Sample Final Project - International Klassrum and Educational Assistance (2016 )-234 PDF

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IKEA has 978 suppliers from 50 different countries making the switching costs low. This, plus the fact that IKEA is a very big organization, leads us to believe that IKEA is in charge, and not vulnerable to supplier power.175

Buyer Power Buyers, customers of the organization, do not have to be the industries’ consumers. The factors increasing the power of the buyers are opposite the factors of supplier power. When switching cost is low, buyers are concentrated and there is high buyer competition threat. This can happen if the buyers are using backward vertical integration, meaning that they are supplying themselves.176 IKEA offers a wide range of products for all social classes even if the middle class is their main target market. This gives them a large pool of loyal customers since IKEA can compete based on both the price and the quality with their competitors. IKEA calls this the “IKEA way” and this is something they have been focusing on since the foundation of the company.177 Competitive rivalry When organizations have similar products and services and are aiming at the same group of customers, they are competitive rivals. The degree of competitive rivalry in an industry is affected by competitor balance, industry growth rate, high fixed costs, high exit barriers, and low differentiation.178 IKEA’s greatest competitive edge is their low prices. In Sweden, IKEA does not have any clear competitors since there are no companies that offer the same concept as them. However, they do have competitors in the different types of products that there are offering. Also, there are a lot of organizations in Sweden competing over donations to charity.

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http://www.ikea.com/ms/en_US/this-is-ikea/company-information/index.html 2016-02-17 Johnson et al. 2014, p. 58 http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/ 2016-02-17 Johnson et al. 2014, p. 59 http://www.frii.se/om-insamling/statistik/ 2016-02-23

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