IKEA has everything you need to live and make a home

Introduction: Sweden (country of Origin) A military power during 17th century, Sweden has not participated in any war for almost two centuries. Armed neutrality was preserved in both world wars. Swedens long successful economic formula of a capitalist system interlarded with substantial welfare elements was challenged in the 1990s by high unemployment and in 2000-02 and 20009 by the global economic downturns, but fiscal discipline over the past several years has allowed the country to weather economic vagaries. Sweden joined the EU in 1995, but the public rejected the introduction of the euro in a 2003 referendum. Swedish economy Sweden is today among the worlds richest and most technologically advanced nations. It has not always been this way: Sweden was a largely impoverished agrarian society until it was transformed into a center of heavy industry in the 19th and 20th centuries. Now the country has an impact on global business and industry far beyond its size, and companies with Swedish roots, such as IKEA, H&M and Volvo, are household names from Boston to Beijing. Swedens transformation has been helped by several factors, including avoiding involvement in the 20th centurys many wars and the countrys long history of entrepreneurialism. Economists and politicians have long pointed to Sweden as a role model because of its successful combination of generous welfare benefits and high-tech capitalism. It constantly places near the top in international rankings of competitiveness, innovation and standard of living. Taxes are high, but the streets are clean. The Swedish economy is built on rich reserves of iron ore and timber, and plentiful hydroelectric power. The main industrial sectors are forestry, telecoms, and the automotive and pharmaceutical industries. Today the country is among the worlds 15 richest in terms of GDP per capita, a status helped by high levels of education and a skilled workforce, excellent internal and external communications, and one of the highest levels of internet access. Sweden is part of the European Union but maintains its own currency, the krona (crown). In 2003 Swedes voted in a referendum and chose not to join the euro. The country bounced back from the recent global financial crisis and subsequent recession more quickly and more strongly than many other industrialized nations, and foreign observers have noted its healthy public finances. Natural resource

Forests, hydroelectric power, iron ore, copper, lead, zinc, gold, silver, tungsten, uranium, arsenic, feldspar, timbers. IKEA Introduction IKEA is a well-known household name. They are an extremely popular business. They sell all kinds of household fittings form; the smallest t-spoon to huge double beds. IKEA first started in the 1940's in a small farming village in southern Sweden where it was founded by Mr.Ingvar Kamprad when he was 17. IKEA originally sold pens, wallets, picture frames, table runners, watches, jewelers and nylon stockings. In the 50's and 60s IKEA forged good relations with its suppliers in Poland, as they started to use a lot more wood in many of their designs. After 41 years of steady growth IKEA opens its first store in the USA. Then IKEA reaches a huge milestone, after 50 years of providing millions of people with their home furnishings IKEA reaches 340 stores worldwide in 40 countries. IKEA is still growing throughout the world. MODE OF ENTRY Foreign Direct Investment IKEA do FDI in Pakistan as Green Field Investment. And in FDI for IKEA go for the Seekers of an Advantage and their main purpose is to gain the market advantage. Following are the reasons for doing FDI in Pakistan: World's largest democracy with 18 million people. New governments promotion of Business. Well established judiciary to enforce rule of law. Cost competitiveness; low labor costs. Large pool of skilled manpower; strong knowledge base with significant English speaking population. Pakistan is member of WTO. For Foreign Direct Investment our country is not enough attractive destinations, but an improvement element is new democratic elected Government in 2013. IKEA MARKETING PLAN FOR PAKISTAN MARKETING MIX Product Trends come and go, but combining a low price with good design and function never goes out of style
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Profile: IKEA caters to the need of people having limited budgets and limited space in their homes The IKEA product range meets these needs by offering a wide range of well designed, functional home furnishing product at prices so low that as many people as possible will be able to afford them The IKEA range includes product for every part of the home IKEA products have the label Design and quality, IKEA of Sweden

