Analyzing Business Strategy for IKEA: Impact of Macro Environment and Internal Capabilities

This document provides an analysis of IKEA's business strategy, focusing on the impact of macro environment factors and internal capabilities. It includes a detailed examination of the company's strengths, weaknesses, opportunities, and threats. The document also explores the competitive market forces using Porter's Five Forces model.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1. Drafting about the stimulus about the external factor which is reflecting of macro
environment in organisation context......................................................................................1
Task 2...............................................................................................................................................4
P2. To making the detailed analysation of the about the knowledge of Internal environment
and capabilities of providing organisation through using systematic approaches.................4
Task 3...............................................................................................................................................6
P3. By implementation of the Porter’s Five Forces module to measured the competitive
market forces in perspective of company...............................................................................6
Task 4...............................................................................................................................................8
P4. Through evaluating the range of theories and concept of the managerial model for the
investigating the strategic plan for organisation perspective.................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business Strategy is a propaganda where it optimised to get analyse and interpret about
the business activities and planning to execute various form of managerial method to supports of
conducting the optimum business related plans by organisation manager or leader to further
success factor (Phadermrod, Crowder and Wills., 2019). It also helps to predict about the
investments, hiring of workforce, raw material consumption and many more which are generally
counts in fulfilling the demands of their clients and accomplish the targets. Many formation of
business strategy is come across as to scrutinize the market behaviour and traits which is
essential to the vision, mission and objectives are highly considered as for the company
perspective which driven the company’s business goal as what to they have achieved in the
competitive Market (Saura, Palos-Sanchez and Correia, 2019).
Introduction about Company
The venture IKEA company is a Multinational enterprise which manufactured and
produced the exceptional level of basic home products that are driven through the assorted in to
make it actively in supermarket and it regulated through the Headquarter which is Swedish
Dutch as it having a branch in United Kingdom where it propounded the main retail products
which are provided the same product and services in very effective way (Anandarajan and
Harrison, 2019). It founded at 28 July, 1943 in Sweden, where total number of employees are
linked together through globally are above 2,00,000 by contributing their effective skills of to
accomplish all the segmentation about the company norms and targets and influencing to other
competitors a hard competition in competitive market.
Task 1.
P1. Applying appropriate framework analyse the impact and influence of the macro environment.
The macro environment is the form of terms and condition that exists in the economy
background. It involves the factor of gross domestic product, recession, inflation, market policies
etc, to making relation between general business cycle for measure the performance particular
organisation.
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Mission: The mission of IKEA company is having a business idea that supports this vision by
offering a wide range of well-customized, functional home furnishing products at the prices are
economic range for people can easily afford (Pereira and et. al., 2019).
Vision: “To making creative in better way of people’s life in different manner”.
Objective: By having a strong and effective aim to accomplish the targets segments in retail
business for long period of sustainability that provides the sense of direction to getting the targets
done in the manner of disciplinary which occurred in corporate compliances. As they have a
motive making manufactured of qualitative product in a efficient manner where they can easily
influence the consumer needs and wants of the long terms durability aspect.
PESTLE Analysis
This method is commenced about the business get effected through external factor as it
can be in favour or different preference which will not considered to be profitable but it compiled
all the rules and regulation or in another words the factors which are in Pestle is instructed about
the business strategies approach to implies to get their achieve the targets such as political,
Economical, Social, technological, environment and legal.
Political: This element reflects the corporate and government laws such as new tax introduced,
trade tariffs, political stability, corruption, labour laws etc.. In the perspective of IKEA company,
as it is Netherlands based organisation and want to serve their business in United kingdom region
they have to considered all the rules and regulation which undertaken by UK government. Some
of policy traits could create impact in their business for example labour laws, corporate taxation
and others which they have make understand the UK regulation and prepare a strategy to assess
the potential market.
Economical: The influence of the economic feature is to be background of the utility in market
sector, where economic factor basically determine the certain economy performance in terms of
economic growth, disposable income, exchanges rates that generates impact for short and long
terms aspect. As United kingdom economy is having a better stability the value of Pound is high
in international market, through which IKEA company need to measure the UK economic aspect
in overall situation as well as the high value of pounds could generates the positive returns. But
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there is negative influence of Brexit market in United kingdom which not allows to trade in
European market to those venture who are trading the business in UK region as this factor can
create a uncertain conflicts for IKEA company.
Social: This factor is emphasis about the organisation build their business strategic implement by
evaluate to target consumer which instructed about product pitching to in such a manner to fulfil
their needs and wants (Botero and et. al., 2019). On the basis of demographic factor, as it
involves a certain criteria age, gender, population growth rates, income factor, taste and
preferences all these criteria are matter for particular organisation. These factor can create impact
in IKEA company as their business is dealing with supermarket products and they are keen to
address product and services in United kingdom which require them a proper market research.
