IKEA

Essay text:

Together with efficient warehousing and customer selling service it passes on to customers resulting in lower prices, anywhere from 25 - 50 % lower than its competitors. However, at the same time they manage to operate with 8 - 10 % profit margins, much higher than the industry average (Norman and Ramirez.1993). We have made a short and simple SWOT analysis to get an overview their capabilities. Strengths Weaknesses High variety offering ? right range of products Higher margins than competitors Economies of Scale Logistics - inventory management Long term relations with suppliers The business culture Organisational capabilities ? adapting change Market leader - Category killer High service level - few stock outs Low lead time Good product information Too big ? may increase bureaucracy Franchising ? higher control cost Mass marketing ?expensive Charismatic leader ? hard to replace Search cost ? for cheaper components Market surveillance ? keep up with trends Opportunities Threats Expanding Asian market New technology ? may lower marketing cost More focus on environmental issues New trends ?individualism Time is money ? people do not have the time to put products together Too dominate ? defence position man hamper innovation The key elements to IKEA's winning formula are well known: simple, affordable, functional, high quality, Scandinavian design, an extensive product line, knock-down furniture kits that customers transport and assemble themselves, low cost, unique logistics, huge stores located in suburban areas with plenty of parking space, day-care facilities and restaurants...