PESTEL Analysis of IKEA


Added on  2019-09-24

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Running head: Article workARTICLE WORK
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Running head: Article workH1: PESTEL ANALYSIS OF IKEAPESTEL analysis is the macro-environmental factor which gives an idea about theexternal factors which will have a direct impact on the strategy as well as the operation of theenterprise. In this article we will make detailed discussion about the PESTEL analysis of Ikea.Who does not know about the company like Ikea. It is being regarded as one of most renownedfirm of Sweden. At first, let’s get some detail about Ikea. Ikea is the Swedish basedmultinational company that design as well as sell ready to use furniture. The firm has itsoperation present in many countries and as a result of this, the factors like Political, economical,social and technological, etc will have a significant impact on the company. We will now lookinto the PESTEL factors that are affecting operation of Ikea. H2: Political analysisH3: Political controversies that have affected the brandIn the recent past, political controversies have caused a significant impact on the overalloperation of the brand. In the year 2012, the firm has accepted some of its furniture which wasmanufactured by East Germany political prisoners. The firm had apologized for the same, but therespective thing had caused a major impact on its global brand image. Due to this, the overallsales of the company were also dropped.H3: Government rules and regulationsThe operation of Ikea is also affected by the rules and regulations which are being framedby the political government of the nation. Following the given context, it can be said that in thepast few years, India and China have taken a step in terms of lowering different political barriersto entry for foreign brands. It is because of the given aspect only; many international brands havetaken steps for expanding their operation in the respective market. For example, Red tape is amajor matter of concern for the brand like Ikea. However, with the help of such type of smoothpolicy, Ikea can expand its presence in the respective market. This will have a direct impact onthe overall sales of the company in an effectual manner. H3: Political instabilityIt is also being regarded as another most important political factor which will have animpact on the company’s operation. For example, a situation like political instability will have a1
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Running head: Article workdirect impact on the strategy of the company. Such type of activity will influence the firm’scapability to make an effective decision. Due to this, the overall operation of Ikea will beaffected negatively. H2: Economical analysisH3: Global economic recessionThe operation of Ikea is majorly affected by the global economic recession which has adirect impact on the purchasing power of the people. However, it has been examined that Ikea ismanaging the prices of its products in an effectual manner and it is the reason why it is able todeal with the pressure that is being imposed by the economic fluctuations. Further, the situationlike recession will also influence the pricing tactic of Ikea. Such situations forces firm to keepthe prices of their product low. This is because; if the respective thing is not followed thensurvival of the firm in the market will become very much difficult.H3: Strength of dollars in marketIt is also being considered as another most important economic factor that is influencingthe operation of Ikea. The strong dollar will have a direct influence on the revenue of the firm.On the other hand, it is because of the given situation only there are many customers of Ikea inIndia and China who are not able to afford the product of the company. H2: Social analysisH3 Change in tastes and preferenceThe operation of the company is also influenced by social factors like change in the tastesand preference of customers and purchasing capacity of the people of the country. In this regard,it is very right to say that for the company like Ikea it is essential that it should give importanceto the tastes as well as preferences of its respective buyers. This is because; if not give then inthis situation it will become very difficult for the corporation in terms of attracting a largenumber of customers towards the firm. This will influence the overall profit of the company. 2
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