Ikea threats and Weakness Overview

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Ikea Milton Keynes

Ikea Weakness:

  • Size and Scale as a global business. “During FY2014 only 9% of global sales were generated in Asia and Australia, at the same time when 69% of sales were generated in Europe’s saturating market.” (Yearly Summary 2014, IKEA Group)
  • Reputation: Ikea has suffered a number of global ethics-related incidents such as altered images using photoshop in September 2012. The discovery that Ikea had business suppliers in communist east Germany 30 years earlier that used forced labor.
    The company has been accused of using child labour in Asia and of buying feathers plucked from live geese. Journalists revealed that Mr Kamprad had backed a Swedish fascist group in his youth; he apologised in an open letter. (Economist, T. (2011)The secret of IKEA’s success. Available at: http://www.economist.com/node/18229400)
    And the 2013 horse meat incident (Business Insider (2013) Available at: http://www.businessinsider.com/ikeas-reputation-has-taken-a-beating-2013-3) These incidents weaken the brand image.

 

Threats:

  • Social Trends: Ikea is the brand of many. “Kamprad set out the philosophy: ‘We have decided once and for all to side with the many. What is good for our customers is also, in the long run, good for us.’ He wanted to ‘create a better everyday life for the majority of people’.” (The Guardian (2005)Ikea – brand of the many. Available at: https://www.theguardian.com/business/2005/jun/12/theobserver.observerbusiness4)
  • Competitors: As with any business Ikea must stay ahead of it’s competitors by being as innovate as possible. Local companies has jumped on the DIY furniture system and it is important for Ikea to remain the number 1 place to go. This is done through teams of developers with each piece of furniture taking approx. 3 years to develop. Ivan Kamprad would personal inspect each product too. (Stenebo, J. and Stenebo, S. (2010)The truth about Ikea: The secret behind the world’s fifth richest man and the success of the Flatpack giant. London: Gibson Square Books. Pg18-22)
  • Economic Factors: Ikea is not immune to economic factors and was also affected by the 2009 crash causing them to cut 5000 jobs by June 2009 “We have never had to implement such massive job cuts before…. But it is completely necessary to adapt our costs and our capacity to demand, which is weaker than we expected,” Dahlvig (Bennett (2009)Article: Ikea has cut 5, 000 jobs due to economic crisis: Report – the economic times. Available at: http://economictimes.indiatimes.com/news/international/ikea-has-cut-5000-jobs-due-to-economic-crisis-report/articleshow/4693917.cms?intenttarget=no)
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