SWOT - IKEA
IKEA is a company that is synonymous with building prefabricated furniture and Swedish food. The stores are always massive warehouses that have furniture set up and arranged so that customers can see what the products could look like in their homes. The company has long been known for their unique furniture and has made a place for themselves in many countries retail market.
One of IKEA's major strengths lies in affordability of their products and constant innovation. Innovation is a regular driver of IKEA's business, and they pride themselves on their ability to keep up with the times. Another strength of IKEA is that they have created a focus on sustainable products. One example of this is that all the cotton IKEA uses is from sustainable sources. In 2016, 61% of the wood that IKEA used came from sustainable sources, and their goal is to have 100% come from sustainable sources by 2020. In their 2017 annual report, IKEA mentions throughout the report that one of their primary goals is to create not just a viable business, but a sustainable product line and economy as well.
IKEA is also frequently on the forefront equal rights for all. In March 2018 they reported on the women in their company, and these were some statistics they mentioned:
-49% of their company leaders are women,
-the work with artisans across India to empower them through their craft,
-the IKEA Foundation gave a 3.5 million euro grant to PRADAN so that they can help women in India find their voices, and
-they also work in 12 other countries social enterprises (both first world and third world countries alike).
IKEA's strengths, in general, seem to lie in listening to what their customers want and the trends in what customers are looking for in products. Financially the company did quite well last year, and their revenue grew by 1.7%. This amounted to total revenue of 36.3 billion euros, and retail sales accounted for 34.1 billion of the total. Another strength of IKEA is that they are continually re-evaluating themselves through customer service and yearly reports detailing not just their successes but also their weaknesses and how they will work on them.
IKEA has operations all over the world in as many as 30 different countries. Each country has its own rules and regulations which won't always line up with other country's rules and regulations. This can cause issues in which products can be sold in which nations and can increase the cost of manufacturing. The increase in price can be from creating products that are only sold in specific markets or having to change things about their products to fit the country they are to be sold in.
There have been a few moments of bad press lately for IKEA which doesn't help their overall bottom line. Among the issues were corruption in Russia, environmental issues and an all-male catalog that was released in Israel that appeared to make fun of orthodox Jews. Problems with negative press and scaling their business to fit other countries are among the most prominent weaknesses that IKEA faces.
IKEA has not yet expanded their stores to Africa, but they do have operations there. While some countries in Africa would not be suitable due to low-income issues, countries like South Africa could work well for IKEA. Also, countries, where the income is low but not so small as to be poverty level, would likely appreciate IKEA due to the affordability. Among the countries that might benefit from this is India where IKEA has operations. Another reason to move into countries like India could also be that India has a high population and many people would be looking for unique or new ways to store their items.
IKEA has somewhat recently stepped into the sustainability trend, but for the most part, their success is in cotton. Expanding their sustainability to more products and areas of the company could increase customers likelihood to shop. Advertising their sustainability can also help to generate more growth because it is something customers are looking for. Some customers may be more willing to travel and spend a little more for a product that will last and is made from sustainable means. Another thing that IKEA should advertise more is what they do to help women and people in low-income countries. IKEA does fantastic work giving jobs to people that struggle to find them. The tasks also frequently involve crafting or using skills from the person's culture to create products for IKEA. They also encourage their staff to help better the world around them, and this can be seen the support some of their workers have given others in stressful situations. IKEA does terrific work in the areas of sustainability and equality and being more forward about this could not only help sales but the overall company image as well.
If you go on the internet, you will see all kinds of ways to DIY just about anything. This is the most significant threat to IKEA because customers that think they can build a better lasting and cheaper product themselves. This DIY trend takes away customers that otherwise might have shopped at IKEA. One of IKEA's hallmarks is that you can build the furniture yourself with prefabricated parts, and the DIY trend cuts into part of their brand image.
Countries laws don't always remain the same and as the rules change IKEA must change with them. Some of these laws can involve higher taxes on imported materials which could raise the price of goods at IKEA. As the prices go up, customers are less likely to buy the products which will cause IKEA's revenue to go down. If people have the choice between a more expensive and lasting product and a cheaper product that will last a little while customers are going to go for the more affordable option. If IKEA can keep itself competitive and maintain their affordability, they will remain successful.
Another threat related to the increasing cost of IKEA products is the increasing cost sustainable materials. While sustainable materials are better, in the long run, they are more expensive to procure and use. This causes the cost of products to increase to cover the heightened price in materials. So while there is an opportunity in creating more sustainable products, there is a fine line between opportunity and a threat involving the cost of the product to the customer.
IKEA's strengths lie in their innovation and listening to what their customers want, one of these being more sustainable products. Their weaknesses fall into negative images issues that have happened in different markets and problems maintaining cost while creating sustainability. Their opportunities include creating more sustainable materials and products and their threats are the possible increased cost of products to do changing laws.