The Bargaining Power of IKEA Buyer - Case Study Example

IKEA Case Study IKEA Introduction: IKEA is a Swedish company. It was established in 1943. Its headquarter is located in Leiden Netherlands. It mainly conducts in all kinds of furniture including resident furniture, office furniture and evenly infant furniture for sale hence it is is world biggest retailer and supplier of furniture. It was founded by Ingvar Kamprad, a 17 years old guy who is now categorized as the world’s richest person of 2013. The company is famous for its modern architectural designs of furniture.

There are many other attributes that are contributing to the key success of this firm and these attributes are its attention to cost control, operational details, continuous product development, and corporate attributes. These attributes are the main competitive priorities of IKEA. IKEA owns 349 stores which are operating in 43 major countries of the globe. The location of these stores is determined by keeping the easy accessibility of customers to carry on their business with a firm. The other most important factor that IKEA consider while selecting new sites is whether it reduces transportation cost.

IKEAS Five forces Analysis: There are five forces analyses proposed by Porters. These five underlying forces are Bargaining power of suppliers Bargaining power of buyers Threat of new market entrants threat of substitutes competitive rivalry1. Rivalry among existing firms: The most important troupes in the furniture industry are Euro market Designs Inc, Galiform plc, Wal-Mart Stores Inc, Argos, and many others. But still, IKEA is categorized as the world's biggest furniture retailer because it is offering modern architectural and interior designs of furniture at a low cost and with the best quality, therefore, it is a leading market among existing firms.2. The threat of new entrants into the industry: There are many threats for the new entrants into the furniture industry.

A large amount of monetary investment is required to establish a business. After establishing a business, expertise and skills are required to offer quality products at a discounted price. The time factor is another essential element that plays an important role in building up its image in the market. IKEA is established in 1943. It has successfully built its image in the market. It has its huge investment in various parts of globe whereas for new entrants all this required time to get stable and for successfully operating.3. The threat of substitute products and services: The threat of substitute products and services of IKEA is low because there are a lot of products presented by IKEA which can be substituted by the other products offered by IKEA.4. The bargaining power of IKEA buyers: IKEA has targeted a wide range of customers.

As this firm is operating at the national level as well as at the international level it has a strong bargaining power among customers. On the other hand, buyers have an extensive range of products offered by IKEA with respect to quality, price, and many other attributes.5. The bargaining power of IKEA supplier: There are 349 stores of IKEA operating in 43 major countries of the globe. So the bargaining power of IKEA suppliers is strong. IKEA believes in a long-term strategic relationship with its suppliers.