Analysis of impact of macro environment on IKEA and its business strategies

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Analysis of impact of macro environment on IKEA and its business strategies........................1
TASK 2 ...........................................................................................................................................6
Internal environment and capabilities of IKEA..........................................................................6
TASK 3............................................................................................................................................9
Evaluation of Porter's Five force model......................................................................................9
TASK 4..........................................................................................................................................11
Models, theories and concepts to interpret strategic direction for IKEA..................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is a summary about the way an organisation will be achieving its
objectives by meeting its customers expectations in order to have competitive advantage for the
firm(Martinez-Simarro, Devece and Llopis-Albert, 2015). It leads to a systematic process that
helps the business to set its future goals in order to achieve. Present study is based on the
company IKEA that is a Swedish multinational Retail organisation founded in the year 1943.
Company is the world's largest furniture retailers and also design and sell different kitchen
appliances, home accessories and other products. Report will include mission, vision, objectives
of IKEA and will critically evaluate the macro environment factors for strategic decisions.
Further report will include internal environment focusing on strength and weaknesses and also
will use VRIO analysis in order to analyse internal capabilities. It will also include Resource
based view framework for analysing competitive analysis. Further report will evaluate porter's
five forces model for IKEA and will produce strategic direction in order to improves the
competitive edge with the use of Ansoff's matrix. At last report will create strategic plan for
IKEA with the use of Porter's generic strategies.
TASK 1
Analysis of impact of macro environment on IKEA and its business strategies
Vision:-
To create a better day to day life for the surrounding people.
Mission:-
To create better life for the customers with wide range of well designed home furnishing
products at a reasonable prices so that people are able to afford the products.
Objectives:-
 To offer wide range of home furnishing products with attractive design and good quality.
 To offer durable goods with effective functioning.
 To provide goods and services at reasonable price so that majority of people are able to
afford them.
PESTLE analysis:-
It is framework that is used by IKEA in order to analyse the macro factors that impacts
business performance. It helps the company to have deep understanding of its business and helps
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to exploit opportunities. However, IKEA is not doing the PESTLE analysis on regular bases
because of which company is facing criticism with respect to political and legal factors.
Figure:- 1
Political:-
There are some political factors like policies set by the government, foreign trade,
environment law, tax policy etc. that affects the business and its strategies. The supply chain
disruption is the major issue that affects IKEA due to political instability as many parts of supply
chain is in Europe and political disruption there may affects the activities of supply chain. IKEA
also had faced criticism from the media of china as package boxes of IKEA represented Taiwan
and China as two different and separate countries. Such critics and politics affected the
organisation in many ways(OFFER, 2017). However, company is making strategies to have
political stability and apologised for its mistakes that leads to both political and economic
stability and helped for increasing sales of the business in foreign market.
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Illustration 1: Pestle analysis