Discussion on Business Strategy of IKEA and Porter’s Five Forces Model

Every other organization whether it is IKEA or not uses business level strategies for achieving different aims such as the attention of customers and building strong relationship with them etc. IKEA does the same and its Porter’s five forces analysis is as given below:

Direct substitute services or products’ threat

Rivalry between already present companies

New entrants’ threat

Supplier power’s threat

Buyer power’s threat

Direct substitute services or product’s threat as far as IKEA is concerned, it is quite low. This is due to the availability of various services and products for satiating the requirement of several home appliances and furniture. The rivalry or competition among already present firms is considerably high as there are many huge supermarkets such as Tesco, Target, and Wall Mart. These all sell some types of furniture and there are direct competitors as well such as Rooms to Go and Argos. It can be said that new entrants’ threat is significant as far as IKEA is concerned because there are minimum barriers for new ones willing to enter the industry.

For IKEA, the suppliers’ power is not significant because there are options for the company to switch to and it helps them while taking the power from suppliers. Lastly, the buyer power’s threat is not important or considerable for IKEA as they have more power in this region while concentrating on different regions.

Business strategies and Competitive risks

As far as the business strategies of IKEA are concerned, a strong risk is posed by the entrance of new competitors while the same from the existing competitors as well. Actually, IKEA has to look out for not only the new entries but also the existing ones such as Wall Mart. That is why it is has to constantly focus on its products and services along with relationship with customers (Teece, 2010).

References of Business Strategy of IKEA and Porter’s Five Forces Model

Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning , 43 (2-3), 172-194.