Business Report: IKEA's Strategies, Challenges, and Future Growth

This report provides a comprehensive analysis of IKEA's business operations, challenges, and strategic recommendations. It begins with an introduction highlighting IKEA's current market position, the impact of online competition, and the need to adapt to modern market practices. The report then delves into IKEA's company profile, including its history, ownership, and global presence, followed by an examination of its activities, including SWOT and PESTEL analyses, and Porter's Five Forces. Key challenges are identified, such as logistics, competition, and the need to personalize products for different markets. The report further explores IKEA's management approach and provides specific recommendations for addressing these challenges. The conclusion emphasizes the importance of strategic adaptation and continuous improvement to ensure IKEA's continued success in the global furniture market. References are provided to support the analysis.

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Contents
Introduction:..............................................................................................................................................2
The company:............................................................................................................................................2
2.1: PROFILE........................................................................................................................................2
Activities:................................................................................................................................................3
SWOT.....................................................................................................................................................3
PESTEL.................................................................................................................................................4
Potters Five forces:................................................................................................................................4
2.2 IKEA management approach:........................................................................................................5
3: Challenges:.............................................................................................................................................5
3.1 description:.......................................................................................................................................5
3.2 Impact:.............................................................................................................................................5
Recommendations:....................................................................................................................................5
Conclusion:................................................................................................................................................5

IKEA and the challenge of growth
Introduction:
The IKEA owner supposes revenues to rise this economic year as connected business grows, but
incomes will be pretentious by increased investors as site experts such as Amazon and
Made.com fight for brand battles. The world's largest furniture brand struggles after decades of
rapid growth to adapt to modern market practises and to the increase of its rivals online while
trying to reservation its unmistakable affordability with high raw materials and other costs. As a
result of the online change in the supply of products to their franchisee stores around the world,
Inter IKEA Group is increasing significantly in packaging and logistics costs," Managing
Director Maurice Dams said to Bloomberg on Wednesday. Naturally, we face a huge logistics
challenge. In an interview, he said, we ship major goods." "The way we can adjust our streams is
what we look for - we have a team that looks at how we can transfer our products more
effectively. It means investment. It means investment. Inter IKEA is indeed a shopkeeper
franchisor, the leading INGKA Company and also responsible for the production and
procurement of goods and resources. It provides the majority of revenue to its retailers and about
5percent of franchise fees. Sales expected to rise this time without suggesting any figures and
facts said that prices would decrease towards its store employees so the costs of raw materials
were lowered at elevated amounts,this year without further pricing information.(Ringstrom,
2019)
The company:
The Ikea, owned by the Stitching INGKA Foundation as of 1982, is the world's largest retailer of
furniture and home product. Furniture and furnishings in the Scandinavian style are produced by Småland
group in Sweden (Kotler et. al., 2012, p. 3). Ikea shapedincome of EUR 28.75 billion in 2014 with its 315
stores in 40 countries, which is 5.9% higher than the previous year. In addition, websites reported 1billion
visits over that same year to shops with 69.90 million visits.On the other hand, secondary activities that
are known as main activity support processes. This include the facilities of the organisation, the
management of human resources. Procurement and development of technology. The way from provider to
consumer must be as quick, economic and eco-friendly as possible. The basic elements of this work are
flak packaging: to reduce waste of space ensures that we can more easily provide conveyance and storage
of goods. Since efficient distribution plays the central role in creating a low price, the continuous
production of goods routing and logistics is the priority.This philosophy builds on IKEA's corporate
culture, from design teams, suppliers and consumers. Continuing growth activities in all aspects of the
supply chain are an important way of influencing the market in order to strengthen potential strategies for
IKEA. The business has the benefit of setting the market stage owing to the uniqueness of IKEA's
plannedplacing, becoming the maincontestant in its sector. By incorporating the client into the process
and implementing a two-way value system, IKEA has established the value chain approach.
2.1: PROFILE
In their vision and mission statement, IKEA clearly stated its plan; IKEA developed its role as pricefront-
runner and provided the consumer with a high quality product that includes mechanisms from throughout

