Type: Business
Pages: 3 | Words: 781
Reading Time: 4 Minutes

SWOT –is the classic method of risk analysis and strategic options of development for the project, company or product. SWOT is an abbreviation of English words Strengths, Weaknesses, Opportunities and Threats. SWOT is a fairly well-recognized approach that allows conducting a joint study of the external and internal environment. SWOT analysis implementation can establish the connection between strength and weakness, which are inherent in the organization, and external threats and opportunities. SWOT methodology firstly identifies the strengths and weaknesses, threats and opportunities, and then establishes chains of connections between them, which can be used to formulate appropriate strategy. As the name implies, the meaning of the analysis consists of the qualities contradistinction (“weighting”) of the object that is being analyzed. The aim of this analysis is to answer such range of questions: what strengths does project/company/product has; what are the most powerful and advanced components of the project/company/product in comparison to another one; what elements of the assessed object are weak, undeveloped; what additional opportunities arise during and after the project/company/product’s performance; what factors may compromise the implementation of the whole project, company’s performance and product introduction to the market?

IKEA and SWOT Analysis

Internal environment it is one of the factors that relate to the influence of the company from the inside. Such factors and elements of the internal environment can be sampled as objectives of the company, its structure and tasks, technology it uses and people that are doing all its business processes, as well as various special features of the enterprise.

External environment in which an enterprise is working is essential for its successful business development. External environment factors of impact are divided into two categories: factors of direct impact and indirect impact. Factors of the external environment of direct impact include the following elements: suppliers, laws, government agencies, customers, competitors, and financial intermediaries. The main activity of suppliers is to provide enterprises: materials, capital and labor. Laws and government agencies consistently and comprehensively affect the activities of enterprises. Consumers affect internal components of an enterprise such as main aims and strategies of the company, its product quality and production processes. It is well known that consumers are not the only one object of the competition because it also includes labor, materials and capital. Among the indirect factors of the external environment are: technology, state of the economy, socio-cultural factors, political factors, the relationship with the local population, and international relations.

IKEA company has focused on the threats that are connected to the social trends (the slowdown of the new customers flow), market forces (increase of competition), economic factors (the recession of the economy). IKEA has concentrated in its strengths in order to find positive solutions in threats overcoming. Therefore, social threat company is willing to overcome by means of development the online customer help that is aimed to show their customers what steps can be done in order to decrease people’s impact on the environment. Company has informed their personnel about IKEA social responsibility campaign: what company is doing to reduce its impact on the environment and the spending that the company makes for the charity. In order to decrease the competition company, due to its scale, has concentrated on the minimization issues: the reduction of the costs connected with materials that are used and people that are hired by the better technologies usage and employees specialisation. These measures are made for the increase of entrance barriers into the market. As IKEA decreases its expenditures, it provides customers with products by lower prices. Low price strategy creates more purchases in the times of financial troubles. It also increases the range of target consumers of the company.

SWOT analysis of the company allows to show and evaluate the company’s business process from the external and internal sight. Strengths and weaknesses assessment show the main competitive advantages and disadvantages of the company’s performance. Weaknesses determination is aimed to show what factors of the company can slowdown its growth and prevent the company’s ineffective operations.  Their effective elimination will make the company more competitive in the market and increase its profitability. Opportunity assessment gives the company information about its growth ability, shows markets and spheres that a company can enter, and consumers that it can find. Threats show key factors of the environment that the company should deal with. Their understanding can give new opportunities and build new advantages of the company’s performance. Therefore, SWOT analysis gives IKEA full understanding of its current position in the market. When the current position with all its strengths, weaknesses, opportunities and threats is identified the effective and efficient business growth strategy of the IKEA can be build. Only in this case company can obtain the most successful results.

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