IKEA CompanyThe IKEA Company is not only the largest designer in United Kingdom but also a retailer of well-designed, inexpensive and functional furniture for households. Every year, IKEA has more than 140 million visitors who visit 140 stores in 29 countries and disperse more than 80 million IKEA catalogues. IKEA Company designs many items which are roughly 11,000 in the product line. IKEA manufacture their own products which are supplied to various branches across the world. The employees of this company are close to 40,000 (Hitt 2008, pp. 80). An Environmental scan of this organization can be analyzed effectively through SWOT analysis.
A SWOT analysis is a very essential component in the premeditated process of planning in an organization. It is used to describe the strengths, weaknesses, opportunities and threats which the company will face and how it will react to them so as to gain a competitive advantage (Furnham 2005, pp. 170). The central idea of the IKEA analysis of SWOT is to find out the strategies which support the company’s capabilities and that which match the company’s resources with the constant demands which arise from the environment.
This is in line with the customer trends, the customer profile and the segmentation process which the company has adopted. The IKEA appeals to several groups in the market which make it have a competitive advantage over the other products from the same organization and other organizations which offer similar products (Furnham 2005, pp. 172). There are two aspects in IKEA which needs to be analyzed, this include the internal and external environment. The internal environment of this organization comprises the strengths and weaknesses.
The IKEA Company owns a large market share and is a market leader in its line of production. It has segmented its market effectively and normally maintains their performances standard in offering quality products at affordable prices. They meet all the needs of it customers effectively. The organization has been successful because of it internal strength such as large economies of scale. This has enabled the organization to employ some defensive strategies such as the use of lower prices (Fincham & Rhodes 2005, pp. 84). Lowering the prices of the products and at the same time offering high quality products which satisfy the customer’s needs is very essential because it creates customers loyalty to the organization.
This has enabled the organization to understand its customers well and create a long term relationship. As a result of such relationships, the organization has benefited a lot from the customers who offer referrals. This is a very effective means of advertising which the IKEA Company has been using for a long time. However, the company has some weaknesses. The IKEA Company is using a lot of resources to defend its current market instead of exploring new markets which the competitors have not entered.
IKEA Company is experiencing the problem of declining profit margins as a result of the expansion into existing and new emerging markets without carrying extensive market research so that they can identify customers’ wants and needs; this exposes the company into uncertainties such as low number of customers to be served in the new market segment. The company had experienced some problems in its management, for example it had a problem with the flight connection to the headquarters and also some bureaucratic form of management which had to be followed, this delayed the decision making process in the company because decisions must be made from the top management (Rollinson 2005, pp.