Business Strategy: Analysis of IKEA's Macro Environment and Internal Capabilities

This report provides an analysis of IKEA's macro environment and internal capabilities, including a PESTLE analysis, stakeholder analysis, resources based review analysis, VRIO analysis, SWOT analysis, and Porter's five forces analysis.

Business strategy

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...............................................................................................................................................3
Company overview......................................................................................................................3
PESTLE Analysis........................................................................................................................4
Stakeholder analysis....................................................................................................................5
Task 2...............................................................................................................................................7
Resources based review analysis.................................................................................................7
VRIO of IKEA.............................................................................................................................7
SWOT analysis............................................................................................................................8
Task 3...............................................................................................................................................9
Porters five forces........................................................................................................................9
TASK 4..........................................................................................................................................11
Strategic plan.............................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is considered to be the aspect of companies with the set course of actions or
decisions which is helpful in assisting the specific level of business objectives in perfect manner.
In addition to that, business strategy has the set level of competitive moves along with action in
order to attracts their customer to compete successfully with competitor by strengthening the
performance and more level of organizational goals achievement. Ikea is the globally recognized
firm which is being known for its low prices along with innovative designed furniture ( Pagliari
and Moxon, 2020). In ths report there will be clear discussion of the influence of macro
environment on the business IKEA along with critical evaluation of internal environment and
respective capabilities. Hence the business target will be identified as the long-term strategic
game plan which have been designed to achieve set level of goals and objectives. The report will
also be extended to the application of porter five model to the appropriate implementation of the
strategic direction plan in order to have the improvements in competitive edge.
MAIN BODY
Task 1
Company overview
IKEA is the internationally known as the home furnishing retailers which is growing rapidly as
the world largest level of furniture retailer recognized by the Scandian style. The majoritic of the
furniture is the flat pack which is ready to assemble with more level of ranges including more
level of home furniture and accessories in perfect manner. The company have ranged in more
than 9500 variety of products with more level of wide ranges available in IKEA stores along
with online through IKEA websites in perfect manner.
Vision
The company vision is to create a better every day for the many people, customer along with the
co-workers who work as suppliers with company.
Mission
The company want to support the vision by the offering the wide ranges of well-designed
functional home furnishing products at the low prices in order to increase the level of
affordability.
Business idea
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The business idea is to have the creation of product with respective beautiful design, good
function along with sustainably and quality which can be available at lower price. The firm have
the call for democratic deigning which believe.
PESTLE Analysis
As the IKEA is complicated firm with one stop for the all the needs household needs with
cultural insensitivity with in regards to the resulted level of customer injury or death (Eskerod
and Larsen, 2018). The company is the old as IKEA which is serving the customer since the
year 1943 have been bound with varsity of problems in which pestle analysis will be helpful in
uncovering the more level of recent conversion along with respective growth and challenges.
Political factor
The firm is facing the political situation in the markets as the impact of government attitude
towards the brand and political stability. This have inclusion in level of bureaucracy, degree of
corruptions with import restrictions to be operating as the global furniture. The company have
been imprisoned with the with political issues on political ground was the using of prison labour
at manufacturing sites. There is policy of visiting production facilities to control working
processes, access to East German suppliers had been restricted. On the other hand, furniture’s
retailer has been engaged in the lobbying activities which significant considered o be lower to
the lobbying spending of the other multinational companies in similar sizes.
Economic factor
As the economic factor the macroeconomic situation and the consumer spending have the major
level of impact on company performance. Hence there is the negative level of impact of crisis for
the IKEA which is been extended to the other countries due to the cost leadership strategy of
business (D’Agostino and et.al., 2020). In addition to the changes in currency have more level to
be affected as fluctuation in between EUR and USD and other major currencies due to the global
scale of business operations. In addition to Fluctuations of costs of raw materials such as wood
and metals IKEA uses is a major economic factor that also impacts the business significantly.
Social factor
Knowing the local culture is the rule of every business should follow b marketing each and
every material as the efforts of IKEA have not well received. The company have the following
mistake such as putting the homosexuality in the Russian catalogue where is is considered to be
very shameful along with putting women on the Saudi Arabians catalogue which have resulted
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the fire in west. The company is suffering from many disgruntled complaints and one star review
due the fault in delivery and receiving mor level of bad press.
