Question

3. What does a Porter's 5-Forces analysis reveal about the Ikea company and industry ?

Answer 1

Porters five underlying forces are :

1. Rivalry among existing competitors
2. Threats of new entrants
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Threats of substitute products

And each one's analysis reveals something about the IKEA company and industry. They are:

• Even though rivalry among the firms in global markets of furnituresband major players in industry is intense, IKEA is the undisputed market leader in the industry of discount furniture in the global market.
• The threat of new entrants is low and there are no much threats of new competitors for IKEA.
• The bargaining power of IKEA customers is very strong as the competition is intense and the IKEA company offers large choices if alternatives for furnitures.
• IKEA suppliers do not possess bargaining power as there are many factories around the globe who have matching capabilities and resources like IKEA and they also have partnership with IKEA
• Threats of substitute products are low in IKEA, as there are not too many products that can substitute the demands for furniture.