The Ikea Group Market Plan

By Author: Henry Ford
Total Articles: 189
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The IKEA group has been a very successful company over the years; whereby it was named top furniture retailer in the world. The company enjoys a wide market for its products; with more than 154 stores in 22 countries. However, the performance of the company has been in the decline in the past couple of years. Based on this phenomenon, the there has been great need to conduct a market analysis which came up with a market plan. This is aimed at improving the company’s performance (GMD, 2009).

SITUATIONAL ANALYSIS
The company was started in 1943 as a small enterprise dealing with basic household goods. As time went on the business was expanded and started dealing with home furniture and opened its showrooms. The IKEA Group is a large scale retailer in home and office furniture. The company is very large and has more than 154 stores in 22 countries. The performance of the company has been overwhelming over the years; whereby in 2002 it was named the top world’s furniture retailer. Regarding the sales, the IKEA Group has been leading in the market with annual sales of more than $12Billion. The number of clients ...
... being attended by the company is very diverse rising to more than 286 million (GMD, 2009).

At initial years, the IKEA Group opened various furniture shops. Important to note was that the pricing at the time was relatively than other furniture shops; which was aimed at pulling more customers. Despite its rapid growth in the initial stages, the rate of development greatly changed in the late 1990s. This was attributed to the entry of more businesses in the industry thus posing a high competition (Dearlove, 2003).

The information gathered from the ark restaurants corp. and its competitors has been useful in making analysis of its strengths, weakness, opportunities and threats.

Strengths:
The IKEA Group is proud to be the leading furniture retailer in the USA and more than 22 countries of the world. Some of the key aspects and strengths of IKEA Group are as below: Firstly, IKEA Group has a Leading market position, with almost 25% market share of U.S. home and office furniture provisions and having over 154 stores in more than 22 countries. The Group is proud of the steady market offered by households; strong purchasing power, supply chain and advertising among store range (GMD, 2009).

Stable international existence—the IKEA Group is among the largest furniture retailer and operator in the US; whereby it enjoys more than 20% of the market share in New York. In the year 2002, the IKEA Group was named world’s top furniture retailer. In addition, IKEA Group has Efficient and quality services; whereby it has widely recognized home furniture by consumers; quality and very affordable products. Additionally, the company has extensive furniture and show rooms network. In this case, it has vertically synergized with network of multiple stores with a wide diversity of home and office furniture (Dearlove, 2003).

From another perspective, the IKEA Group has global chain systems with more than 154 stores in the world and 14 in the USA. It operates in more than 22 countries. The IKEA Group enjoys very efficient internet advertising. Further, the company has highly spacious and properly located show rooms. It has further been noted that. The company has strong financial foundation; whereby it has a sustainable partnership which ensures sufficient funding for undertaking projects. Finally, cooperative and motivated employees have also been witnessed. This will ensure efficient and quality services (GMD, 2009).

Weaknesses:
The company is also faced with various short comings; to begin with, the company had a decline in sales in some showrooms. This was a continual decline in sales during the 2 fiscal years (2007-2009). This was attributed to the pricing strategy which was initiated to cater for some infrastructural developments. The stiff competition was also a key factor in influencing the poor performance. Further, the company has also realized diminishing profits. In this case, the IKEA Group has experienced diminishing profits in the years 2008-2009. The margins also dropped from 7.75% to 5.4%. Finally, the company has had High debt level during the periods 2007-2009. This might have dampened investor confidence (Cateora Et al, 2008).

Opportunities:
There are many opportunities ahead of IKEA Group. For instance, IKEA’s Group website is viable avenue for market penetration. The company is also potential of innovating new designs in furniture due to the diverse workforce. The increased corporation between the USA and India, Brazil, China, and Canada is posing a potential market for IKEA Group. Professionalism and expertise in furniture design; whereby the IKEA Group has a qualified and efficient workforce in furniture design which is an added advantage. Additionally, the company has a strong innovator in that it is focused on innovations in processes and products like in the various chains of furniture stores (Dearlove, 2003).

Threats:
IKEA Group is faced with various challenging situations, worse of all; Strong competition. Based on this, other key players are putting a lot of pressure on the company’s margins. These include; ifurn, MyNewFurnitureStore.com, Spacy, La Furniture Store and Avetex Furniture among others. In this case, all this enterprises operate furniture retailing and have intensive internet marketing. Declining availability of indigenous wood products has led to declining quality of furniture and increased cost of production (GMD, 2009).

SOCIO-CULTURAL ENVIRONMENT
The socio cultural concept plays a key role in the success of any business, its always advisable for businesses to ensure consideration of socio-cultural set up of the targeted market. In regards to the furniture industry, the concept of socio-cultural environment is very vital. It should be noted that, the aspects of civilization have been embraced in all societies thus leading to demand of modern furniture. With this in mind, the socio-cultural factor in the demand of future has been nearly homogenous across the globe. Nevertheless, some differences have been realized; whereby different cultures have varied tastes on the types of furniture (Cateora Et al, 2008).

To begin with, the major population in different nations and more so in the 21st century is civilized. The old age days of using home made furniture are gone; thus providing ready market for home furniture. Additionally, the concept of urbanization has also led to high demand of fine furniture. This is facilitated by the increased incomes of the city dwellers. This may be in contrast to many traditional societies where home made furniture is adopted (GMD, 2009).

Further, the socio-cultural framework has a direct relationship with other factors affecting the business environment. For instance, the socio-cultural orientation has a direct relationship with the political situation. In this case, the cultural practices have a significant role in influencing the structure of government and the government policies. In this regard, the culture of peace and mutual understanding creates a good environment that is free from any form of violence or riots. This is a favorable attribute for the business, since maximum security will be assured. The concept of cultural practices regarding furniture and home beauty places a potential market for the furniture thus leading to increased sales (Dearlove, 2003).

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