IKEA Porter’s Five Forces Analysis

Extent of rivalry among existing competitors depend on sustainability of competitive edge, the efficiency of advertising, the level of utilisation of critical success factors for the industry etc.. Rivalry among existing firms is intense in the global market of discount furniture and the major players in the industry include Euromarket Designs Inc, Galiform plc, Wal-Mart Stores Inc, Argos and others. However, currently IKEA is the undisputed market leader in the industry of discounted furniture in the global scale.
Threat of new entrants to the industry depends on a range of factors such as the level of capital requirements, the extent of profitability of the industry, possible barriers to enter the industry etc. The threat of new entrants into the industry is low, and the chances of emergence of new competition for IKEA is insubstantial as the current market is saturated and significant amount of financial investments and expertise are required to become a discounted furniture retailer in a global scale.
Bargaining power of buyers as a factor impacting the level of competition within an industry depend on the levels of switching costs for buyers, the extent of customer sensitivity to changes in prices, the nature of the product etc.. The bargaining power of IKEA customers is strong, as the competition is intense and the customers have a wide choice of alternative options offered by global furniture retailers, as well as, local furniture producers.
Threat of substitute products for the company depend on the level of standardisation of products, the level of depreciation, direct and indirect substitution and a range of other factors. However, the threat of substitute products and services is low as there are no too many products and services available that can substitute the demand for furniture, home appliances and a range of other products offered by IKEA.
Bargaining power of suppliers along a wide range of factors depend on the variety of substitute raw