Ikea in South Africa

IKEA : Possibility of a subsidiary company in South

Africa

Types of business :

IKEA is well known for its simple yet effective approach to retail the « Do It Yourself concept

products ».

IKEA products are flat packed and can be easily assembled by customers themselves.

Strengths of Ikea:

Affordability for the south African consumers “There is something for everyone”

Strong financial position: A revenue of €38.8 billion ($44.6 billion)

Brand reputation globally known and market presence that might attract the attention of the

potential south African consumers

Ikea Products quality

Weaknesses of Ikea:

Negative media attention and publicity that can damage the brand reputation in south Africa

Ikea Standardized products that might not fit with the local preferences

Low quality products The cost reduction obsession of the company has diminished its item quality.

South Africa is too far away from the IKEA production lines especially from a quality control

perspective.

"it was mentioned during the franchise discussions between IKEA and Nevada Furniture (a south

African company) that South Africa is too far away from the IKEA production lines, especially from a

quality control perspective."

Opportunities of Ikea:

IKEA’s green business model

Global expansion IKEA is making plans to enter and expand larger markets

For example, South Africa can be a favorable new destination for Ikea to expand its brand among the

emerging markets with a 1 billion potential market and all the government facilities provided to

foreign investments. the abundance of the natural resources’ can lend a huge supply for raw

materials and help reduce the importation costs by affording an internal production.

Expansion in the grocery market Where the demand exists.

Threats of Ikea:

Stiff Competition with local and international brands

Consumer income When consumer income will increase, they have more purchase power; they are

less likely to buy high quality and cheap products

Low cost business model has been imitated and copied by its rivals.

Distribution and marketing management decisions:

IKEA

...