Porter’s Five Forces Model Analysis of IKEA Case Study Writing for Students

IKEA is a renowned Swedish brand for home furnishing products and global furniture retailer since 1943. The company’s goal is to offer sustainable and high-quality products at affordable prices. IKEA’s vision is to

“ Create a better everyday life for the many people”.

To understand the structure and vision of the company, a team of experts provides an IKEA case study writing help in Australia that covers the complete understanding of the model.

The company has also worked on values of unity, humanity, simplicity, teamwork and leadership. IKEA has always followed the cost leadership and product quality concept to become a market leader.

All the factors are a result of Porter’s five forces model. This model is the backbone of every business that affects the company’s operations. It identifies and analyses five competitive forces shaping the company and determining its strengths and weaknesses.

 A Diagrammatic Representation to Understand the Porter’s Five Forces Model

IKEA Case Study Overview with Porter’s Five Forces Model

Force 1: The Threat of New Potential Entrants

The firms that are newly established in the market and not competing currently have the potential to do so. New businesses can enter the market on a small scale but would not have a hold and effect on IKEA. For a new firm to grow this large would require time, resources, effort and investments. So, apart from these factors, there are other reasons also to minimize the threats from new entrants.

Force 2: Rivalry Among Current Competitors

Customers are always looking for something unique and new. The competitors of IKEA are offering the same to the consumers. The level of rivalry is high in the home furnishing industry. But as a big name attracts a big audience, also gets huge competition. IKEA has always proved itself and has been a most successful organization to deliver the products as per the needs and desires.

Force 3: Bargaining Power of Suppliers

It is the pressure that suppliers put on the company by increasing the prices, affecting the quality or reducing the product supply. To sort this IKEA has launched a rule of IWAY that suppliers follow. The company conducts many audits to make sure that the policy is followed. If the supplier fails to follow the code of conduct, the name is withdrawn from the list. So, the supplier power is low.

Force 4: Bargaining Power of Buyers

It means the potential of buyers to bargain for the prices. Due to an increase in e-commerce, the rivalry is too high and the customer power is moderate. IKEA aims at pricing strategy and target market. If the brand increases cost, consumers would switch to other rivals affecting IKEA’s profit margin. But the company keeps the demand and needs of the consumers a high priority considering all the standards.

Force 5: Threat from Substitute Products/Services

Substitute products are ones offered by the competitors that can fulfil the needs and demands of the customers. IKEA has built a brand image in the market with affordable pricing and quality products. The important factor is the brand provides a complete range under one roof by giving a one-stop solution to the consumers.

A Brief Conclusion

Over the years, IKEA has established its platform and image in the market. The market base and pricing strategy have helped the brand gain a large target audience with the help of the model as briefed in the article. Porter’s five forces model influences every industry. It helps to analyze and pinpoint the areas to improve the strategy and increase profitability. To understand, and help you to draft it, a team of professional experts in IKEA case study writing are available.