Product Design: While most retailers use design to justify a higher price, Ikea Designers work in exactly the opposite way. Instead they use design to secure the lowest possible price IKEA designers design every IKEA product starting with a functional need and a price Then they use their vast knowledge of innovative ,low-cost manufacturing processes to create functional products, often coordinated in style Then large volumes are purchased to push price down even further Most IKEA product are also designed are also designed to be transported in flat packs and assembled at the customers home .this lowers the price by minimizing transportation and storage costs In this way, IKEA concept uses design to ensure that IKEA product can be purchased and enjoyed by as many people as possible Price Low price strategy:Low price is a prerequisite for the IKEA concept to realize vision to create a better everyday life for the many people. As the IKEA concept aims to serve the many people, the IKEA product range needs extremely low price level IKEA designers do their part to keep prices low by using production capabilities from other areas in unique and previously unimagined ways: Like having a shirt factory produce furniture upholstery Or using leftover materials from the production of one product to create an entirely new one After deciding product priority, a product developer would set the products target retail price using what the company referred to as the matrix The matrix consisted of three basic price ranges and four basic styles
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 Within each price range, the company would survey the competition to establish a benchmark and then set its own price point 30% to 50% lower than those of its rivals There is a separate matrix for each product type IKEA sold that is, a price matrix for sofas, a price matrix for kitchen tables, and so on In addition to being used to set retail prices, the matrix was used to identify gaps in the companys product lineup By plotting the companys current offerings on grid and looking for empty spaces, product mangers could readily identify market opportunities Place Metro cities Islamabad, Lahore, Karachi, Faisalabad Tier two cites Gujranwala, Mir pure, Jhelum, Haydarabad Promotion

In Pakistan, IKEA will promote itself as a fashionable brand for homes Distribution of IKEA Catalog Media channels covered will be: TV/Print/Digital Pull strategy will be executed so that the customers themselves pull out the product from the shop

Marketing Strategy The philosophy of IKEAs group is reflected in Kamprads statements: We have decided once and for all to side with the many. What is good for our customers is also, in the long run, good for us. We want to create a better everyday life for the majority of people. Nowadays the huge success of IKEA is due to many reasons: Unique Products Understand the needs of their customers Low cost Fair Quality Unique Brand identity All ages welcomed It is worth to say that has already presented the year 2040s kitchen equipment! Another important thing about IKEAs marketing strategy is that it concentrates on individual marketing rather than mass marketing. It also takes into consideration the each country specific management style.
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IKEAs advertising campaigns are also strictly adjusted to the channel of communication that they use each time, such as TV, Social Media, and Print. In 2009, for the opening of the new IKEA Malm store, IKEA created a very interesting Facebook campaign: a showroom picture uploaded to their Facebook profile, first people to tag an item win that item. It was really a brilliant idea! IKEA usually communicate their products and their brand in a funny way, which leads directly to the subconscious of the audience. For example at 2009 in Austria announced the launch of their new catalogue by advertising it in cinemas. They used existing movies with great actors in which IKEA products are seen accidentally. The most impressive thing about IKEA is that it doesnt have costumers but fans. IKEAs Keys to Success Democratic Design Lars Engman, a product developer at IKEA, learned the hard way that furniture needs to do more than just look good after his 6-year-old daughter and her pals destroyed his expensive Italianmade sofa wanted to design a couch that was hard-wearing and kid-friendly without compromising on design. In 1980, the Klippan sofa was born. Today, at $249, it remains one of IKEAs top-selling items with 1.5M sold since 1998. Offer a wide range of home furnishings of good design and functionality Balance of form, functionality, and low price The price tag is designed first

Vertical Integration For the Klippan sofa, there are five suppliers for the frames in Europe, plus three in the U.S. and two in China. By centralizing everything from the production of the fabric to the stitching of the covers to just four core suppliers in China and Europe, IKEA has been able to lower the retail price of the covers by 20% since 2004. 1,300 suppliers and 27 distribution centers Operations cover every step of production Enables the group to save cost at each stage Delivers high-quality furniture at lower prices than its competitors

