IKEA Group: Profitable growth through diversity
IKEA is one of the world's most renowned and successful retailers, as well as a leader in its field of furniture and homewares. Central to this success has been the company's ability to diversify and expand, both geographically and in terms of its product offering, while maintaining a firm handle on costs.
Features and benefits
- Outlines IKEA's recent financial performance and explains the reasons for it.
- Analyzes IKEA's global business model, looking at growth markets and areas of concentration.
- Assesses IKEA's growth prospects as it looks to expand in existing markets, enter new ones and roll out new, innovative product lines.
IKEA exhibits a high degree of vertical integration with interests across the entire value chain. This is crucial to the company's success, helping it to better control the quality of inputs and profit margins. The company's presence at the end of the value chain takes the form of very large, out-of-town megastores that also serve as warehouses.
Key to IKEA's success is its global footprint. The company continues to exhibit some degree of reliance on the European market, but is continuing to expand in to Asia's high-growth markets. The company is not just geographically diversified in terms of sales but also supply, with products or raw materials originating from five continents.
There remain markets where IKEA is not present and its stores remain concentrated in an out-of-town megastore format. The future therefore holds further geographical diversification via entry in to new markets, potential new 'Citystore' formats, a furthering of its retail network in established markets, and the roll out of new product lines.Your key questions answered
- How has IKEA performed in financial terms in recent years? What are the driving factors behind these numbers?
- What is IKEA's vertically integrated business model and how does the company benefit from it?
- Where does IKEA operate?
- What may the future hold for company?
- VERTICAL INTEGRATION KEY TO BUSINESS MODEL
- Ownership structure facilitates vertical integration
- Stichting INGKA Foundation is the ultimate head
- Stichting IKEA Foundation: The philanthropic arm
- INGKA Holding B.V.: The parent of The IKEA Group of Companies
- The IKEA Group of Companies: IKEA's nuts and bolts
- IKEA Industry: Major supplier helps control inputs & margins
- IKEA Group Retail: Global network, wide-ranging inventory
- Large stores, diverse offering
- Building an e-commerce presence
- Effective inventory cost management
- Profitable growth in recent years
- IKEA performs well compared to competitors
- GLOBAL SUPPLY, GLOBAL SALES
- IKEA's global sales footprint spans four continents
- Sales concentration in Europe remains
- Asia the company's big growth region
- IKEA not neglecting core markets
- Sourcing from around the globe
- NEW MARKETS, PRODUCTS & STORE FORMAT
- Continued geographic expansion program
- Indian entry a certainty, South America a possibility
- New stores in China and South Korea
- Continued expansion in established core markets
- Technology and energy at forefront of new product lines
- Wireless charging furniture now on the market
- Renewable energy potential new revenue stream or CSR image booster
- Smaller store format to reach new demographics
- Diversification key to success, both past and future
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