Threats
Businesses such as IKEA will struggle against the larger portfolio suppliers such as Tesco in the United Kingdom and Walmart in the United States. For example Tesco’s sells not only groceries, but TV sets and mobile phones, so it is only a matter of time before the business diversifies into a range of bedroom furniture or kitchens.
Like any global marketing company IKEA has to compensate for the global economic situation. The business needs people to move through the family life cycle. Empty nesters need to equip their homes with furniture. So interest rates need to be low enough so that they can afford to borrow money to equip their new homes. There needs to be plenty of low-cost housing for them to be able to do this. Do they have job security? The changing economic environment will impact and influence IKEA’s furniture business.
IKEA is trading in relatively mature consumer markets, and has entered all plausible free markets countries. The new and emerging nations of India and China sometimes make it difficult for IKEA to embed itself as a supplier to new consumers. For example, there are often foreign ownership rules which mean that IKEA might have to take a local business partner. The new partner could take more than 50% of its business and this is not always acceptable to its board.