The SWOT Analysis of IKEA

1. The Development of IKEA

Ever since founded in 1943 in Sweden, IKEA has developed and innovated the home furnishing sector. Established by Ingvar Kamprad at the tender age of 17, this young entrepreneur was destined to change the world. He drew the inspiration of the company’s name from the initials of his name and the initials from his family’s farm, Elmtaryd, and his home village, Agunnaryd.

At the very beginning, IKEA engaged in selling small items such as pens and lighters, from where it grew into the industry giant today. The company got into flat-packing of furniture with its first store that opened in Norway in 1963. Afterward, the company has managed to attract millions of new customers every year. Indeed, the fact that IKEA has made significant progress worldwide.

In this IKEA SWOT analysis, an in-depth look that focuses on numerous factors that have shaped the company’s decision making over the years. Here, a special focus is on the strengths of the company and the various opportunities. Meanwhile, weaknesses and threats are mentioned that should be settled in the future.

2. The SWOT Analysis of IKEA

A SWOT analysis is an efficient method to analyze the components that help a business thrive or contribute to its development. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors, where as opportunities’ and threats are external factors.

• Strengths: these are the advantages that are better then competitors in the market;
• Weaknesses: the weak part when compared with others and may demage the brand;
• Opportunities: the chances that company should grasp in the recent time;
• Threats: the potential threat that should avoid in the future.

This section focuses on the strengths that have enabled IKEA to become the largest home furnishing retailer of the 21st century. Accordingly, there are both internal and external strengths to ensure its position in the market. The most outstanding strengths of IKEA are:

• Design and Creation
• Affordability
• Brand Recognition
• Market Research

As we all know, IKEA is famous for its design and creation over the world. When people wanted to buy furniture, the first choice came into their mind is IKEA, since it offers most fashionable and exquisite design. Furthermore, this wide range of designs is also affordable for the average of people, and after purchasing the furniture, it supports to transport your goods to you home which can effectively reduce customers' costs.

IKEA has been in the market since 1914, thus it is the reason why IKEA enjoys good reputation. Besides, IKEA also has a very vibrant marketing team that has enhanced its market research and thus enabled them to venture into new markets. From this IKEA SWOT analysis, it shows how the company has managed to remain a pacesetter. 

As for this section, it mainly illustrates the weaknesses or shortcomings of IKEA. Weaknesses are inadequacies that result from both internal and external factors and if not properly handled can result in huge financial losses. The main weaknesses listed as below:

• Poor Product Quality
• Difficulty for Assembling
• Shipping Problem
• Negative Press

IKEA remains several weakness that may damage its market share and brand image in some degree. The primary concern has been the poor quality of their products. Many people have reported their furniture breaking down just a few days after setting up. As for the necessity in people’s daily life, the quality seems far more important when making buying decisions.

What’s more, consumers being unable to assemble their furniture, which could result in the missing pieces such as screws and nuts. Since IKEA opened in numerous countries, it could bring logistics difficulties in shipping and delivery. Plus, another weakness for IKEA is the sustainable issues, for instance, the bad press about complaints from the staff due to long working hours. According to its weaknesses, it is better to avoid the negative effects.

This section focuses on the opportunities available for the company to grow even further. An opportunity is a chance to capitalize on market conditions in a bid to get the utmost benefit from this. These are the external factors that IKEA can capitalize on:

• New Market
• Online Shopping
• More Storefronts
• Expansion

Through the fierce competition in furniture market, IKEA has the benefits of being an established market player. This thus allows the company to have proper knowledge on how to run the company better. As a result, reaching to more countries could increase more new customers so as to increase revenue. With the advancement in the internet, more companies are moving online. IKEA can capitalize on this platform and therefore enables a wider customer reach.

To maintain all the new consumers and create a good user experience, the company should set up more storefronts all over the country to ensure everyone has access to this brand. Except the furniture section, it is suggestible for IKEA to enter into more new markets, such as food industry, fashion industry and so on. These aspects of the IKEA SWOT analysis will enable the company to see more of its arising opportunities and how to capitalize on them better.

Threats could damage the brand in some aspects, so firstly figure out the threats then keeping changing and optimizing in the future. Some of the weaknesses also double up as threats. In this section, it mainly concludes the threats that IKEA could face up in the market:

• Strong Competition
• Disgruntled Employees
• Sustainability Problem
• Lower Market Penetration

With more and more companies coming into the home furnishing industry, the increased competition among them could hurt the position of IKEA. Global brands such as Walmart are on the verge of claiming consumers from IKEA. Another threat is dissatisfaction from employees who have often claimed mistreatment and unpaid overtime, which thus resulted in lawsuits and may cause the company millions in settlements and legal fees.

Nowadays, the sustainability is highly mentioned by consumers who advocate green purchasing. At this time, the waste of raw material and massive productions could hurt environment. Furthermore, IKEA is also recording reduced numbers of new consumers. Considering the threats for IKEA, it is catastrophic for company’s development that IKEA should come up with certain solutions to maintain its market share.

3. Wrapping Up

From a SWOT Analysis, a company can have a detailed look at the factors to consider in decision making. A company can learn how to make use of the various opportunities as they turn up. Here, IKEA can also focus on the threats and challenges to their business that may arise. By taking proper advantage of the opportunities that arise, IKEA can make their business models more flexible and adaptable to the changing market circumstances.