IKEA is a Swedish company that offers a wide range of well-designed furniture for the home. The furniture is characterized by being very functional and at prices so low that anyone could afford it.
Porter's Five Forces model is a theoretical model that helps to analyze the market and the rivalry of competitors within it. These five underlying forces are competitive rivalry between existing companies, the bargaining power of suppliers, the bargaining power of customers, the threat of new entrants to the industry, and the threat of products or services substitutes.
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Porter's Five Forces analysis for IKEA can be explained as follows:
Rivalry Among existing companies it is intense in the global furniture market and the main industry players in Europe include Designs Inc, Galiform plc, Wal-Mart Stores Inc., Argos and others. However, today IKEA is the undisputed market leader in the discount furniture industry on the global scale.
The threat of new entrants in the industry is low, and the chances of new competition from IKEA is slim as the current market is saturated and the amount significant financial investments and experience are required to become a discount furniture store on a scale global. (See more at
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The bargaining power of customers from IKEA is strong, as competition is intense and customers have a wide variety of options alternatives offered by furniture stores worldwide, as well as local producers of furniture.
Substitute product threat. The threat of substitute products and services is low, as there are too many products and services available that can replace the demand for furniture, appliances and a range of other products offered by IKEA.
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IKEA suppliers they do not have bargaining power, as there are numerous factories around the world with the capabilities and resources to work with IKEA. At the same time, IKEA pursues the strategy of forming long-term strategic relationships with its suppliers.
