Porter’s Five Forces Analysis of IKEA
Michael Porter’s Five Force Analysis helps in determining the competitive advantages for
a firm within an industry by taking into consideration various external and internal factors
that influence the particular industry (Porter, 2008). The two forces proposed by this model
have been discussed hereby in context to the Australian operations of the international
organization IKEA that is a leading retailer in home products especially furniture.
a) Bargaining power of Buyers Analysis: IKEA is known to deliver the best of quality
products that are well differentiated, smart and extremely affordable for the end users.
Even if fragmentation of customers is considered based on the usage of the products being
delivered by IKEA – either for residential purpose or corporate purpose, the variety of
products being offered by IKEA is high. The products are well differentiated and
customized to cater to the needs of the customers. The company offers great services, easy
home assembling of products and believe in being simple yet smart (IKEA, 2014). The
company has positioned itself with low pricing strategy which ensures best price in the
market. Not just that, it renders shopping help by offering various easy – to – use software
like 3D planners, etc. This makes buying a very convenient experience for the buyers at
both physical stores as well as online stores. User friendly GUI of the online portal
enriches the shopping experience. The Australian stores want to make sure that the
customer retention is optimal and therefore the branches here constantly seek to improvise
