The Background
IKEA is an exclusive team that operates selling household furnishings. INGKA Holding BV
is the parent firm, plus produces IKEA household goods. The team functions inside Europe, the
US in addition to Asia. Its main office is in Helsingborg, Sweden and has about 127,800
employees. Below is a TOWS analysis of IKEA (Figure-1).
The Analysis
Internal Strengths Internal Weaknesses
1. A strong global brand. 1. The size and scale of its
global business.
2. Its vision, to create a better
everyday life for many 2. The need for low cost
people. products because this needs to
be balanced against optimal
3. A strong concept base on
quality.
offering a wide rage of well
designed functional products 3. IKEA needs to keep good
at low prices. communication with its
customers, since the scale of
4. Economies of Scale
online and regular print makes
5. A democratic design with this problematic.
cost consciousness in mind.
6. Close to supply chains to
reduce costs.
7. Expected increase in online
sales.
External Opportunities SO WO
1. A request for greener 1. Initiate a greener, global 1. Build low priced green
merchandise. brand (O1, S1, S2, and S3). products globally (O1, O2,
W1, and W2).
2. A growing demand for low 2. Expand small priced
priced products. products globally (O2, S1, S2, 2. Build environmentally safe
S3, and S4). products for customer
3. Demand for reduced water
approval, with a consistent
usage and lower carbon 3. Diversify into products
dispersal of advertising (O3,
footprints. globally, which are cost
W3).
efficient (O2, O3, 05, O6, S1,
4. Increasing online sales.
S2, and S3).
5. Sourcing from China
6. New store openings.
External Threats ST WT
1. Get rid of the company.
1. A slowdown in the first 1. Diversify into a different
time buyers entering the segmentation with a new
housing market, since this is a product (T1, T2, T3, S1, S2,
core market for IKEA and S3).
products.
2. Offer more products with
2. More competitors entering greater utility (T1, T2, T3, S1,
the household good markets. S2, and S3).
3. The recession is
diminishing consumer
spending and disposable
income.
Figure-1 IKEA TOWS Analysis
Target China that is functionally engrossed, Internet users, thrifty shoppers,
and shoppers with limited financial resources.
Profile Older, rural and urban, wider socio-economic outline (established
homeowners).
Positioning Wider range of environmentally safe products (toxin free).
Excellent service.
Situate away from fresh entrants.
Competitor targetstraditional good manufacturers.
Product Standard variety.
Satisfactory service and plenty of time for product choice.
Longer store hours.
Place Focus on medium and/or smaller sized towns.
Promotion Local newspapers, PR, direct mail and Internet.
Price Stay competitive with traditional household good manufacturers not
fresh entrants.
Figure-2 IKEA Target Segment and 4Ps
The target segment (See Figure-2 above) is evaluating and putting the segments into groups
by attractiveness. IKEA should focus on the following segments:
IKEA should focus on global Internet users because an online help guide would
accommodate the necessary social trends. For example, it could focus on home
improvement, in the housing marketplace. It could as well give tips on how to save and
be environmentally friendly because of the sluggish economy.
IKEA must segment customers that want to save money globally, since it is large enough
to enjoy economies of scale. For example, this lowers the average costs inside semi-
permanent periods. Economies of scale will give IKEA a competitive advantage because
the savings is passed on to patrons, with diminished prices.
IKEA should target customer segments that have limited financial resources globally
because IKEAs low prices create appeal amidst its customers, within this financial
downturn in the economy.
IKEA must target segments that have higher budgets globally, since it has good quality
and design. For effectiveness, IKEA must communicate and get this out in the open. For
example, IKEA should include this inside online and print advertising, to reach this
segment.
Ethical Issues
IKEA is dealing with the following ethical issues:
IKEA recalled IRIS ALVIN tents due to a lack of application cords. IKEA recalled
accessory drawers KVIBY due to injury threat with glass knobs.
IKEA as well recalled baby sleeping bags on safety grounds (Data Monitor, 2009)
IKEA recalled Parodi and Apelsin glass vases from supplier #18347 due to a faulty base.
Parodi has been sold on all IKEA sales markets and Apelsin has been sold in the EU only.
IKEA recalled food labeled jars of marinated herring as a large piece of glass was found
in it by two customers.
Recalls can affect brand-equity and sales that could have a negative impact on revenues
because of litigation expenses (Data Monitor, 2009). Past the impressions of a products
characteristics derived from the COM (Country of Manufacturer), purchasers might abstain
from buying merchandises on account of any animosity (Kanuk & Schiffman, 2009).