Strong Brand Image The emotional response to IKEA is unparalleled. The promise of store vouchers for the first 50 shoppers drew thousands to an IKEA store in the Saudi Arabian city of Jeddah, where two people died and 16 were injured. A February opening in London attracted up to 6,000 before police were called in. At a time when consumers face so many choices for everything they can buy, IKEA provides a one-stop sanctuary for coolness. It is a trusted safe-zone that people can enter and immediately be part of a like-minded cost/design/environmentally-sensitive global tribe. Cost-Consciousness Sensible Design Unconventionality Social/Environmental Awareness

Consistencies among Global Strategy Perceived as a value brand, following their affordable solutions for everyday living tagline Image of being hip and modern, has been called a one-stop sanctuary for coolness Maintain Swedish influence Store experience Highly anticipated store openings Adapting products to national markets Advertising through the media

Location Strategy Entering markets where suppliers are readily available Supply is the bottleneck Focus on Asia overall as an emerging market

Micro Environmental Factors Customers As all businesses need customers, they should be Centered (Orientated) around customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service. Employees Employing staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If business employs staffs are without motivation or skills or experience, it will affect customer service and ultimately sales. Suppliers Suppliers provide businesses with the materials they need to carry out their business activities. A supplier's behavior will directly impact the business it supplies. For example if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organizations Marketing Mix strategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products. Shareholders As organizations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organizational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business. Media Positive media attention can make an organization (or its products) and negative media attention can break an organization. Organization need to manage the media so that the media help promote the positive things about the organization and reduce the impact of a negative event on their reputation. Some organizations will even employ public relations (PR) consultants to help them manage a particular event or incident. Consumer television programmers with a wide and more direct audience can also have a very powerful impact on the success of an organization. Some businesses recognize this and will
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change their reaction when consumers mention that they are going to contact a consumer television programmer or the newspapers about the business. Competitors The name of the game in marketing is differentiation. Can the organization offer benefits that are better than those offered by competitors? Does the business have a unique selling point (USP)? Competitor analysis and monitoring is crucial if an organization is to maintain or improve its position within the market. If a business is unaware of its competitor's activities they will find it very difficult to beat their competitors. The market can move very quickly for example through a change in trading conditions, consumer behavior or technological developments. As a business it is important to examine competitors' responses to these changes so that you can maximize the impact of your response. Macro-environmental factors The main Macro Environment factors are: 1) Demographic Environment 2) Economic Structural Environment 3) Technological Environment 4) Political Environment A business and its forces in its micro environment operate in larger macro environment of forces that shape opportunities and pose threats to the business. It refers the major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces. The important environmental factors are; (1) (2) (3) (4) (5) (6) (7) Economic Environment Political and Governmental Environment Socio-cultural Environment Natural Environment Demographic Environment Technological Environment International Environment.

Economic Environment: Economic environment of business has reference to the board characteristics of the economic system in which the business operates. The business sector has economic relation with the government, capital market; household sector and global sector. These sectors together influence the trends and structure of the economy. The form and functioning of the economy
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vary widely. The importance external factors that affect the economic environment of a business are: Economic Conditions: The general Economic conditions prevailing in the country viz. national income, per capita income, economic resources, distribution of income and assets, economic development etc. are important determinants of the business strategies. Business cycles and economic growth of the economy are important factors defining the economic environment. The economic system operating in the country also affects the business enterprise to a very great extent. The economic system of a country may be capitalist, socialist, communist or mixed. Economic Policies: The government decides the economic environment of business through Budges, Industrial regulations, Economic planning, Import and Export regulations, Business laws, Industrial policy, Control on prices and wages, Trade and transport policies, the size of the national Income, Demand & supply of various goods etc. Economic Growth: The stage of economic growth of the economy has direct impact on the business strategies. Increased economic growth rate and increase in consumption expenditure, lower the general pressure within an industry and offers more opportunities then threats. The rate of interest affects the demand for the products in the economy, particularly when general goods are to be purchased through borrowed finance. Low interest rated provides opportunities to the industries to expand whereas rising interest rates pose a threat to these institutions. Currency Exchange: Current exchange rates have direct impact on the business environment. When the rupee was devalued in 1991, it was to make Pakistani products cheaper in the world market and consequently boost Pakistan's exports.

