Situational Analysis
Situational Analysis
University of Phoenix
STR/GM581 International Strategic Planning & Implementation
Steven Hall
Situational Analysis IKEA is a global home-furnishing retailer founded in 1943. “In 2008, IKEA had 253 stores in 24 countries plus 32 stores owned by franchisees and 20 stores expecting to open in 2009” (The Times 100, 2009, p. 1). This paper will show the organization’s mission, vision, and values. In addition, this paper will show a consideration of broad environmental forces affecting the firm, and the potential for global expansion. Finally, this paper will show an assessment of industry structure using the Porter Five Forces Model, and a critical assessment of organizational SWOT (Strength, Weaknesses, Opportunities, Threats) factors.
Mission, Vision, and Values “The IKEA vision ‘to create a better everyday life for many people’ puts this concern at the heart of the business” (The Times 100, 2009, p. 1). IKEA believes that if it keeps prices low people will want to shop at IKEA. Furthermore, IKEA believes that as a responsible company, it also has a responsibility to world it serves. A social and environmental responsibility is important to IKEA. IKEA also works only with suppliers who share this same philosophy.
Environmental Forces “According to Ulf Smedberg, marketing manager of IKEA China, IKEA faces three main challenges in China: pricing, high duty rates, and the PRC bureaucracy” (Miller, 2010, para 5). Although China has reduced many regulations for foreign companies, its regulations are still harsh. “IKEA has been hit with heavy import taxes in China, though the company aims to relocate production of many items to China to solve this problem. IKEA faces strict quotas and has difficulties importing food to its restaurant” (Miller, 2010, para 5). To solve this last problem, IKEA “now has a food-import agent that handles all related issues, including labeling” (Miller, 2010, para 5).
Porter Five Forces
University of Phoenix
STR/GM581 International Strategic Planning & Implementation
Steven Hall
Situational Analysis IKEA is a global home-furnishing retailer founded in 1943. “In 2008, IKEA had 253 stores in 24 countries plus 32 stores owned by franchisees and 20 stores expecting to open in 2009” (The Times 100, 2009, p. 1). This paper will show the organization’s mission, vision, and values. In addition, this paper will show a consideration of broad environmental forces affecting the firm, and the potential for global expansion. Finally, this paper will show an assessment of industry structure using the Porter Five Forces Model, and a critical assessment of organizational SWOT (Strength, Weaknesses, Opportunities, Threats) factors.
Mission, Vision, and Values “The IKEA vision ‘to create a better everyday life for many people’ puts this concern at the heart of the business” (The Times 100, 2009, p. 1). IKEA believes that if it keeps prices low people will want to shop at IKEA. Furthermore, IKEA believes that as a responsible company, it also has a responsibility to world it serves. A social and environmental responsibility is important to IKEA. IKEA also works only with suppliers who share this same philosophy.
Environmental Forces “According to Ulf Smedberg, marketing manager of IKEA China, IKEA faces three main challenges in China: pricing, high duty rates, and the PRC bureaucracy” (Miller, 2010, para 5). Although China has reduced many regulations for foreign companies, its regulations are still harsh. “IKEA has been hit with heavy import taxes in China, though the company aims to relocate production of many items to China to solve this problem. IKEA faces strict quotas and has difficulties importing food to its restaurant” (Miller, 2010, para 5). To solve this last problem, IKEA “now has a food-import agent that handles all related issues, including labeling” (Miller, 2010, para 5).
Porter Five Forces
References: Fong, M., (2006 March 3). China Daily. Slashing prices: IKEA hits home in China. Retrieved from http://www.chinadaily.com.cn/english/doc/2006-03/03/content_526237.htm Miller, P.M., (2010). China Business Review. IKEA with Chinese Characteristics. Retrieved from http://www.chinabusinessreview.com/public/0407/company_profile.html Mind Tools Ltd, (2010). Porter 's Five Forces. Retrieved from http://www.mindtools.com/pages/article/newTMC_08.htm Swathen, (2010a). Porter’s Five Forces of Competition. [X] » Buyer Bargaining Power (one of Porter 's Five Forces) » Threat of New Entrants (one of Porter 's Five Forces) » Supplier Power (one of Porter 's Five Forces) » Threat of Substitutes (one of Porter 's Five Forces) » Porter’s Five Forces of Competition Strategic CFO. Retrieved from http://www.wikicfo.com/Wiki/(X (1) S (g1ywrm55x4gtt145hoj2v355))/Default.aspx? Page=Porters%20Five%20Forces%20of%20Competition&NS= The Times 100, (2009). IKEA. SWOT analysis and sustainable business planning. Retrieved from http://www.thetimes100.co.uk/case-study--swot-analysis-sustainable-business- planning--110-368-3.php