Business Strategy: Analysing Macro-Environment and Internal Environment of IKEA

BUSINESS STRATEGY

CONTENTS
INTRODUCTION.................................................................................................................................1
TASK – 1..............................................................................................................................................1
Analysing the macro-environment for determining the strategic management decision....................1
TASK – 2..............................................................................................................................................3
Critical analysis of internal environment for assessing the strength, weakness, capabilities, structure
and skills set......................................................................................................................................3
TASK – 3..............................................................................................................................................6
Devising appropriate strategies for improving competitive edge and position in the market.............6
TASK – 4..............................................................................................................................................9
Application of models, concepts & theories and devising strategic planning for Ikea.......................9
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................12

INTRODUCTION
The present dynamic as well as aggressive environment entails the centrality of key
planning and evaluation for the association. Deliberate planning is needed for the
organizations that are trying to turn into the significant player in the business. The term
strategic analysis is being alluded as the appraisal of the goal, abilities, costs and
understanding the current economic situations of the organization that structures the
substance for the advancement of the strategic procedure. In this way, it is considered as the
most indispensable device for authorizing appropriate arranging process inside the business
(Johnson, Scholes and Whittington, 2008). Considering this, the present research study
centres around offering a vital investigation of IKEA, which is a worldwide organization
established in Sweden, UK, connected with into the selling and planning of furniture, frill and
home apparatuses. The report will incorporate outer condition examination of the
organization in which it is presently working and its related issues influencing the firm. The
investigation will likewise centres around the focused interior capacities of the firm. Result
from the Porter’s five force model will also be evaluated. The last piece of the examination
will illuminate conceivable strategic plan IKEA can use for continuing and improving its
focused position.
TASK – 1
Analysing the macro-environment for determining the strategic management decision
Speaking in volume in regards with IKEA, it is a privately held international home
products retailer that is engaged into selling bathroom and kitchen items, households,
furniture and other accessories. The company was founded in the year 1943 with a main
mission to offer well-designed functional home furnishing products at affordable prices. The
vision of the company is develop a better everyday life for most of the people. Furthermore,
the objectives of IKEA is to manufacture cheap products for those people who can’t afford
expensive products (IKEA, 2013). They also make sure that the customers get everything
what they are looking for in the store. The strategic decisions and tactical actions of the
company is affected by numerous macro-environmental factors and there critical evaluation
is necessary for informing right management decisions. All these factors can be analysed by
making use of PESTLE analysis tool.
PESTLE analysis
The benefits of IKEA is profoundly affected by the rate of corporate
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Political
taxes which essentially drops down the after-charge earnings.
Further, there are numerous levies and exchange hindrances
enforced by the administration of United Kingdom which prompts
increment in the costs of products bought from different countries by
the procedure of import. In addition to this, in the decade of 1970 to
1980, IKEA has used prison labour in EAST Germany which has
developed a political controversy all across the globe. Issue in
relation with the supply chain disruption caused due to political
instability in the nation also affects the strategic decision making
process (Chen, 2016). All of these factors can impact IKEA and its
organizational strategies as well. Because of supply chain disruption
IEKA’s strategic decision-making process has been affected in
drastic manner.
Economic
The development of the economy of the country legitimately impacts the
business. There has been quick development in the economy of United
Kingdom, which is providing better expectations of living along with
expanded pace of work. This can impact overall sales of IKEA as
enhanced living standard of people of UK can help IKEA to enhance
their overall sales. Supplementary to this, the expense of work is another
factor that effects IKEA harshly. There are numerous countries, for
example, China and India where experienced workers are high in
numbers and thus, can offer more extensive overall revenue to the
company. In view of the expansion rates in the nation, the conduct of the
purchasers is distorted and there is age of avoidable deficiency of assets.
In conclusion, the market is additionally destabilized (Yip, 2004).
Social
The strategic choice of IKEA is bound to impact by the demographic
variable of the country. The maturing populace is very less that make
purchase related furnishings. Moreover, the diminished salary level of the
individuals in UK will urge them to put furniture on lower rank in their
need list. Social trends also impact the sales of IKEA as change in social
trends can decrease popularity or demand of their products or services.
Technology
Digital technology has helped the firm to reach large number of
customers and offered a more cost effective shopping experience to them.
Due to the online retail locations, there is gigantic selling activity for the
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