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IKEA Using Porter's Five Forces Model

1118 Words5 Pages

1. Introduction
The company is IKEA which sells varieties of furnitures such as wood product, kitchen product and etc. Singapore is a very tiny country found in between Malaysia and Indonesia. Singapore also have a company called IKEA. IKEA in Singapore is very useful for people to go and buy furniture’s even though it is far for them to travel from one place to IKEA.
2. Company Background
IKEA is a worldwide furnishing company that has a total of 389 stores in 48 countries ("About IKEA", n.d.). There are a total number of 70000 employees whereby 59000 employees work in Europe ("The Case of IKEA", 2001). In some companies own rights to operate IKEA stores, however only this company has the rights to be owned by IKEA's legendary founder, Ingvar …show more content…

From getting the maximum market share from other company, they always keep an eye-contact on others. For example: number of competitors, market share, and customer loyalty ("How to Analyze IKEA using Porter’s five forces model", 2016).
The Bargaining power of buyers is high because the customers have a wide choices of other options offered by local furniture producers (Sowmia, 2015). When the demand increases, the prices of the products also increases. For example: number of customer, number of companies, and difference between the competitors.
The Bargaining power of suppliers is low because there are a wide range of providers of raw materials that not only wood can be used for production but there are also other materials like wood dust, plastics or metal (Mozil, 2013). Due to the manufacturing process, supply material is late, the production is also late and due to the supply of product is reduced, the prices also decreased ("How to Analyze IKEA using Porter’s five forces model", 2016). For example: number of suppliers, number of companies, and uniqueness of …show more content…

It is hard to imagine customers going to store their clothes in boxes (Mozil, 2013). The replacement for similar product will reduces the price ("How to Analyze IKEA using Porter’s five forces model", 2016). For example: cost of change, price of substitute, and quality of substitute.

6. Strategic Recommendations

• Ikea should broaden the selection of hiring the customers.
• Do expand the company in Singapore as PESTEL analysis shows that Singapore is not a corrupted country.
• Ikea should also deliver the customers product more faster and serviceability.
• Do promote successful managers from various countries to expatriate jobs in other countries.
• Do being the best profitable market share in Singapore.
• Ikea does not really bargain power as there are many factories around the world.

7. Conclusion
The company is IKEA which sells varieties of furnitures. Singapore is a very tiny country found in between Malaysia and Indonesia. IKEA in Singapore is very useful for people to go and buy furniture’s even though it is far for them to travel from one place to IKEA. PESTLE analysis is a tool used by marketers to analyse the factors on the company. Porter’s 5 Forces analysis to analyse the competitive environment in a company works and to determine an industry's weaknesses and

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