Ikea - Five Forces Analysis

Ikea - Five Forces Analysis

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Short description of Porter's Five Forces analysis for…

Intensity of Existing Rivalry

Large industry size Large industries allow multiple firms and produces to prosper without having to steal market share...
Relatively few competitors Few competitors mean fewer firms are competing for the same customers and resources, which is a...

Bargaining Power of Suppliers

High competition among suppliers High levels of competition among suppliers acts to reduce prices to producers. This is a positive...
Volume is critical to suppliers When suppliers are reliant on high volumes, they have less bargaining power, because a producer can...
Large number of substitute inputs - Ikea When there are a large number of substitute inputs, suppliers have less bargaining leverage over...
Low concentration of suppliers - Ikea A low concentration of suppliers means there are many suppliers with limited bargaining power. Low...
Diverse distribution channel The more diverse distribution channels become the less bargaining power a single distributor will...
Critical production inputs are similar - Ikea When critical production inputs are similar, it is easier to mix and match inputs, which reduces...

Threat of Substitutes

Substantial product differentiation When products and services are very different, customers are less likely to find comparable product...
High cost of switching to substitutes - Ikea Limited number of substitutes means that customers cannot easily switch to other products or...

Bargaining Power of Customers

Low dependency on distributors When produces have low dependence, distributors have less bargaining power. Low dependency...
Product is important to customer When customers cherish particular products they end up paying more for that one product. This...
Large number of customers When there are large numbers of customers, no one customer tends to have bargaining leverage....

Threat of New Competitors

Strong distribution network required - Ikea Weak distribution networks mean goods are more expensive to move around and some goods don’t get to...
Geographic factors limit competition - Ikea If existing competitors have the best geographical locations, new competitors will have a...
High learning curve for new competitors - Ikea When the learning curve is high, new competitors must spend time and money studying the market...
High sunk costs limit competition High sunk costs make it difficult for a competitor to enter a new market, because they have to...
Industry requires economies of scale - Ikea Economies of scale help producers to lower their cost by producing the next unit of output at lower...
High capital requirements High capital requirements mean a company must spend a lot of money in order to compete in the...
Customers are loyal to existing brands - Ikea It takes time and money to build a brand. When companies need to spend resources building a brand,...
Entry barriers are high When barriers are high, it is more difficult for new competitors to enter the market. High entry...

What is Porter's Five Forces Analysis?

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