Ikea invades America,SWOT Analysis and Executive Summary

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Ikea invades America,SWOT Analysis and Executive Summary

  1. 1. Company History: IKEA was founded in 1943, selling basic household goods at discount price. In1947 it began selling furniture. In 1958 it opened its inaugural store in Sweden. By 2002 IKEA was the world’s most prominent furniture retailer, operating 154 stores in 22 countries. It opened its first store in United States in 1985 in Philadelphia. By 2002 IKEA had 14 stores in U.S. Its goal was to have 50stores in U.S.by 2013. <br />Product: Low cost unassembled home/office furniture and household products<br />Target market: Price sensitive consumers; sleek, minimalist style loving consumers<br />Situational Analysis: SWOT Analysis<br /><ul><li>StrengthsIKEA’s flat packaging makes it easier for customers to transportSleek, minimalist design is popular in European cultureStrong brand recognition internationallyStrong in-store experience –“modern theme parks”IKEA take care of all its employees the sameLow cost furniture and household itemsStrong distribution network across the storesStrong and unique business modelCommitted and strong relationship with suppliersWeaknessesForeign company trying to sell to American audience – difficulty in understanding American choicesProduct and style selection is limited- matrix selection“Unassembled furniture”, does not attract all consumersLesser sales person for customer serviceNo home delivery optionLesser number of stores in U.SFurniture durability is lowOpportunitiesThe price sensitive target market, especially college studentsSuburban consumers looking for sleek and minimalist designIncreasing popularity among Americans Emerging markets in Asia and Eastern EuropeThreatsCompetition from low end furniture retailers like Wal-Mart, Costco and high end specialty retailersCompanies attempting to copy IKEA’s business modelAmericans are less willing to change furniture</li></ul>Key Issue: How can IKEA increase its market share in the highly fragmented U.S. furniture retailer market?<br />Alternative Recommendations<br /><ul><li>Geographical expansion across United States.
  2. 2. Promote the distinctive Scandinavian design and style by focusing on a specific niche market like suburban market.
  3. 3. Penetrate into the market by improving the products and services, in a way Americans prefer.</li></ul>Recommended Alternative<br /><ul><li>IKEA can expand geographically across U.S., increasing the number of stores. IKEA has only 14 stores in U.S. So there is a large market unexplored in different states inside U.S. IKEA products are sleek, minimalist in design and unique. The business model is unique and appealing. The strong in-store experience –“modern theme parks” is very inviting and attractive. Customers find IKEA shopping experience appealing. The store popularity is increasing. So IKEA should take advantage of its strengths in increasing its market share.</li></ul>Impact of Marketing Mix<br /><ul><li>Product: Increase product style and selection and focus beyond the matrix selection
  4. 4. Price: Keep the product price low
  5. 5. Place: Open more stores in different states; highly populated areas; suburban market place
  6. 6. Promotion: Increase the number of salesperson for better customer service; train sales persons to educate customer about quality makers like wood quality, construction technique and so on; offer interior design services to the customers interested in a more complete home makeover; increase product durability

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