Technological factor
Paper catalogue is still having the major offerings by IKEA along with more level of promotions
with literally fingers over smart phones to check out the offering online. the IKEA have provided
the current offering, sales and more level of home décor on website to provide significant level o
realistic experience to the customer and increase satisfaction. This have led to the increase in
new review, mouth referrals and brand loyalty
Environmental factor
The firm have put into all around the $1 billion for renewable energy in lower economic
countries with the clear aims to have in store to be fully renewables (Vargas-Hernández and
Garcia, 2019). They are more investing in solar and wide panels by shifting materials to be
taken form the sustainable resources.
Legal factor
The firm IKEA have the ned to follow the abundance of the laws and regulations as they are the
staying up with physical stores will have the need to update the labour laws are essential. The
firm have needed with poor quality of products which have clearly resulted with death and
injuries. As per the law suit, it is essential to recover the monetary which is helpful in protecting
the reputation.
Stakeholder analysis
It is the process of proper level of identification of the people whose level of participations,
interest have the impact on the projects along with proper level of determinations to involve the
best level of communication to the group in through manner.
IKEA company have the internal and external stakeholders as the former one has the
consideration of employee, manager and owners. On the other hand, the later one will have
discussion on the supplier, consumer and community.
Internal analysis employee has the keeping the same level of strategy with operations. There is
need to bring day to day operations for building strong level of relationship. On the other hand,
managers have the build the naturel 2-way communication with respective employees in order to
improve he power wisely.
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On the hand, external analysis has the supplier in which there are large om number indeed
needed the good level of communication for day to day meeting and local supplies near the
suppliers. In addition to customer is the crucial parts which have the power to change whole
organizations image so need to have communication indifferent way with the help of marketing.
The management skills along with capabilities are more pioneering the company to be the part
as most powerful entity (Li and Zhang, 2019). The company is sacksful in maintains the
competitive edge due to more level of loyal customers. In addition to that employee of company
is working more with efforts to have the satisfaction of demand to create more level of value in
IKEA. The suppliers and the stakeholders have been considered to be part of additional factors to
celebrate the success of IKEA. On the other hand, community have the ned for location starry in
order to work in hand in hand with level of environmental organization the selective level of raw
materials and environments friendly aspects.
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Task 2
In addition to that IKEA is the existence of global homes which have the inclusion of respective
heritages which is helpful in bringing the positive level of impact on people and respective
planet. The company have the passion to bring life in homes as the company believe that culture
is being built on the enthusiasm, togetherness and a “get-it-done” attitude. The firm is constantly
looking for the innovative way to do things which create more level of affordability to everyone.
Resources based review analysis
The company is more level of selecting the appropriate level of feasible position when it has
been identified as the time of delivery items.
the firm have the properly allocation of ware houses with smart locations in different sector to
have more level of control over the greater activities. The strategy has the proper analysis of the
deploying of different resources to come with processing time and the queue of various action in
perfect manner (Wu, 2020). The staff of IKEA is being roasted in order to have the completion
of the customer respective orders firm the respective picking area. The resources are considered
to b stimulated at the higher level which have been applied with the detailed level of application
in appropriate working schedule. Tangible resources of the IKEA are such as the wood, cotton,
waste and food.
VRIO of IKEA
On the other hand, VRIO of IKEA is helpful in the analysing the strategies which is been used
by the company in the market to gain more level of competitive advantages which is being
outside the original area. The analysis VRIO stands for the
Valuable- this have the allowing to IKEA in order to have the differentiation for the organization
form the respective competitors as more level of innovations of the successive business model
and the value chasing have allow eth firm to have the production in the democratise design. The
firm have the creation of product with respective beautiful design, good function along with
sustainably and quality which can be available at lower price. The firm have the call for
democratic deigning which believe.
Rare
In this respective industry, the other competitors are managing to have more accurate level of
deign as per the demand and needs of customers which can be followed having the process. This
is helpful in making customers make enjoying the company. It is very rare to have the finding
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out of valuable and unique level of combinations with respective to good quality, price in more
way of adding the inexpedient level of shopping experience in perfect manner.
