Business Strategy of IKEA Assignment

Added on - 21 Feb 2021

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BUSINESS STRATEGY
CONTENTSINTRODUCTION.................................................................................................................................1TASK – 1..............................................................................................................................................1Analysing the macro-environment for determining the strategic management decision....................1TASK – 2..............................................................................................................................................3Critical analysis of internal environment for assessing the strength, weakness, capabilities, structureand skills set......................................................................................................................................3TASK – 3..............................................................................................................................................6Devising appropriate strategies for improving competitive edge and position in the market.............6TASK – 4..............................................................................................................................................9Application of models, concepts & theories and devising strategic planning for Ikea.......................9CONCLUSION...................................................................................................................................11REFERENCES....................................................................................................................................12
INTRODUCTIONThe present dynamic as well as aggressive environment entails the centrality of keyplanning and evaluation for the association. Deliberate planning is needed for theorganizations that are trying to turn into the significant player in the business. The termstrategic analysis is being alluded as the appraisal of the goal, abilities, costs andunderstanding the current economic situations of the organization that structures thesubstance for the advancement of the strategic procedure. In this way, it is considered as themost indispensable device for authorizing appropriate arranging process inside the business(Johnson, Scholes and Whittington, 2008). Considering this, the present research studycentres around offering a vital investigation of IKEA, which is a worldwide organizationestablished in Sweden, UK, connected with into the selling and planning of furniture, frill andhome apparatuses. The report will incorporate outer condition examination of theorganization in which it is presently working and its related issues influencing the firm. Theinvestigation will likewise centres around the focused interior capacities of the firm. Resultfrom the Porter’s five force model will also be evaluated. The last piece of the examinationwill illuminate conceivable strategic plan IKEA can use for continuing and improving itsfocused position.TASK – 1Analysing the macro-environment for determining the strategic management decisionSpeaking in volume in regards with IKEA, it is a privately held international homeproducts 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 mainmission to offer well-designed functional home furnishing products at affordable prices. Thevision 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 affordexpensive products (IKEA, 2013). They also make sure that the customers get everythingwhat they are looking for in the store. The strategic decisions and tactical actions of thecompany is affected by numerous macro-environmental factors and there critical evaluationis necessary for informing right management decisions. All these factors can be analysed bymaking use of PESTLE analysis tool.PESTLE analysisThe benefits of IKEA is profoundly affected by the rate of corporate1
Politicaltaxes which essentially drops down the after-charge earnings. Further,there are numerous levies and exchange hindrances enforced by theadministration of United Kingdom which prompts increment in the costsof products bought from different countries by the procedure of import.In addition to this, in the decade of 1970 to 1980, IKEA has used prisonlabour in EAST Germany which has developed a political controversy allacross the globe. Issue in relation with the supply chain disruption causeddue to political instability in the nation also affects the strategic decisionmaking process (Chen, 2016).EconomicThe development of the economy of the country legitimately impacts thebusiness. There has been quick development in the economy of UnitedKingdom, which is providing better expectations of living along withexpanded pace of work. Supplementary to this, the expense of work isanother factor that effects IKEA harshly. There are numerous countries,for example, China and India where experienced workers are high innumbers and thus, can offer more extensive overall revenue to thecompany. In view of the expansion rates in the nation, the conduct of thepurchasers is distorted and there is age of avoidable deficiency of assets.In conclusion, the market is additionally destabilized (Yip, 2004).SocialThe strategic choice of IKEA is bound to impact by the demographicvariable of the country. The maturing populace is very less that makepurchase related furnishings. Moreover, the diminished salary level of theindividuals in UK will urge them to put furniture on lower rank in theirneed list. Social trends also impacts the sales of the firm this should bekept into consideration.TechnologyDigital technology has helped the firm to reach large number ofcustomers and offered a more cost effective shopping experience to them.Due to the online retail locations, there is gigantic selling activity for thedealer. In addition, the usage of social media as flighty advertisingchannel by majority of its rivals will essentially present incredible risk toIKEA.EnvironmentalFor the firms like IKEA, environmental factors are considered quiteimportant for their sustenance (Takreem, 2015). The company hasinvested in climate around 1 billion dollar towards the renewable energy.In addition to this, they are also making efforts to source cotton and wood2
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