Political and Governmental Environment: Political environment refers to the influence exerted by the three political institutions they are; Legislature, Executive, Judiciary etc. The legislature decides on a particular course of action. Government is the executive and its job is to implement whatever was decided by parliament. The judiciary has ensure that both the legislature and executive function in public interest and within the boundaries of constitution.
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Legal and political environment provides a framework within the business is to function and its existence depends on the success with which it can face the various challenges constructed out of political and legal framework. Socio-cultural Environment: Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. Social class and caste of a person goes a long way in deciding the business activities in relation to its production and marketing activities. Tradition, customs and social attitudes have changed the attitude and beliefs of the persons which have their effect on organizational environment. Class and caste are influencing the purchasing pattern. Socio-cultural environment may include expectations of the society from business, attitudes of society towards business and its management, views towards achievement of work, views towards structure, responsibility and organizational positions, views towards customs, traditional and conventional, class structure and labor mobility and level of education.

Natural Environment: Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. Demographic Environment: Demographic factor include Size, growth rate, age composition, sex composition etc. of population, Family size, Economic stratification of population, Educational level, Caste, religion etc. All these demographic factors are relevant to business. These factors affect the demand for goods and services. High population growth rate indicates an enormous increase in labor supply. Population with varied tastes, preferences, beliefs, temperaments etc. gives rise to differing demand pattern and calls for different marketing strategies. Technological Environment: In order to survive in today's competitive world, a business has to adopt technological changes from time to time. New technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products. MP3 players, computer
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games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. International Environment: Another environmental factor which is fast emerging as the force to reckon with is the international environment. Implications of global or international environment are Due to liberalization, Pakistani companies are forced to view business issues from the global perspective. Safe and protected markets are no longer there. World is becoming small in size due to advanced means of transport and communication facilities. Learning of foreign languages is must for every business manager. Acquiring familiarity with foreign currencies is also must. Facing political and legal uncertainties is inevitable.

SWOT ANALYSIS OF IKEA

IKEA Strengths Strengths IKEAs main strengths are a strong international brand recognition attracting key demographic customer groups, built upon a unique philosophy. This IKEA business model is unique in its construction and execution with little direct competition on a like for like basis. Perhaps a key asset IKEA possesses is the IKEA catalog. Published in the entire world and translated into more 40languages, the IKEA catalog is present in a lot of homes, ensuring high brand recognition and penetration. It is its catalog which allows it to be known around the world. IKEAs success has been driven from the price architecture offering value to the customer in innovative but functional products which are low priced vice versa similar products. Since 1997, the company has enjoyed high sales performance which boosted profit margin and created a healthy reserve which could be used to fund company expansion. Strength is that the company also maintains total control of its design, pricing and supply of product ranges globally; creating a product portfolio that caters for most consumer lifestyles and budgets. The backward integration also ensures that the firm enjoys economies of scale by producing its own furniture. IKEA Weaknesses The firms main weakness is the fact that it is very much reliant on Europe, with82% of stores located in this region and is underserved in the emerging economies of Asia and Latin America. This could be a potential drag on company performance in the long term as the European market is fairly saturated with little growth. Another potential snag is that though
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IKEA promotes low prices such policy has been identified as being synonymous with a low level of customer, especially in the UK where large queues at the cashiers at weekends are common features. This suggests that there is a need to work on service tonsure a complete shopping experience and ensure repeat business within the existing customer base especially in saturated markets where new customers are harder to draw. Opportunities IKEA is countering its main weakness with its key opportunity, which is expansion into emerging markets in Asia and Eastern Europe. Traditional product for IKEA has been affordable, low-priced high volume products. However the movement into mid and higher price points will see an opportunity to move the demographic base and increase the average basket value with less reliance on a limited demographic group. Another opportunity available to IKEA is the increasing popularity of online shopping. Its expansion into the realm of the virtual marketplace, the possibility of greater reach coupled with lowered expenses is now a real one for IKEA. Although there are negative associations within the development of the IKEA Ecommerce site there is an associated opportunity to achieve growth and increased levels of customer service as the additional transactional capability will reduce pressure from stores to a certain degree. Thus, possible growth areas include the development of premium lines, whether within existing stores or through new high street fascias complementing the out-oftown stores, and an increase of sales via the development of e-commerce sites in each country. At the same time, IKEA also needs to be mindful of improving customer service, and reducing the volume demand on existing stores. Threats Unfortunately, these extra developments are driving the threat of a possible over saturation of the market, as mainstream retailers are beginning to mirror the model of low cost value flat packed furniture which will impact on the buoyancy of IKEA. Such move will have an adverse effect on IKEA which draws a significant portion of its revenue from the sale of low-priced flat furniture. This is compounded by the negative impact on sales of continued depressed economic conditions in its core European market as well as the adverse effect of a weak dollar on sales in the US, and the political and economic instability of the Chinese and Russian markets, in which the company plans to invest heavily in the short-midterm. With economic concerns over rising living costs and depleting disposable income due to the global depression, there is an overall threat to the performance of the business in UK and American markets specifically. Even its emergent markets in Asia are impacted as economies around the world experience a severe depression.