Imitability
On the other hand, the competitors will always be being behind there more level of experience
curves. As there nevertheless, competitors have the more level in right to combination with
accurate money skills and tomes with application towards the corporate culture which have
eventually led to make the imitate way to the long term.
Organization
The firm IKEA have bene recognised in the market for the longer period of times with is helpful
to the firmer in making string level of presence of brand in order to make the firm successful in
the different countries. The firm is successful in managing their hyper dynamic t the different
cultures around the world by turning out the threat into the significant opportunity. Even though,
the same application of culture is having the willingness to work along with participating them
with respective value chains. The firm have managed in the Saudi Arabi along with Russia
homosexuality concept.
SWOT analysis
The analysing through the application of different tools will be helpful in making proper level of
strategic planning (Ng, 2019). In addition to which the SWOT analysis will be used which is
clearly based on the external and internal analysis to have the conjure factor which can have the
effecting of business to take major level of adage of different opportunities along with managing
the threat which have been discovered on the basis of external environment.
Strength
The strength of the company is the clear and worldwide brand images which is helpful in
attracting more level of key consumers groups in perfect manner. The firm has it well defined
marketing strategy in order to have approach in retailing by deadly targeting there customer with
pioneering simplicity. The firm have the significant concept of translating the product array
which is leading to the humungous cost reductions in becoming the world leading retailer of
furniture in upcoming suture.
Weakness
The existence of large global business makes its difficult for the firm to maintain the quality
control concept which clearly signifies in weak leak of the supply chain. The company tries its
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best to have the implementations of the uniform quality level across the wide range of products.
But it is turning out to be difficult day by day. The firm have the obsessive control over the cs
leadership which have the caper impact of firm portability. There are environmental concerns
about IKEA’s operations and the company faces challenges in communicating and articulating
its environmental policies to its customers, shareholders, and other stakeholders.
Opportunities
The firm have the green business mode as the huge level of opportunity which is more level of
supporting in the ethical consumers as they are aware as the environment conscious. This can be
chance or the clear opportunity to be tapped by the company in gaining competitive advantage.
The raid increases for the demand of the low-cost merchandise with present finance state of
global economy. This have resulted the consumer for opting the low cot goods rather than
shopping of expensive store.
Threat
The change in level of social trends have the deescalate the amount of the first buyers which are
considered to be coaming it he grousing market. In addition to the market forces and imitated
concepts are growing the part of compete retailer as the mainstream retailer to the mirror o
model. In additions to the economic factor the global level of financial crisis has the reduced
level of disposal in comes by the increase in customer spending.
Task 3
Porters five forces
This is the model that is used by companies to analyse sit position in external market.
Companies need to understand situation of suppliers, customers and other aspects in order to
sustain in market for longer duration. IKEA is the popular retail firm that offers high class
furniture to global consumers. It has strong financial position and leading the industry as well
(FIVE FORCES ANALYSIS OF IKEA, 2018).
Bargaining power of suppliers
Retail sector is the generating huge profit in country but there are many suppliers those
which are offering quality material to manufactures. Hence power of suppliers is very low.
IKEA has strong market position and financial position, it can switch suppliers if it is not
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satisfied with the material provided by suppliers. Hence IKEA has made rules and regulations for
suppliers and when particular supplier is offering goods according to these practices then it
makes them regular suppliers. This develops strong bonding with its suppliers this aids business
in gaining success in market.
Buyer’s power
Customers are the most essential stakeholder of company, every firm always aim to retain
its loyal consumers. IKEA always take care of customer’s needs but still power of buyers is very
high. There are many furniture companies that are giving competition to IKEA. If these
companies are offering better quality products to them at affordable prices then they may switch
the firm. Hence it is essential for IKEA to keep its users satisfied always to remain in
competition always. IKEA has made effective pricing strategy and also uses digital marketing
tactics to make its consumers happy. This helps the firm in attracting more consumers and
controlling over bargaining power of consumers (FIVE FORCES ANALYSIS OF IKEA, 2018).
Threat from substitute products
IKEA does not really have threat from substitute products hence it is low. As substitute
products can not compare with its quality and pricing. Brand name of firm is very high hence
consumers trust on the company and chose IKEA over other substitute companies. Customer
service of company is very fast that develop its unique brand image in market.
