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External Factors Affecting IKEA

Paper Type: Free Essay Subject: Marketing
Wordcount: 1028 words Published: 14th Jun 2017

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The performances of every organisation are influenced by the various internal and external factors. In case those factors are understood and tackled well the business flourishes or it has to face weak performance, loss, downturn and ultimately resulting closedown. Various components that a business has to face in today’s competitive market are:

  • Economic
  • Socio-cultural
  • Demographic
  • Political/legal
  • Technological, etc.


People have different level of income, buying capacity and necessity. Majority of the population in terms of UK prefer affordable prices because of economic crisis. They also buy products adhering to their socio-cultural beliefs i.e. which social group they belong to, their style, traditional norms and values. The choice, style and patterns of thinking, geographic region, climatic conditions differ as well. In fact IKEA is trading its 180 stores in 23 different countries. Product being sold at IKEA UK and IKEA Russia, China, America and others has to be different.

Demography on the other hand is always changing factor. Population keeps fluctuating so IKEA has to increase production as per the fluctuating demands. After all where there are 1000’s of other similar businesses offering similar prices, if one fails to meet the demand the other will win those customers. So as to maintain the customers and attract more IKEA has to be able to cater the actual demand in the market. Also people at this century are more interested towards technology. More technologically the products are made more the people will accept it. It also matters how easily it can be accessed? How durable it is? How environment friendly it is? How advanced it is? How portable it is? Etc.

Government regulations/laws and the prevailing political instability in the countries like China, Russia and others and competing within their national brands plays vital role in the market.


In this scenario IKEA’s biggest weapon seems to be its pricing policy. Desired products all at incredibly affordable prices. At this point of time where not only businesses, people have also been victimized by the recession. Suddenly people’s buying capacity has gone down. If store like IKEA is offering durable, environment friendly, amazing designs, diversified products automatically their sales will rise. Prime concern of the people at this point of time is the issue like global warming; where IKEA’s furniture, furnishings and foods are literally eco-friendly customers are more and more visiting their stores. There has been dramatic rise in the number of people visiting at the IKEA stores world wise. In fact IKEA has been trading its 180 stores in 23 different countries including UK, USA, Australia, China, Russia, America and many other countries.

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The figure shows the constant rise in the number of people visiting IKEA stores all round the globe. The figure has been shown in million in 55 years (1954-2009). Starting from 0.05 million in 1954 gradually 1.6 to 8.2 from 1974 to 1984 respectively. The dramatic rise can be seen from the year 2004 to 2009 i.e. 400.8 and 660.1 respectively.

Moreover the weaknesses of IKEA cannot be pushed aside. IKEA’s stores seem to be centralised because 90% of its stores are based in England and the rest in America, Middle East and Asia. Along with the low prices customers complaints about the low customer services in the stores, which IKEA needs to take into considerations seriously.

Opportunities on the other hand is high for the store as it has only been targeting people of average income and capacity, it can further more add the ranges of high prices to flourish all type of markets and customers. The e-commerce side seems to be weak as well which can be strengthened for sales maximization.

At present every businesses policy is sell cheap sell more. Lower the price higher the number of customers. Any store offering prices slightly less than IKEA, the customers will be gone. It can be said that similar other business are the biggest threat to IKEA.


One of the most fascinating customers driven strategy in the IKEA stores are the demonstration of products they want to buy. Customers can in fact touch, feel, see and measure the comfortability, degree of satisfaction on the spot and decide what exactly to buy. The wide areas in the IKEA helps customers move around and observe products. E.g. The whole kitchen, furniture, bedroom, bathroom, beds, staircases, doors/windows, kids room, sofas, carpets, home accessories, fabrics so on and so for.


Huge businesses like IKEA usually work with other business in a joint venture. IKEA is mostly known for its beautifully designed innovative furniture. It is also working with other huge national and international brands like:

  • Joint venture with Bosnia furniture maker (Krivaja, central Bosnia town of Zavidovici)
  • First two IKEA stores in china were joint venture
  • IKEA has joint venture hotels in Montreal
  • Joint venture with Moscow based agricultural producer belaga dacha to build mall
  • IKEA and Siam future (Bangkok, Thailand) working together to develop mega bangha
  • Joint venture in Belarus (wood working)
  • DLF(India) and IKEA joint venture to bring foreign brands such as Armani, D&G, Gucci, Versace to India

These big companies work together with other companies to avoid failure, to develop and as a one way or the other to survive.


In conclusion, it’s tremendously hard to run a business and furthermore it’s hard to earn the customers. In today’s competitive world where people can explore the products of various national and international brands it’s enormously hard to be different among all of them. In other words, it’s hard for a business to uphold its position in the market.


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