SWOT Analysis of Ikea in 2020

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A simple and efficient approach of Do It Yourself concept for products was initiated by the brand Ikea. Using this concept, the cost is kept low by the company and the value is given to the customers. The various products developed by the brand are flatly packed and is ready to use immediately on purchase. The customers can easily assemble for the final products themselves. The brand also has a strong online presence and its neat strategy is towards retailing and paying huge dividends to the company’s shareholders. The company is headquartered in Delft, Netherlands and was established during the year 1943.

Ikea’s business model is to provide a wide range of stylish, and functional home furnishing products at the prices that are so low for many people to afford the brand’s various products. The brand put all the products at an affordable rate for their customers through their entire value chain optimization, investing in a highly automated production, and by building a long-term supplier relationship. Ikea’s vision goes outside of home furnishing as well.

The SWOT analysis of Ikea differentiates all the main strengths, weaknesses, opportunities, and threats of the company for them to achieve more. Read out this article, to get an understanding of where Ikea stands.

The SWOT analysis of Ikea highlights the strengths of the brand for a positive flow, its weakness where it should work on. It also throws light on the threat that the business can encounter and the various potential opportunities it has.

To make sure that Ikea meets the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Ikea.

Let us discuss on the SWOT analysis of Ikea.

Strengths in the SWOT Analysis of Ikea

Strengths in the SWOT Analysis of Ikea

  • Strong Financial Position

Ikea’s financial position is strong, and it has reported revenue of about $44.6 billion. This is achieved from their concept that translated into an array of products that the customers can assemble it themselves.

This would lead to a huge reduction in cost. Ikea has always targeted to maintain a cost leadership that would execute a positive impression on its revenue.

  • Affordability

The main strength of the brand is its cost factor. The products are inexpensive that can anyone can afford it. The brand’s low cost-effectiveness has led to its customer retention and customer acquiring.

There are various ways to drive down cost and that too without its products and customer expectations being impacted.

  • Brand Reputation and Strong Market Presence

Ikea, being the most valuable furniture brand and during the year 2018, it is valued for about 17.4 billion US dollars. Over the years, the brand has built a strong franchise system and currently, it has about 423 stores in about 52 countries and markets.

Having a strong global presence and reputation, it has seen a good place in the customers, and they would prefer this brand as compared to others. This is a popular brand and a familiar one.

This brand provides almost 12000 products that have generated about 2.5 billion visitors online and about 957 million offline stores during the year 2019.

  • Ikea Products

One of the main strengths of Ikea is its various products that they have and its design, price, and quality. The brand provides flexibility for the customers to assemble their products and this feature attracts many customers for the decision-making process.

This is a major strength of the brand where they have developed many products that are cost-effective and innovative to reach many customers as possible.

Weaknesses in the SWOT Analysis of Ikea

Weaknesses in the SWOT Analysis of Ikea

  • Negative Impact of Media

Ikea is operating in about 52 various markets across the world and has faced many criticisms for various kinds of issues. They have heard various complaints from many employees like poor treatment, questionable acts, etc. and it had a great negative impact on the brand.

This is a weakness of the brand as negative publicity would hurt the brand reputation and customer loyalty.

  • Standard Products

The focus of the brand is to provide standardized products with good service and high-quality at a low price. But this way it is not possible for standardized products to reach all in the marketplace. This way the brand would tend to lose customer focus.

  • Low-quality products

It is a tough task to reduce product cost and maintain product quality. When the company has reduced the cost of the product, then its quality would be compromised.

This would result in a negative impact on the brand’s image. When the raw material cost is on the rise, it is tough to maintain the low cost and good quality.

Opportunities in the SWOT Analysis of Ikea

Opportunities in the SWOT Analysis of Ikea

  • Green Business Model

The brand sees a massive opportunity to attract customers to purchase various products. An increase in the ethical customer or the purchasing procedure is called the Ethical Chic.

This would mean that all the customers prefer to purchase products that are eco-friendly. Involving more in the green business model would get more visibility and opportunity for the brand.

  • Global Expansion

The brand should expand its business operations in the emerging markets and in the various developing countries where there are many untouched customer bases and that can be considered for effective profitability.

On expanding its business operations to larger markets like China, India, South America along with its cost strategy, it would get more benefit out of it.

  • Inclusion of Premium Quality Products

The brand’s products are good and have a large customer base. Including many premium quality products into its product range, the brand would get more customers to purchase their brand. This would get more revenue for the brand.

Threats in the SWOT Analysis of Ikea

Firm Competition

  • Firm Competition

The brand sees a lot of competitors from the market. Ikea is having its business operations in about 52 countries and has a tight competition with many local and international brands. One of the main competitors is the leading brand in the world, Walmart.

In India, the local competitor, Pepperfry, is an online retail in furniture is a tough competitor for the brand.

  • Lawsuits of Ikea

Ikea has experienced many lawsuits and court issues due to its employee discrimination and its poor quality of products being offered. A customer was injured by its product and due to this, the brand exposed to lawsuits.

  • Increase in Income

As Ikea’s products are less-priced and do not have great quality, affordable people with high incomes would not prefer to purchase like this. When they have more purchasing power, the customers are less likely that they would purchase cheap products.

Also, as a fact, Ikea brand compromises over low quality, customers are always in search of high quality. When their income rises, they would go for better quality products. This is indeed a threat to the brand.

Conclusion

The SWOT analysis of Ikea mentioned in this article has highlighted the main strengths of the brand that comes up from its strong financial position, affordability, strong market presence, brand reputation, and its wide range of products.

Its weakness is seen from the negative impact of media, standardized products, and low-quality products. Ikea sees a huge opportunity of going on a green business model and expanding globally. It sees a big threat from competitors, faced lawsuit, and an increase in customer income.