Impact of Macro-Environment on Business Strategies of IKEA

BUSINESS STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Impact of macro-environment on the organisation and its strategies..........................................3
Stakeholder analysis....................................................................................................................6
TASK 2............................................................................................................................................8
P 2 Assess the internal environment............................................................................................8
TASK 3..........................................................................................................................................10
P 4 Models, theories and concepts.............................................................................................10
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Every company develops its own strategies of business in order to achieve its short-term and
long-term goals. Business strategy is basically a long-term plan which a company creates for
achieving the organisational mission. It includes the objectives and goals of the company, the
type of products and services which the company plans to deliver, the target customers whom the
company wants to sell the products along with the markets in which the company serves in order
to earn much profitability (Vahlne and Jonsson, 2017).
IKEA is a group of Swedish companies which operates around the world and has its
headquarters in Netherlands. It deals in designing and selling of ready-to-assemble furniture,
appliances used in kitchen, home accessories and provides home services. Since 2008, it has
been the world’s largest retailer of furniture. It has more than 420 stores which performs its
operations in more than 50 countries. The company is famous for its innovative designs in
different furniture types and appliances. Also, the interior design work performed by the
company is eco-friendly which is also its strategy towards sustainability (About the IKEA group,
2019).
The report will analyse the impact of macro-environment factors and the stakeholders by using
the PESTEL and stakeholder analysis for developing effective strategies and decisions of
strategic management. Furthermore, the internal environment of the company will also be
evaluated by doing SWOT analysis along with Resource Based View for analysing the
competition in the markets. It will also use Porter’s Generic Strategies for developing strategic
management plan which includes various strategic directions.
TASK 1
Impact of macro-environment on the organisation and its strategies
As the company performs its operations in different countries, it is important to analyse the
external environment to set the goals and develop strategies accordingly. The PESTEL analysis
is basically a tool or can be considered as framework which helps in analysing the impact of
macro-environment factors on the company and its strategies (Frue, 2018). The impact of the
PESTEL factors on the strategic development of IKEA is as follows:

Political: The company must abide by all the regulations of the country in which IKEA operates.
Some countries have similar laws and the political influences while the other have different
regulations. It is sure that the companies benefit from the political stability of the country as the
economic stability is impossible without it. It is also possible that IKEA in order to expand itself
in some location can lose profits because of the restrictions imposed by the government. Also,
the government if unfriendly can impose restrictions on the trade, importing and exporting
foreign goods which is necessary for the company to remain stable (Ehsan Ullah and et.al.,
2016). But, IKEA can make use of this and must make stronger relationships for opening
international brands and also must move to Asian markets which can be an effective strategy to
minimize negative effects of these political factors.
Economic: The IKEA’s economy is susceptible to the to the economy of the world. Companies
like IKEA are suffering from the recession of 2007. That time, many people lost their jobs. For
this, the company witnessed that the consumers were making conscious buying decisions. The
people considered the furniture as the need rather than the luxury (Suárez-Ruiz, Zhou and Pham,
2018). After observing the needs of the people of upgrading mattress and couch, the company
made its price relatively low in order to attract the customers who want inexpensive things but at
the same time stylish. IKEA is influenced by strong and weak dollar. But fortunately, the
economy has strengthened and the jobs are opening up at a high pace which make the company
able to accept the challenges in order to increase the sales.
Social: Along with tailoring the products to the customers, IKEA must also focus on not
offending social values. Social values of every country is different. For example, the IKEA has
developed a strategy to remove the same-sex couple from its magazine as in Russia
homosexuality is considered shameful. But this created a problem when it was accepted overseas
except Russia. This made the company in dilemma (Garnier and Poncin, 2019). The main aim of
the company is to earn maximum profit. The social factor also impacts the company as it gets