Business Strategy: Macro-environment and Internal Environment Analysis

Business
Strategy

INTRODUCTION
The different types of actions and strategies which are adopted in the market by an
organization to gain strategic and competitive edge is known as Business Strategy (Akter and
et.al., 2016). It is useful if a company has to set goals which are short-term and medium-term in
nature. If a company frames a right business strategy then it will lead towards attainment of
objective of maximization of profits. Thus the company's managers should be able to make sure
frame the right strategy to gain a competitive edge. For this report, IKEA has been considered
which is a Swedish company headquartered in Netherlands. It deals in various types of products
for the customers. In this assignment, detailed macro environment analysis, analysis of internal
environment will be covered. Also, evaluation of outcomes with the use of Porter's five forces
and application of different theories and models will be analyzed in this assignment.
TASK 1
P1: Macro-environment analysis
The different types of external factors which can influence an organization in the future
time period constitute a part of the macro environment (Amran and et.al., 2016). For its analysis
the use of PESTEL analysis has to be made.
PESTEL analysis-
Political factors- The political factors are related with political stability of a country and
create an impact on the organizations. These factors affect the performance of IKEA because this
will create an impact on its profitability level.
 Opportunity- When the policy of the government is stable and in the favor of IKEA then
this will lead towards creation of profits for the company and this will help it in attaining
its required goals and objectives in the future time period.
 Threat- If the political stability is not present in the country where IKEA is operating
then this will create different types of problems and issues for the company in the long-
run period of time.
Economic factors- Economic conditions can change anytime and therefore this can
create an impact on the firms. For IKEA, these factors are quite crucial to be considered
because the economic conditions can affect its profitability.
 Opportunity- Economic growth can witness a boom. In this situation this offers an
excellent opportunity for IKEA as this will make sure that the company is able to achieve
its goals and objectives in the future time period.

 Threat- If the inflation rates are increasing then this acts as a threat for IKEA as this will
lead towards a decrease in the profits of the company.
Social factors- Society and its factors can create an influence on the working pattern of
the organizations like IKEA. These factors have an impact on IKEA as they can lead
towards either an increase in its profits or a decrease in the profits.
 Opportunity- The increase in the population growth rate offers an opportunity for IKEA
as it will lead towards increase in the demand of its products.
 Threat- Lifestyle changes of the customers can create impact on business of IKEA both
in the short-run as well as the long-run.
Technological factors- For an organization it is quite necessary to be able to consider
these factors because technology keeps changing frequently (Anwar, Shah and Hasnu,
2016). IKEA is impacted by the influence of these factors. This is so because this will
lead towards either an increase or a decrease in the profits.
 Opportunity- If IKEA is able to adopt technology faster than the others then this will
makes sure that the company earns more profits.
 Threat- If IKEA is not able to adopt technology faster than the others then this can
reduce its level of profits.
Environmental factors- Environment is a factor which needs to be considered by the
organizations. Customers are nowadays quite conscious towards the environment. In the
context of IKEA, these factors can create an impact on the company as it will lead
towards either an increase in the profits or decrease in profits (Ghemawat, 2016).
 Opportunity- If IKEA is able to adopt the environmental policies of the government
then this will make sure that its image among the customers is good and it earns higher
level of profits.
 Threat- If IKEA is not adapting to environmental policies of the government then this
will impact its image among the customers and its revenues may fall which can reduce
the level of profits in the company.