SWOT analysis and sustainable business planning
An IKEA case study

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Page 3: Strengths

Strengths could include a company's specialist marketing expertise or its location. They are any aspect of the business that adds value to its product or service. IKEA's strengths include:

  • a strong global brand which attracts key consumer groups. It promises the same quality and range worldwide
  • its vision 'to create a better everyday life for many people'
  • a strong concept based on offering a wide range of well designed, functional products at low prices
  • a 'democratic design' reaching an ideal balance between function, quality, design and price. IKEA's 'Cost Consciousness' means that low prices are taken into account when each product is designed from the outset.

These strengths contribute to IKEA being able to attract and retain its customers. One way IKEA measures its strengths is the use of Key Performance Indicators (KPI). KPIs help IKEA to assess the progress of its vision and long-term goals by setting targets and monitoring progress towards these. An example of one of IKEA's KPIs is the percentage of suppliers that are currently IWAY approved. The IWAY is the IKEA Way of Purchasing Home Furnishing Products. This guideline defines the social and environmental requirements IKEA expects of its suppliers.

IKEA has strengths right through its production processes:

  • Increasing use of renewable materials IKEA improved its overall use from 71% in 2007 to 75% in 2009.
  • 'Smarter' use of raw materials IKEA increased the use of recycled or reclaimed waste products in energy production across all stores from 84% in 2007 to 90% in 2009.
  • Volume commitments IKEA believes in creating long-term partnerships with its suppliers in order to achieve this. By committing to buying large volumes over a number of years IKEA can negotiate lower prices. This also benefits the suppliers because they enjoy the greater security of having guaranteed orders.
  • Economies of scale for instance, bulk buying at cheaper unit costs.
  • Sourcing materials close to the supply chain to reduce transport costs.
  • Delivering products directly from the supplier to IKEA stores. This slashes handling costs, reduces road miles and lowers the carbon footprint.
  • Using new technologies for example, IKEA's OGLA chair has been in its range since 1980. The chair has changed through the years to reduce the amount of raw materials needed.

 Find out more about IKEA

IKEA | SWOT analysis and sustainable business planning