Many other retail organisation are already having a presence in United Kingdom region such as
Tesco plc, Asda Stores, Mark and Spencer etc. Their market will impact on IKEA where they
need to identify their serving product and services area (Vizzoto and et. al., 2020).
Technological: It allows the new resources commenced through the up gradation in the
organisation which allows technological incentives, the level of innovation along with research
and development in United Kingdom region. Similarly, IKEA company measure the scope of
technology resources in UK as there is advanced resources are utilised in retail stores. So, IKEA
could enhance the technology of Artificial Intelligence systems in built in their stores which will
improvise their work efficiency as well as improved their mechanism in effective manner.
effectively and it will generate positive impact (Batzer, 2019).
Environmental: According to this factor is elaborate about the increasing the lack of raw
material, chemical air pollution and carbon footprints are all these uncertainty is reduces by
setting the target through particular government (Fatchiya, Amanah and Soedewo, 2019). With
the perspective of IKEA company, the environment aspect of UK is highly influencing where
they need to analyse the availability of optimum raw material and have to make sure about the
product and services to not influence any harmful impact towards the UK environment and
initiate to contribute for society development aspect. Through this practise it makes understands
and encourage to making involvement in corporate social environment for better sustainability.
Legal: It is comprise about the understanding of laws and regulation which are commenced
through Government as have to implement some business laws which maintained. Similarly, the
legal aspect of United Kingdom is address about the Employment Act 1996 for protecting the
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workforce rights of employees that have to considered by the perspective of the IKEA enterprise
in segment of Minimum wages Act and Holiday pay. Sick pay and Maternity leave policy and
with rights are legally protected towards female workforce (Contini and et. al., 2019).
Evaluation
Through Pestle analysation within the perspective for IKEA company of their external
factor or forces which allows to getting interact with various form of scopes, opportunity,
problem and decision making which supports to accomplish the objective and goals as for the
betterment of company perspective (Umar, and Chunwe, 2019). As from this Pestle analysation
there would be Technological and Legal Aspect selection which structure formatted through
which laws and resources are highly needful and importance to allows in their organisation
premises for getting more approachable.
M1. Critically analyse that macro environment to determine and inform strategic
management decision.
The impact of macro environment is necessary to organisation like IKEA venture is for
evaluating information about external factor. For conducting Pestle analysis is arises for ensuring
about information related with external that can influence a business by generating opportunities
and threats in competitive market. As IKEA is multinational retail company, in which Pestle
analysis helps in creating decision at the time of investment purpose or planning to establishing
new venture in international market. Similarly, this practise is provide information regarding
with political. Economical. Social, technological, environmental and legal where IKEA could
faces major challenges in Political and legal factor by fluctuation of policies effectively.
Task 2.
P2. To making the detailed analysation of the about the knowledge of Internal environment and
capabilities of providing organisation through using systematic approaches.
On the behalf of the consideration about the internal environment where it helps to
getting analysation about the internal scenario of the company within the systematic approach on
allocating the optimum information about related larger and small opportunity.
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Swot Analysation: It is strategic planning tool which utilise to measure internal strength and
weakness along with external opportunity and threats for a particular organisation aspect.
Following there is a detailed analysation of Swot in context of IKEA company.
STRENGTH WEAKNESS
 IKEA company having their
worldwide presence along with their
product branding having better image
in competitive market .
 They provide better quality products in
affordable price. As they have long
term relationship with suppliers of
IKEA benefits as they assures to allows
their product price in affordable
integrate the supplier chain.
 Having strong and effective
promotional team to promote the
product and services internationally.
 Customer shares negative feedbacks as
dissatisfaction with its product as
continuous for having poor quality of
general products.
 They are failed sometimes for
balancing their standard across the
location of worldwide. While company
uses the old technique resources by
which products are not produced in
proper way.
 IKEA's operation blames their poor
environmental factors such as natural
climatic where they fail to not produce
the product and services.
OPPORTUNITIES THREATS
 IKEA produced a eco-friendly product
and services which is increasing the
demand and it will improvise the
growth strategy for company.
 There are low cost countries where
their per capita income are in low level,
this opportunity for IKEA as they can
expand their business where they
perform more better.
 Online platform can increase the IKEA
products in demand and help to engage
 There are other retailer venture such as
Walmart, Asda and Tesco companies
are entering in the home appliances
products segments as IKEA is
specialists. As these companies are
dominant in the market can be overtake
the IKEA market position.
 As per the people traits they buy low
cost product. As IKEA allows less
prices in their product and services. But
there is high competitors like Tesco,
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more customer interaction as it will
improvise the sales.
Asda and other retail shops in which
customer have high bargaining power
with IKEA. This high bargaining power
will decrease profit margin.