the globe using competitive advantages at international level, less costly logistics and large, easy retail
outlets in the suburban area. In accumulation, cost management by icons and efficient procedures is
successfully embedded in the culture of IKEA. The value chain strategy describes two main operations,
namely primary and secondary activities. Main operations including manufacturing, marketing, logistics
and post-sales activities.
Activities:
IKEA is a globally multinational furniture distributor with branches, which offers furniture, bathrooms
and galleybelongings and fittings in boxes. IKEA is the biggest furniture company worldwide, owing to
its exclusive conception of furniture delivered in containers, economical and at home by the costumer.
IKEA has 301 shops in 37 countries, and is the world's most profitable multinationals (32 August 2009).
A total of 286 million people visited the stores of the IKEA Corporation around the world last year, many
of them throughout England, Latin America, Asia and South America.
SWOT
The sustainability and ecological design urgencies of IKEA are dominant to their corporate plan. The
business has announced a new sustainability strategy for 2015. This will put together social,
environmental and economic problems.
Strength:
Global brand that attracts the most significant consumer community that guarantees fair quality
internationally. A solid evidence- based on an amazing array of durable goods that are well built at
competitive prices. Increased recycled materials – from 71percent in 2006 to 75percent in 2008, IKEA
has massively increased use. Volume commitments: IKEA hopes that its manufacturers will have long-
term relationships.
Opportunities:
The demand for low-cost, greener goods is rising. The current financial climate may lead to more costly
retailers being traded by consumers. Chinese and Indian middle class development Demand for lower
water use and carbon footprints.
Weakness:
In order to reinforce and keep them, IKEA must reflect and recognise its shortcomings. This can play an
important role not only in setting goals but also in designing new strategies. IKEA's shortcomings may
include the fact that IKEA is very difficult to standardise its product size and reach of its global market.
This can constitute a weak association in the supply chain of IKEA that can influence IKEA's customer
views.
Threats:
If an organisation knows of any possible consequences, so it should prepare to deal with those. IKEA may
employ such power to combat challenges in the industry by creating new ideas. IKEA risks may be
triggered by: substantial reduction in the number of first-time time homebuyers. More entrants have
joined the low-cost houses and furniture markets. In order to deal with this contraction, IKEA needs to
improve its distinguishing features that decrease consumer and disposable income expenditure.
In addition, the beds of IKEAs were too small and all measurements on the European scale. The kitchens
were often too small for Americans to use in short furnishings and accessories. The company has finally

agreed to customise and upgrade its product portfolio to compete in the US market. The redesign of the
furnace boosted sales in bedroom furnishings by 30-40 percent, and instantly in kitchen furniture by 15
percent. In 1997 approximately one third of the IKEA equipment was produced for the United States
market. The business makes enormous incomes from the American market, but it has a greater share on
the European market.
Situation at present:
PESTEL
Political:
In both Scandinavia and the global market, IKEA is one of the best examples for a brand. Sweden's
political situation is stable and its climate is simple for many marketplaces. IKEA must also one of the
west sellers who took this chance to pierce Chinese markets after the 1978 improvements and opening
policy in China.
Economy:
Financial crisis is one of the world's greatest problems for multinationals. IKEA is entering Chinese and
Indian markets at a period when the global recession was least affected. Opening Southampton in the
United Kingdom in 2009 led to revenue declining from recession otherwise, but the operational margin
dropped by 11 percent in 2004.
Potters Five forces:
In order to evaluate a sector, Michael porter determined five powers.
Buyer power:
Because of its exiting low prices, IKEA has a little strength. Movable goods and other small devices have
an alternative and customers have limited options to make the IKEA special among its rivals by having
quality at low price.
Power of Supplier:
IKEA has its hundreds of distributors from Asia, Africa and elsewhere globally which have developed
standards in material delivery. The IKEA provides for the contracts with different companies to produce
the same items just a few times for all those items.
Competition:
IKEA furniture competitors' designs and features are quite different. IKEA has a very strong consumer
imagination in the EU for high quality low-price goods in the US
Replacements:
No one product can be used to replace the furniture, but IKEA must adopt the latest technologies to
prevent design from deteriorating.
New entrants:

