Essay: Threats for IKEA

By | April 27, 2011

Sample Essay

Impact of recession in major markets:

The current recession and economic slowdown damaged most of the countries including the most developed nations like the UK and USA. According to the statistics the UK economy contracted 2.4% in the first quarter of 2009. Similarly a 6.1% contraction was recorded in the first quarter of the 2009 USA economy. IKEA also felt the pinch of this economic turnover. The percentage of the regular visitors at the store dropped to 5.1% in 2009. Apart from that the group has also slowed down their pace for expansion in the business (Datamonitor, 2010).

Barriers to entry:

Because of the foreign investment policy in India IKEA has to cancel their project of retail operation in India. Because of this the company has been denied of a major share of the Indian consumer market (Arnold, 2002).

Unfavorable market trends:

This is one of the biggest challenges which IKEA and other key players in the industry are facing. The subspecialist producers offers product at a low rate to attract the customers. This trend was more accelerated by the recession as more and more people were adapting this trend (Datamonitor, 2010).

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