M2. Critically evaluate the internal environment to assess strength and weakness of an
organisation internal capabilities.
By conduct Swot analysis for IEKA, where it strength is highlight that company's is
having its global presence and allows less prices in product and services that compare with other
retail company. IKEA is having effective promotional team that work in constant basis to
making high customer engagement. These internal strength of IKEA is enough to support for
accomplishing competitive advantages. Somehow, weakness is quite create challenges like
customer are not satisfied from IKEA's services. Therefore this factor can more implication to
enhance unproductive effectiveness.
Task 3.
P3. By implementation of the Porter’s Five Forces module to measured the competitive market
forces in perspective of company.
About Porter’s Five Forces
The introduction of the Porter Five Forces is all about to guidance for industry related
information in terms of growth, consumer behaviour, profit margin, competitor as along with
well framed opportunities. It allows organisation to perform in the market and scrutinize the
errors regarding the aspect of the business point of view which need to fulfilled as in recover
manner. There are players in the market called buyers and sellers who performed for individual
company objective regulation to influence the consumer by mapping the buying capacities,
threats regarding of new company entrant as in product description, market overtaken through
other similar industry company which could provide the high factor affect. The requirement of
the formation of Porter Five Forces framed in the consideration of IKEA Company which will
demonstrate about the strategic planning for investigation the opportunities and challenges.
Threat of Substitute: It is the factor of substitute of goods and services which can utilise to
replace in the company product or services for impact through threats. According to the
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particular company point of view their product and services introduced at the time when there is
not scope for replacing the current product and having motive to increase the cost and analyse
the productivity. For IKEA company the level of threat of substitutes of product are is high,
because there are other retail companies are Tesco, Asda, Sainsbury etc. These companies also
having similar product that commence to attain competitive advantages.
Threat of New Entrant: By having the presence of new entrant force which create impact to
the company in their market. If the lack of capital and time duration availability to enter in
particular company's market and being a effective competitor. In the context of IKEA company,
the threat of new entrants of other ventures into the retailer industry is having low level, where
the IKEA's market and product position is well stabilised with having amount of financial
investment to become the effective offer a discount in home décor product in global market.
Bargaining power of Buyers: The actual environment of retail market in United Kingdom as
many companies are comprises their business through getting stablished as well as commenced
their performance through new level of competitive advantages as the portion of bargaining
power is high in the determination of IKEA venture where some of the product of its are
represent as economic in pricing factor where consumer can easily afford on the basic of their
buying capacities. They put their range introduction in such a manner where they are highlight
their vision as economic to expensive by which many attributes of buyers are taking participate
in the business.
Bargaining Power of Suppliers: As the probability of suppliers behaviour are more vulnerable
and It works through depend upon the more demanding of product in behalf of the market
(Corbo, 2019). For the performance records and having the low influence of bargaining in
suppliers as they manufactured in the fixed rate of man power, but somehow the situation would
not all time similar it turns into high bargaining power where the more demand occurs need
abundance of manpower requirement to could able to negotiate in raw material consumption.
Competitive Rivalry: In particular industry if there are large number of competitors then
competitive clashes increases but the smaller scope of competitors generates less influence of
competition in market. In this specific company, particular buyers and supplier plays an
important role as they tries to offer product deal in low prices if there is high form of business
competitors presence of competitive market. As there is high power of intensity of industry
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rivalry for IKEA company because they have huge competition with other industry like Walmart
plc, Euro Market, Argos and with others.
M3. Devise appropriate strategies to improve competitive edge and market position based on
outcomes.
As per the above analysation of Porter Five Forces in context of IKEA company group
business they have a sort of chance of opportunity to recreate their business stabilize in the
competitive market to reach a competitive edge. As there is few challenges for IKEA company
such as high power of bargaining in buyers side as because they have alternative choices as they
can prefer for other industry as well as the highly competitors actively trade where IKEA have to
face implication in their productivity. To attain the competitive edge they have to offer discounts
and other gift vouchers with their products, analyse the competitor's performance and prepare a
optimum strategy where it could generates more productivity in market by introduced similar
quality of product in affordable price and compare with other company's product. And other
option is to measure other countries where the lack of home appliances and furniture are in less
quantity and approached for it.
Task 4.
P4. Through evaluating the range of theories and concept of the managerial model for the
investigating the strategic plan for organisation perspective.
On the revision of the management theories as it has provided many business planning
strategies which supports to predict and assumption about to outcomes mapping which will bring
the organisational growth in the competitive market as along with it instructed to analyse the
different factor of behaviour and attributes which defines the compliances format procedure
enhanced in the company perspective.
Through commenced the Porter generic Model analysation for mapping the market and scenario
and constructed the strategic plan to execute in the perspective of IKEA company (Corbo, 2019).