Both major manufacturers of furniture and retailers are in the great city. Another furniture business has a
low cost approach, and should be competing with IKEA to provide furniture and house wares as an
excellent company.
2.2 IKEA management approach:
Ikea has developed into a worldwide phenomenon with an almost like cultivation and the biggest reseller
in the world, due to the charismatic presence of its founding Ingvar Kampar, along with his own
philosophy of management of business and the Scandinavian open management style.
3: Challenges:
The price of Sweden is falling annually and IKEA seeks a solution to this problem; shipping from Europe
to another country takes around 1 to 2 months and the cost of shipment is very expensive. Furniture from
Sweden is sold in the USA.
3.1 description:
Nations like Japan IKEA must adapt their service and their packets to their likes, because IKEA's success
of the IKEA sector, particularly in a market like Japan, is being treated if it failed to produce IKEA's
standardisation in order to resolve it, still maintaining standardisation, economic concern with rising
living costs and depletion of disposable incomes.
3.2 Impact:
IKEA has intensified the competitiveness for global enterprise and many rivals by extending its activities
overseas, so IKEA had to personalise their product and standards to attract the consumer, but IKEA had
to learn to compete with another country's market. In Germany, the IKEA group has achieved.
Recommendations:
In order to reduce excessive costs, IKEA must continuously be pre-planned and aware to market
dynamics. They need a viable brand to allow other rivals to overcome their markets. IKEA is very sure
that its product quality is very high and that competition cannot compare with IKEA but must not,
because opponents do not anticipate or underestimate today. IKEA must always be prepared or effective
for penalties. IKEA can also advertise its product and arrange a lot of activities to increase the awareness
of its brand. In order to draw buyers, IKEA must offer a lot of voluntary sponsors, sports and all.The
perfect way to sell IKEA products and the cost of work they use, for instance.
Conclusion:
IKEA has a market franchise and has been popular internationally as well. Actually, IKEA did n’t work in
Japan, especially before they did. IKEA must build additionalstrategies and struggle to do more sales.
They should also open more IKEAs in other places and optimise marketing to meet the boardclient. IKEA
should study that country market before starting up a business whether adapting or implementing is to be
introduced in the country in question, to ensure that the company never fails. From the study, IKEA
reveals that the network structure is solid however there is a great deal of internationalisation and
consumer worldwide.Everyone is simply claiming that IKEAs goods are not ordered because their
product excellence is very decent and valueprocurement and also last for several years during a consumer
survey on target customer. In the international market IKEA goods are prejudiced by national and
radicalissues. For example, people in Japan don't like foreign goods and have to customise them. Political
factors are affected as in some nations barriers are not permitted for standardisation packaging and the
packaging must be changed because of this IKEA.

References
 Challenges Faced by IKEA. (2018). Retrieved from UKEssays.com website:
https://www.ukessays.com/essays/marketing/challenges-faced-by-ikea-in-international-
environment.php
 GRIN - It’s IKEA’s World. A Growth Strategy Based on Cost Leadership. (n.d.). Retrieved from
www.grin.com website: https://www.grin.com/document/446483
 IKEA’s Growth Strategy (Global Business & Planning) | Erply. (2019, May 22). Retrieved from
Erply Retail Software website: https://erply.com/ikeas-growth-strategy/
 PESTEL, SWOT and five forces analysis of IKEA. (2009). Retrieved from UKEssays.com
website: https://www.ukessays.com/essays/marketing/pestel-swot-and-five-forces-analysis-of-
ikea-marketing-essay.php
 Ringstrom, A. (2019, November 8). Big products, big challenge: IKEA brand owner invests in
logistics. Reuters. Retrieved from https://www.reuters.com/article/us-ikea-results-
idUSKBN1XI19L