Impact of Environment on Company - Business Strategy

BUSINESS STRATEGY

Table of Contents
INTRODUCTION......................................................................................................................................3
TASK 1.......................................................................................................................................................3
Impact of environment on company...................................................................................................3
TASK 2.......................................................................................................................................................6
Evaluation of internal environment.....................................................................................................6
TASK 3.....................................................................................................................................................11
Porters five forces framework...........................................................................................................11
TASK 4.....................................................................................................................................................14
Strategic Management plan...............................................................................................................14
CONCLUSION........................................................................................................................................16
REFERENCES........................................................................................................................................17

INTRODUCTION
Business strategy is defined as formulation of various tactics and business plan
in order to achieve the business objectives of the company. Business strategies help to
utilize and perceive opportunities. The purpose is to mobilize the resources and secure
an advantageous position.
The report is based on IKEA. It is retail industry. It is founded on 28 July in the
year 1943. The founder of IKEA is Ingvar Kamprad. The headquarters of the firm are
situated in Delft in Netherlands. It deals in the products such as ready to assemble
furniture, food products, kitchen appliances and home ware.
The report will analyzed the impact of macro environment in organization by
using pestle analysis and on its business strategies. It will assess the internal
environment of organization through VRIO model and SWOT analysis. It will apply the
Porters five forces model for the market sector. Based on porters five forces framework
it will evaluate Ansoff matrix for producing strategic directions.
TASK 1
Impact of environment on company
Vision - IKEA vision is to provide well designed and diverse range of home furnishing
products to the customers. These products they are tend to provide at economic
processes for ensuring affordable and accessible products to everyone.
Mission - Mission statement of IKEA tells that their business idea is form to support
their vision statement by offering well designed products in a wide range. These home
furnishings products are offered in less price so that many people can afford them.
Pestle Analysis
Pestle analysis of IKEA helps to gather detailed information about their external
environment. This helps the IKEA to formulate its business strategies. Thus, the Pestle
analysis of IKEA is done as follows -

Political - The firm has impact of controversies which are done in political grounds.
The company has accepted that its products are produced by political prisoners of East
Germany in the year 2012. This impacts a lot on the global image of the firm. In addition
the IKEA has allegations that its founder is active recruiter of Swedish Nazi group. The
degree of corruption in various markets where IKEA is operating can influence their
brand image as well as it is a restriction for the firm expansion (Bentley-Goode, Newton
and Thompson, 2017). The import restrictions in various countries can influence the
international market of the company. IKEA also has spent less on lobbying, as per the
research the company being a largest furniture retailer spends only $40k on the
lobbying activities. While the other companies in similar size spend a lot on lobbying.
Economical - The financial and economic crisis in the year 2007 has a huge impact on
the consumer spending. Although the IKEA is able to cope up with this situation by
using cost leadership strategy. The company has to eliminate about 5000 jobs but the
sales are dropped only by 1% in the year 2009. Changes in currency exchange rate
have direct influence on company's profitability. These fluctuations are between USD
and EUR. Interest rate fluctuations also impact on sales of the company. High rates of
raw materials results in increased production cost.
Technological - IKEA is investing highly in improving their technology. They are using
software’s such as Augmented Reality and Virtual Reality in order to transform their
sales. The company is also using data analytics in order to improve the customer
experience in retail sector. The company also maintains their data on its official website
through which the customers are able to view the online catalogues. The company is
also embracing the technology to maintain better network with its distributors and
suppliers. Technology like Cognitive intelligence and artificial intelligence are also
helpful for the retailers of the company to better understand the behavior of the
customers.
Legal - IKEA is facing criticism because of tax evasion in multiple countries from where
they are operating. The laws and regulations of various countries are impacting the
business of IKEA. There are barriers to entry in different countries. The company is
abiding by the legislation of various countries (Bıçakcıoğlu, Theoharakis and Tanyeri,