Ikea Business Model

1644 Words7 Pages
Title: IKEA
Introduction
IKEA is definitely a store that comes into mind when shopping for furniture. Founded back in 1943, IKEA first started from humble beginnings from just a single store in a city called Almhult located in Sweden. Unbeknownst to many, its founder Ingvar Feodor Kamprad had an interest at a tender young age in establishing a business and started selling matches, christmas tree decorations and stationery accessories to his neighbours by couriering them from his bicycle. The name IKEA was constructed from his own initials Ingvar Kamprad (I.K.) and the first letters of his hometown where he grew up, Elmtaryd (E) and Agunnaryd (A). (Ikea, 2014).
Presently worldwide, IKEA is currently known and recognized as the world’s largest
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Locals are living longer due to the quality of healthcare. However, couples are not having enough babies to replace themselves as stated by statistics provided by the Department of Statistics Singapore, (2014). This poses problems to the older generation due to them not being able to receive the care of the younger generation. With the nature of IKEAS business model of providing high quality products at low cost, senior citizens are able to purchase home safety proof products such as door stoppers and anti slip strips as well as other furniture additions as required in the case of wear and tear without putting a financial strain on their wallets. This increases the revenue of IKEA and lists them in a favourable image as compared to other typical furniture companies that doesn’t hold the same…show more content…
According to UK Customer Insights report on IKEA by Verdict, IKEA’s customers are less than satisfied with both products and services as compared to other customers in UK buying at other stores. IKEA was also accused of putting low waged employee is unsafe working conditions as stated by Szkotak , Associated Press, (2011). Such negative publicity could have an impact on IKEA’s brand reputation and their customer’s loyalty.
Rivalry
Competition between IKEA and other existing major players in the industry such as, Home Depot, Wal-Mart, Argos and others are pretty intensive in the tight global market of discounted mass produced furniture due to these large retailers having the same similar traits with IKEA such as low cost products, a huge market presence and a well managed supply chain. With such intense competition competitors could very well gain some market share from IKEA through superior products, better service standards and positive publicity.
Four Strategic
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