Porter's five forces analysis for IKEA
Porter’s five forces analysis for IKEA
Threat of New Entrants
As the current market is saturated, there is little attraction for a competitor large enough to threaten IKEA’s position. In addition, the significant amount of financial investments and expertise are required to become a discounted furniture retailer in a global scale. There is little threat from new entrants.
Threat of substitute products
The Threat of substitute products 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. And the target market for IKEA is unlikely to switch to higher end more classic styles of furniture, so there are not many alternates that offer the breadth of options that are available at IKEA. However, IKEA needs be updated with the latest trends, to avoid losing their name for style. Through simplicity of design and innovative, technology. IKEA can follow any new style fairly well and rapidly and move each the product into its stores. Ever since the inception of the concept of furniture, styles and trends in that sense have undergone much change. Since the current trend is “going-green”, many firms are following this concept. However, the demand for basic, functional furniture has remained relatively constant, therefore there is less threat of substitutes in the near future.
Bargaining power of suppliers
The bargaining power of suppliers is considerably low. Suppliers do not have substantial bargaining power as there many options available to IKEA around the world. There are numerous factories that have the requisite expertise to partner with IKEA. IKEA has succeeded in managing and maintaining long and well-established relationships with suppliers across the globe. IKEA has been recorded to have 1380 suppliers in as many as 54 countries, 21% of which are established in China in 2008. IKEA also possesses their own manufacturing company, Swedwood
Threat of New Entrants
As the current market is saturated, there is little attraction for a competitor large enough to threaten IKEA’s position. In addition, the significant amount of financial investments and expertise are required to become a discounted furniture retailer in a global scale. There is little threat from new entrants.
Threat of substitute products
The Threat of substitute products 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. And the target market for IKEA is unlikely to switch to higher end more classic styles of furniture, so there are not many alternates that offer the breadth of options that are available at IKEA. However, IKEA needs be updated with the latest trends, to avoid losing their name for style. Through simplicity of design and innovative, technology. IKEA can follow any new style fairly well and rapidly and move each the product into its stores. Ever since the inception of the concept of furniture, styles and trends in that sense have undergone much change. Since the current trend is “going-green”, many firms are following this concept. However, the demand for basic, functional furniture has remained relatively constant, therefore there is less threat of substitutes in the near future.
Bargaining power of suppliers
The bargaining power of suppliers is considerably low. Suppliers do not have substantial bargaining power as there many options available to IKEA around the world. There are numerous factories that have the requisite expertise to partner with IKEA. IKEA has succeeded in managing and maintaining long and well-established relationships with suppliers across the globe. IKEA has been recorded to have 1380 suppliers in as many as 54 countries, 21% of which are established in China in 2008. IKEA also possesses their own manufacturing company, Swedwood