Threats from new entrants
The threat from these new entrants is very low. These new ventures are unable to invest
such high amount hence their sustainability is really hard. Apart from this, IKEA is the well
known brand hence new companies can not give competition to the firm in market. Hence people
have trust on it and they frequently buy its products.
Competitive revelry
Competition is very high hence risk or threats from these competitors are moderate or
high. Though IKEA has great market position but other companies are also offering amazing
quality furniture to its buyers. Reliable image of IKEA make it popular among consumers.
Marketing strategy of IKEA is very good that gain attention of mass audience. Argos etc are the
big competitors of IKEA those which have great position in market. IKEA always takes care of
quality of products and resolving complains of its consumers soon so that it can maintain
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competition in market successfully. This strategy of business helps the company in gaining
success.
TASK 4
Strategic plan
Vision Vision
The company vision is to create a better every day for the many
people, customer along with the co-workers who work as suppliers
with company.
Mission Mission
The company want to support the vision by the offering the wide
ranges of well-designed functional home furnishing products at the
low prices in order to increase the level of affordability.
Objectives To provide high quality products to customer.
To maximize the financial return towards the stakeholders.
To have effective developments of the customer expectation.
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Strategies
( Based on Suitability,
Acceptability and
Feasibility)
This is the marketing planning to have the determination of chain
for product and market strategy. The four category is consisting of
the market penetration, product development, market development
and diversification.
Market Penetration- this have implied to be selling the existing
products existing which is use by IKEA at aggressive level.
Effective level of strategy has the IKEA catalogue playing a
particular role as instrumentals role increasing the efficiency the
market penetration.
Product Development- this have involvement for selling the
products into existing market a it is one of the major growth
strategies by launching 2500 new products every year (McNamara.
and Descubes, 2016).
Market Development- as this involves new market for existing as
the firm is world largest market development extensively. The
company is more focus to enter the developing markets at short and
medium term.
Diversification- this finding of the new product into new market
which is having major risk. In this company have few levels of
experimentation at occasion level.
Tactics
( Marketing Mix)
Product- IKEA offerings can be broadly divided into outdoor
furniture, baby and children’s products, eating, bathroom stage,
desks, mirrors, beds and mattresses, chairs, cooking, clothes
storage, decoration, leisure and safety products.
Price- the firm have the price penetrating strategy as various global
chains as well as local super market. The company want to support
by offering the wide ranges of well-designed functional home
furnishing products at the low prices in order to increase the level
of affordability.
Place – the firm have the global level of network with huge
volumes in the manufacturing and more flat packages. The
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company is procuring the material with supply chasing to have the
reduction in tradition cost. The firm have only websites.
Promotion – the firm will have the major level of focus on the
digital marketing strategy along with support of traditional tools
that is such as the TV, print, online ads, billboards etc. the firm will
also have the launching of the wide level of marketing campaign
as problem which is being faced by the people ad offering
solutions’
Implementation/
Control
(Resource Allocation
and Control Measures)
The balance score card will be implemented to have proper
distribution of strategies to have the effluvial level of development
of various strategies in more appropriate manner (Jin-Yuan and
et.al.,2016). The perspective wilt be financial, transliterate
business process, employees and growth perspective and the
customer.
Evaluation The evaluation will be done through the implementation of key
performance indicators which is helpful in having proper level of
stability by reassuring the standard level of performance.
CONCLUSION
From the above fil, it can be Ikea is the globally recognized firm which is being known for its
low prices along with innovative designed furniture. The company have ranged in more than
9500 variety of products with more level of wide ranges available in IKEA stores along with
online through IKEA websites in perfect manner. The IKEA have provided the current offering,
sales and more level of home décor on website to provide significant level o realistic experience
to the customer and increase satisfaction. The strategy has the proper analysis of the deploying of
different resources to come with processing time and the queue of various action in perfect
manner. Even though, the same application of culture is having the willingness to work along
with participating them with respective value chains. The firm have managed in the Saudi Arabi
along with Russia homosexuality concept. Brand name of firm is very high hence consumers
trust on the company and chose IKEA over other substitute companies. The company want to
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support by offering the wide ranges of well-designed functional home furnishing products at the
low prices in order to increase the level of affordability.
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McNamara, T. and Descubes, I., 2016. Can IKEA adapt its service experience to India?. Emerald
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