3/17/2016IKEA Porter’s Five Forces Analysis Research Methodology Learn the Power of ERP Accounting Information Systems Have Evolved. See How. Free White Paper swktech.com IKEA Porter’s Five Forces Analysis Posted on October 13, 2015 by John Dudovskiy Porter’s Five Forces model is “a generic framework that deconstructs industry structure into five underlying competitive forces or variables”[1]. These forces are represented in figure below: Porter’s Five Forces Threat of new entrants to furniture and home appliances manufacturing industry is significant. There are no or minimum legal or regulatory barriers to enter the industry and knowledge barriers are not substantial as well. However, the new market entrants would not be able to benefit from the economies of scale to the same extent as IKEA at least during the initial stages of operations. The access to distribution channels represent a noteworthy barrier for new market entrants as well. It can be argued, that although the threat of new entrants into the furniture and home appliances industry in general is significant, the threat of new entrants to pursue cost leadership strategy is insubstantial due to immense role of the economies of scale. Bargaining power of buyers is huge. IKEA customers are generally price sensitive and this situation increases their bargaining power. The competition is intense and as such, there is a long list of furniture retailers people can buy from. Moreover, the absence of switching costs for buyers fuels their bargaining power to a significant extent. Bargaining power of suppliers is insubstantial. IKEA has 1002 suppliers in 51 countries[2] and the lack of differentiation between products delivered by suppliers increases IKEA’s bargaining power. Along with purchasing products and supplies for low prices, IKEA exercises its great bargaining power to impose its CSR programs on its suppliers. For example, thanks to the push by IKEA, its suppliers improved their energy efficiency by 19% in FY2014 compared to FY2010.[3]… IKEA Group Report contains more detailed discussion of IKEA Porter’s Five Forces. Moreover, the report illustrates an application of SWOT, PESTEL and ValueChain analytical frameworks and discusses IKEA’s marketing strategy and company’s approach towards Corporate Social Responsibility (CSR). http://researchmethodology.net/ikeaportersfiveforcesanalysis/ 1/2 p. H. Bookmark the permalink [http://researchmethodology. C.29 [2] Yearly Summary 2014.R. http://researchmethodology.D. IGI. (2004) Organisational Data Mining: Leveraging Enterprise Data Resources for Optimal Performance.net/ikea portersfiveforcesanalysis/] . & Barko.net/ikeaportersfiveforcesanalysis/ 2/2 . IKEA Group [3] IKEA Group Sustainability Report (2014) R EL A T ED A R T ICL ES : Starbucks Porter’s Five Forces Analysis Sharp Porter’s Five Forces Analysis GuestTek Porter’s Five Forces Analysis Dell Porter's Five Forces Analysis Porter’s Five Forces Analysis Warner Bros.3/17/2016 IKEA Porter’s Five Forces Analysis Research Methodology [1] Nemati. Porter’s Five Forces Analysis Apple Porter's Five Forces Analysis Microsoft Porter’s Five Forces Analysis Google Porter’s Five Forces Analysis Coca Cola Porter’s Five Forces Analysis Samsung Porter's Five Forces Analysis Amazon Porter's Five Forces Analysis This entry was posted in Porter’s Five Forces.