PESTEL ANALYSIS

Topics: Switching barriers, Barriers to entry, Monopoly Pages: 2 (458 words) Published: May 6, 2015
Rivalry among existing firms
It is intense in the global market of discount furniture and the major players in theindustry include Euromarket Designs Inc, Galiform plc, Wal-Mart Stores Inc, Argos andothers. However, currently IKEA is the undisputed market leader in the industry of discounted furniture in the global scale.Threats of   

 New entrants to an industry can raise the level of competition, thereby reducing itsattractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries . whereas other industries are very easy to enter .Key barriersto entry include- Economies of scale- Capital / investment requirements- Customer switching costs- Access to industry distribution channels- The likelihood of retaliation from existing industry players. Threat of Substitutes

The presence of substitute products can lower industry attractiveness and profitability because they limit price levels.The threat of substitute products depends on:- Buyers' willingness to substitute- The relative price and performance of substitutes- The costs of switching to substitutes

 
Bargaining Power of Suppliers
Suppliers are the businesses that supply materials & other products into theindustry. The cost of items bought from suppliers (e.g. raw materials, components)can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then the company's industry is less attractive. The bargaining power of suppliers will be high when- There are many buyers and few dominant suppliers- There are undifferentiated, highly valued productsAs an example of IKEA, in recent years, had heard from its customers thatmany of its furniture offerings were too complicated to be assembled by the customer;showing the power of the supplier to make a difference, IKEA has gotten cooperationfrom some suppliers to provide materials that are easier for the customer to assemble,thereby adding value to...
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