SWOT analysis of IKEA(HK) Strength -IKEA has the own industrial group, which produces wood-based furniture and wooden components.
The industrial group of IKEA is called Swedwood, its operations cover ever step of production, from forestry, saw milling and board manufacture to furniture. As every production step is under the IKEA control, IKEA can have efficient productions which enable it to maximize productivity and minimize waste-generation. -IKEA has its own design group.These can make sure that their products can match the trend of the industry.
What’s more, the present of industrial group can co-operate with the design group, which efficiently convert the design into the finished product. -IKEA has the strong brand image. By the recent research of Datamonitor, IKEA ranked 41st among the best global brands around the world in 2006 with a brand val
...ue of $8,763. The strong brands enhance customer loyalty and lead to repeat purchases.
Weaknesses - Not enough distribution channels.As there are only three retail shops in Hong Kong, it is inconvenience to the customers. What’s worse, the potential customer of IKEA, especially those would like to buy the home accessory will have a chance to switch the buying from IKEA to the shop which is near home. -The problem of product recalls. Sometimes IKEA recall the product due to faulty base. Just take an example, IKEA had recalled Parodi and Apelsin glass cases in January 2007.
This act will give out a poor perception to the customer. Opportunities Sourcing from China is one opportunity. Sourcing from low cost countries like China would reduce its costs and enable IKEA to concentrate on increasing its market share through competitively priced product offerings
-Bright prospect of online sales. There is an opportunities to gain more revenue in online retail sales.
As the IKEA website is one of the most visited home furnishing websites in Hong Kong, a provision of purchasing the products online would benefit IKEA. Threats -Increase of competitors.As there are few competitors enter the furniture & furnishing industry these 2 years(B & Q, Spotlight…etc),it must bring certain impact to IKEA ’s sales profit, market share and market position. -Rise in steel prices. As the global demand for steel is high due to major construction projects in China such as the 2008 Beijing Olympics and 1020 Shanghai World Exposition, these will lead to higher steel prices.
IKEA consumes steel during it goods manufacturing operations, the increase in the prices of steel would have a direct impact on its operating costs. Lose of the comparably advantage of low price will be one of the unexpected result.
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