About the Porter Generic Model
It is driven the mainly about the business background information generates in terms of
scope, opportunities and challenges which are mapped through within capabilities of the specific
company background regarded with the effective performances, but there is need of
understanding the different source of marketing behaviour that help to making evaluate the
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abundance of competitive advantages that procurement by company as well as reduces the
unwanted discrimination factor.
As on the analysation related of Porter Generic model is comprises related with the IKEA group
of company which deliver the best optimum business strategy to support the perform effectively.
The Cost Leadership: One of the prominent Generic model it prescribed about the low
cost product manufacture in the industry. This form of strategy is basically associated
with large-scale of business offers low scale of product price to maximise the profit
criteria for making maximise sales, enhance high productivity or increase the capacity
utilisation. In the perspective of IKEA company, they have offered low prices product
and services with great quality. Through enhance of low prices make influence to attract
more customer from the upper and middle class. They basically cut down production cost
with the motive of profit maximisation.
Differentiation: This strategy is basically propounded for making comparison with
individual or few number of target market. As with the context of IKEA Company has
enhance differentiate with new product concept, in other hand company deals with new
substitute of product manufacture with low prices. First, they have analyse needs and
wants of customers or middle class people who are needed a product but in affordable
price where they produced in better quality.
Cost focus: It is also termed as focus strategy, that considered on a narrow segmentation
to reaching the cost advantages or differentiation. In the organisation respective they have
alternative to work on cost or product differentiation in the market point of view. As
similar situation happen with IKEA company where they have increase or decrease the
cost or customized the product specification.
For above perspective of IKEA company the model of Porter Generic analysation
compiled by considered for the Differentiation strategy , as it will support to forming the
new concept of product and produced in the better quality with low prices incurred. Many
other competitors product are captured the market in that situation IKEA need to attract
the customer by manufacture new specification of product and services and enhance in
market to maximisation the profit.
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Mission, Vision and Objective of company Mission: The IKEA Company stats their mission “Our Business idea supports by
offering a wide range of well designed, functional home furnishing product at prices. So,
low that as many people as possible will be able to afford them”. Vision: “ To create better everyday life for many people”.
 Objectives: By offers a wide range of home essentials and furniture product items of
good design and functions with excellent quality and durability with enhance price
where people can easily afford to purchase it.
Market Segmentation
The main agenda of the segment of the market is directly pointing towards the product
description where it features along with quantity and quality basis about consumer get influenced
through branding and company performance in the market (Al-khateeb, 2019). On the
background of IKEA company market segmentation is divided population into different group of
customer preference aspect as traits and characteristics for example: Males and Females
products, Home appliances and other furnishing products as per produced in colour wise, clothes
according to size, gender group and price factor etc.
Market in Targeting
According to this method to approach the target customer with particular company
perspective as which helps to making detailed marketing research in particular specific format to
getting an idea about people taste and preference and buying capacity basis the product
manufacture to deliver or pitch to the right consumer. Similarly company like IKEA group they
have evaluated their targeted consumer on their power of buying factor where they are generally
IKEA company determine the middle range of customer who having moderate quality of buying.
Positioning
On the majorly dependence of the performance level which is decides to analysation of
the company positing in the market or competitive market where many rivalry industries are
performs and gets to attain their ranking in overall marketing position. As on the result record of
IKEA group company implies their position according to the marketing mix factor for target
potential customer segmentation. In the monopoly segments IEKA is stands among in
competitive companies as they addressed to measure the individual customer needs and wants
from the products.
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Monitoring and Controlling:
The concept of monitoring and controlling is the process of mapping the performance
along with undertaking the corrective actions to set the target business for reaching its goals. In
the organisation context of IKEA company as they have opted for Differentiation strategy. So,
they can monitor and control in two different perspective . First, IKEA venture need to identify
the important factors in product differentiation and setting a criteria of performance productivity
increases, training requirement to the employees for their efficiency improvement aspect and
keeping the records of financial data from previous and current basis. The influence of control
commence by preparing a strategic business plan for IKEA company as they can evaluate their
major key development areas, enhance to control the uncertainty through financial crises as well
as losses and focuses to more in profit maximisation. To improvise the growth of the company
need to maintain the profit and sales margin as it will generates the productivity and better
outcomes.
CONCLUSION
On having detailed accessible of the report about the Business Strategic is commenced through
evaluating the different approaches the implementation of the managerial aspect regarding with
mapping the situational based analysation on company’s background basis through describing
about the mission, vision and objectives along with macro environment analysation which
propounded related with the external forces which effect the organisation performances as there
is support of Pestle analysation. Apart from it the Internal assessment suggests the VIRO Model
which emphasis the product and organisation performances in the competitive market through
different categories. The final part of this report is come across to getting Porter five forces
examine which emphasis about the threats and probability of sustainability in the competitive
market and Porter Generic model is for making effective business plan.
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