Evaluation of Macro Environment and Internal Capabilities of IKEA

Business strategy:
retail sector

Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Evaluation of macro environment.........................................................................................1
TASK 2............................................................................................................................................5
P2) Internal environment and capabilities...................................................................................5
TASK 3............................................................................................................................................7
P3. Porter's five Forces model.....................................................................................................7
TASK 4............................................................................................................................................9
P4) Strategies and theories to attain the business goals by strategic planning............................9
CONCLUSION..............................................................................................................................11

INTRODUCTION
Strategies and planning are the important term that uses to run the business and increase the
organisational productivity in competitive business environment. It can be defined as
combination of all decisions which is taken by owners in order to run the business continuously.
In the field of management and corporate world management are performing the functions and
increase organisational image by offering variety of products and services (Biodi and Sanawiri,
B., 2017). It is important for organisation to make planning which can help to deal with problems
and give guidance to perform well. To understand about this IKEA been taken that is Swedish-
origin Dutch-headquartered multinational group that designs and sells ready-to-assemble
furniture to customers that attracts customers and increase performance. This helps to increase
the organisational productivity. This report covers
TASK 1
P1) Evaluation of macro environment
About organisation – IKEA is a multinational group that designs and sells the furniture
with best quality and designs that can be directly assemble and increase the performance. This is
larger size organisation that is selling the products and furniture to customers. This organisation
is running business by operating stores at different places that can help to increase the brand
image. It was founded in 1943 and famous to make reputed home furnishing brands in world.
Vision – “To create better everyday life for many people.” This increases living standard
of people by offering better quality of furniture and appliances.
Mission – “ To provide functional home furnishing products at prices so low that many
people can afford them.”
Goals – The goals of IKEA is to increase the sale, customers and productivity in
competitive business environment (Dawson and Mussolino, 2014).
Objectives - IKEA’s objectives is to bring new technology for designing furniture and
increase the competitive advantages.
PESTLE Analysis – This is a framework that states the factors which affects the business
organisation and its operation. These is important for organisation to analysis the external
environment so that business can be operated effectively and manage the good performance. A
PESTLE analysis for IKEA organisation has been defined that impacts on operation such as:
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Political factor – This factor is related to political stability that regulations that levied on
business organisations for the purpose of operating. IKEA is operating business successfully as it
is getting the support of government that reduce all restrictions to import and export the goods.
According to 2019/20 it has seen that IKEA is growing its business by entering in to new
countries and selling its designable furniture to customers. This organisation is operating
business in more than 41 countries as having government stability that leads to economic
stability. Now, this organisation is planning to emerging Asian market by increasing presence of
brand that has affected business positively (De Beelde and Tuybens, 2015).
Economical factor – This factor states inflation rates, interest rate, GDP rates and
population that is related to economy. The economic condition of any country decided how much
profits and revenues a business can earn and affects the buyer’s buying power. After Brexit the
economical condition is reduces which affected the buying power of customers. Due to this
reason, people have lost their jobs in larger number that has cut down the living cost. This factor
has affected the IKEA organisation as customers do not get ready to buy the furniture and
appliance easily. To improve the economic condition and selling the products organisation has
provides employment and selling their products at low prices that can help to improve the
business performance (Jeston and Nelis, 2014).
Social factor – This factor involves society and culture that increases the understanding
of people and their needs. It is important for any organisation to go international there us need to
understand the local and little nuance that can help to establish a business smoothly. This factor
affected the chosen organisation for instance, IKEA is not always got local nuances right that
bring the company under fire for photo shopping women out of its catalogue in Saudi Arabia that
has created risk for organisation to operate business. In this, IKEA has to understand the culture
in different country in better ways that can help to operate and attracts the customers effectively.
Technological factor – In changing environment, technology is increasing rapidly
which needs to adopt by companies in order to run and maintain a competition in business
environment. All business concerns are using technology from finance to marketing, customer
services, sales and payment mode that is increases customers attentions and make available them
products. IKEA is retailing sector that make use of such factor currently in better ways as it
introduces Artificial intelligence, cognitive intelligence to understand the consumer behaviour
and provide a new level of experience. This helps to increase the business performance and
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selling activities as it helps to maintain the good relations between customers and managers
(Fuchs and Köstner, 2016).
Legal factor – This factor has created many problems for business that proves small
business cannot affords legislation and regulations because it increases cost. This factor has
affected the business of IKEA is following all legislations and labour laws that is pertaining the
business in well manner. Moreover, it is producing 30% of inventory in other country by
providing job opportunities to people and helped to increase the performance.
Environmental factor – The sustainability for organisations is important that is uses by
organisation to reduce the cost that helps to increase the brand image. IKEA is serious for
environmental factor that has grown the sustainability. For instance, it is investing in climate
changes, renewable energy and carbon emission that has impacted on business positively. By
2020, its stores comes from renewable source of energy and invested large amount in wind and
solar panels that increases the selling activities and taking competitive advantages.
SWOT analysis of IKEA in the year 2020
Strength Weakness
 IKEA has global brand reputation for
low cost furniture.
 It has integrated approach for
manufacturing and designing the
furniture.
 Strong revenue growth and
profitability.
 Vast and numerous network of ultra
modern stores.
 Furniture stores are located away from
city centres.
 Standard product portfolio out of the
globe.
 Controversies regarding safety and
durability of furniture.
 Time taken process (Kwilinski, 2018).
Opportunities Threats
 Low cost manufacturing and expansion
to emerging economies.
 Local source of raw material.
 Introduce of new designs in furniture
 Sustainability in environment due to
 Laws and regulation that needs to
follow in explored markets.
 Price wars and diversification in
strategies.
 Having many competitor in market.
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