Ikea Case Study

Customers analysis:

　　Due to the vision of 'to create a better everyday life for the many people', IKEA, wich became the world's largest specialized furniture retailer. Different from other competitors such as Wal-Mart or Home Depot, IKEA uses affordable well-designed home furnishings to target its customers. By 2005, IKEA had established 202 stores in 32 countries and increased its sales to US$ 15.8 billion. During that year, about 365 million people visited an IKEA store. IKEA has a huge number of customers in Europe and North America(see Exhibit 1), thus the power of buyer is low-medium. The bargaining power of IKEA’s buyers is relatively low because of their large number. IKEA has lots of strengths, for instance low price, advertising (Catalog, website, radio, word of mouth), good online presence, one stop shopping, and a typical IKEA has a grocery store, restaurant, and baby care room. However IKEA still has to face its weaknesses, for example, assemble products yourself, store layouts (reminds people of Wal-Mart), reputation (after the formaldehyde incident, and child accusations). Therefore, The buyer group does gain some power for it faces switching costs in changing suppliers, and otherwise, The buyer group also gains some power in its capacity to demand socially responsible behavior on the part of IKEA and to ban or threaten to boycott IKEA products because of their association with child labor issue.

Suppliers analysis:

　　Due to IKEA is the world's largest specialized furniture retailer, it has a large number of suppliers resource. The data shows that at the end of 2005, IKEA had given a large share of purchasing to Asia, especially in India and China ( see Exhibit 1). Thus, the power of suppliers is medium-low. Their power is limited by a range of factors, which including their large number as well. However,