Expertly Written Essay On Porter’s Five Force Model To IKEA’s Industry To Follow

The company of IKEA focused on retailing house furniture which are low on prices and have functional designs. To analyze the nature of competition within this industry, the Porter’s five force model could be used. The first force according to the model is the existing competitors. IKEA’s industry has numerous competitors which includes Wal-Mart stores and Euromarket designs. The competition within this industry is considered intense although IKEA managed to be on top of this industry. The second force is the supplier’s bargaining power. In analyzing this area, one could recognize that suppliers do not have enough bargaining power against the IKEA Company due to the large amounts of potential suppliers which have high quality raw materials. In addition, the supply chain management of IKEA is strong.
The third force according to the model is the customer’s bargaining power. In analyzing this area, it could be assume that the bargaining power of customers of the IKEA Company is relatively strong due to the high competition within this industry. Customers could choose other options. The fourth force is the threat of new competitors. There is a low chance of developing new competitors within the IKEA industry due to the high standards and quality of products of existing companies within the industry. The last force is the threat of alternative products. The threat of alternative products is also low due to the low amount of substitutes to the house furniture.
In analyzing or applying the Porter’s five force model in the IKEA’s industry, it could be recognized that the nature of competition within this industry is intense. Although the threat of new products or new competitors is low, existing companies within this industry should be prepared for an intense competition especially in terms of the quality of product.