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Conclusion & Summary Swedish company IKEA was the worlds largest furniture retailer since the early 1900s.From 1997 IKEA has increased its number of stores by more than 100. The company comprised 338 stores in 40 countries with a workforce of 154,000.Ikea offered nearly 12,000 items to the home furnishings market worldwide .It sold a wide range of products including furniture, accessories, bathrooms and kitchens .IKEA is well known for its unique concept, low price, wide range of product and flat packing. However, although the company opened new stores in past years, sales growth was decline, largely as result of the depressed economic conditions across Europe, the companys core business region .Thus, it is clear that, in order to improve performance at a significant level, simply opening new stores is not enough. Instead, IKEA must assess its external and competitive environment, determine the key opportunities and threats which face it, and align its strengths and weaknesses to best counter the weak consumer market, and thus generate the strong growth it needs to remain a strong brand and presence in its chosen market. This project will assess the external environment IKEA is operating in using the PESTEL analysis to determine the political, economic, social and environmental outlook as well as the industrial environment using the Portals five forces model to analyze the industry IKEA is operating in. knowing the external environment is insufficient if the companys internal strengths and weakness are not fully exploited and the SWOT analysis is used to analyze the companys internal performance and determine the opportunities and threats facing it . After determining the firms environment, a review of the processes and options available to IKEA to promote growth will be given followed by recommendations on the steps IKEA can take to grow in this economic downturn. This business will be successful in Pakistan. Macro Environmental factors especially political stability in Pakistan after elections 2013, Sharif Brothers promote industries. And other factors are also involved as such living standards of people are moving to upward. And medias role is very important for promoting a business. We think this is the best start.

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References http://www.rediff.com/money/2006/mar/21fur.htm http://www.indiainbusiness.nic.in/whyindia.htm http://finance.indiamart.com/investment_in_india/fdi_approval.html http://www.furniture.co.in/News/news1.html http://www.state.gov/r/pa/ei/bgn/2880.htm http://www.123helpme.com/view.asp?id=148901 http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/forestry_and_wood/index.html http://franchisor.ikea.com/concept.html http://www.slideshare.net/manigarg211/ikea-invades-india http://www.studymode.com/essays/Ikea-India-111713.htm http://www.slideshare.net/jinu920/ikea-for-global#btnNext http://www.scribd.com/doc/28080693/Executive-Summary-Since-1997-Ikea-Has-Increased http://www.scribd.com/doc/59951004/Case-Analysis-IKEA http://www.thelocal.se/followsweden/article/Swedish-business-sectors/#.UNdxsr2DodU http://www.cyborlink.com/besite/india.htm http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/iway/index.html http://www.reocities.com/timessquare/1848/ikea.html

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