Online website. IKEA provides online tips and ideas for sustainable life at home. 3. 4 Environment IKEA uses sustainable resources, renewable energy, reducing water use, and green transportation. Weaknesses 1. IKEA size. The big size of IKEA’s business is hard to control quality and standards. For example, quality of product is concern in some regions. . Inconvenience located. The flagship stores are located far away from the city center; as a consequence, consumers have to travel a long distance to get to the stores. Moreover, they also have to collect a large in convenience packages to take them home. 3. Diverse market. The difference tastes of consumers in different regions. IKEA has many stores in different region. So, they have to adapt the style of products in order to satisfy each region consumers. Threats 1. Competitors. The growth of competitors, they can enter the low cost household and furnishers markets.
Furthermore, they act like IKEA’s style which is the model of low cost products and flat packaging. 1. 1 Offering services. A better services offering from competitors. For instance, they offer home delivery, free installation, etc. 1. 2 More products. The larger suppliers such as Tesco and Walmart, they do not sell only home furniture, also offer electronics, groceries, etc. 2. Economic situation. The target group of IKEA is consumers with limited financial income. Therefore, this economic situation will impact and influence IKEA’s business due to a slow down consumer spending and income reduces.
IKEA’s SWOT analysis| Strengths| Weaknesses| 1. Supply chain strategies. 2. IKEA’s culture and concept. 3. Environmental perspectives. | 1. IKEA size. 2. Inconvenience located. 3. Diverse market. | Opportunities| Threats| 1. Environmentally business. 2. Low price products. 3. Working on sustainability. | 1. Competitors. 2. Economic situation. | Gap analysis Next 0-3 years Present Issue| Aspect| ? A weak online support. – IKEA lack of online purchasing options. It forces customers to go to stores. This probably causes losing some profits due to inconvenience located of some stores.?
Do It Yourself – The target group of IKEA may require convenience installation. IKEA does not provide this point. Sometimes IKEA has overlooked their customers.? Using the new unit load carrier takes longer time than traditional one.? Due to increasing material flows, DC needs the effective solutions to handle it.? The distribution will increase in IKEA supply chain.? Over stock.? A lack of innovation of products? The highly flow of visitors which cause a long queues to check out. This is due to a lack of manpower. | ? Developing the online stores to compete with its competitors.
Also, increasing online purchase by a space simulator.? The IKEA competitors, they offer delivery products and free installation with good ability technicians. IKEA will provide immediate purchase and take home, and offer service but allows customers make their own decisions.? Providing information and knowledge of the new unit load carrier is very important to use it efficiently. It is also decreasing a damage and waste of products.? A great handled can reduce effect at DC by using, for example automatic picking.? Balance supply chain by using supported software and better management.?
Hiring new generations staffs which are diverse of personalities. Consequently, they can create some new innovated products.? IKEA uses Beonic’s tra? c insight visitor flow system to ensure its checkout never short staffs. | The times 100 business case studies, viewed 13 Aug 2012, http://businesscasestudies. co. uk/ikea/ Jonsson A. and Mathiasen B. , 2004, Consequences of the implementation of the Loading Ledge, Lund Institute of Technology Mehnaz S. , Case analysis IKEA, viewed 13 Aug 2012 http://www. scribd. com/doc/59951004/Case-Analysis-IKEA