Business strategy

Business Strategy
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Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Analyse appropriate frameworks analyse the impact and influence of Macro environment
on Ikea.........................................................................................................................................3
M1 Critically analyse the macro environment to identify the inform strategic management
decisions......................................................................................................................................6
LO2..................................................................................................................................................7
Strategic capabilities of IKEA.....................................................................................................7
VRIO framework.........................................................................................................................7
Resource based framework..........................................................................................................9
LO3................................................................................................................................................10
P3 Applying Porter’s five forces model for evaluating the competitive force in Ikea business.
...................................................................................................................................................10
M3 Devise appropriate strategies to improve its competitive edge and market position on the
basis of outcome........................................................................................................................12
LO4................................................................................................................................................13
Description on use of theories, concepts and models to produce strategic management plan.. 13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17
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INTRODUCTION
Actions or decisions that are taken by company to reach their pre-defined organizational
goals in order to remain competitive in their business environment is known as business strategy
(Huikkola and Kohtamäki, 2017). Every organization needs to develop effective organizational
strategies in order to stand out in competition. Strategic analysis of an organization helps in
achieving their pre-defined goals, enhance their capabilities, strength, as well as strengthen their
overall economic condition.
This report will lay emphasis upon investigating IKEA which is a Swedish-founded
multinational group that sells ready-to-assemble furniture, kitchen appliances and home
accessories, and many other useful goods and occasionally home services. This report will focus
upon analysis of impact and influence which the macro environment has on IKEA and its
business strategies, assessment of organization’s internal environment and capabilities, and
interpretation of strategic directions available to IKEA.
LO1
P1 Analyse appropriate frameworks analyse the impact and influence of Macro environment on
Ikea.
IKEA is based on the multinational group that designs and sells large number of products such as
furniture, kitchen appliances and home accessories, among other useful goods, occasionally
home services (Park and Mithas, 2020). This company was established in 1943 by Carpenter
Ingvar Kamprad. In 2019, there are 423 IKEA stores operating in 52 different countries and their
fiscal year 2018, 38.8 billion worth of Ikea goods were sold.
Pestle analysis
The Macro environmental factors which effect on the organization in term of political,
economic, social, technological, legal and environmental. These are considered the important
factors at current scenario.
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By using PESTLE analysis, it is based on tool or platform that help for identifying the
current future of Ikea. It has been supported that increases the importance of enterprise in global
marketplace. Ikea has been increasing the production from various countries while increasing the
5-8% of production in across the world.
Political Factor
Ikea stores are opened in more than 41 countries, company must include all necessary
regulations of each. Political factor influence of enterprise regarding the bills, political instability
but that’s not all about one thing. Without economic stability, it is not possible to handle the
business performance (Moktadir and et.al., 2020). At certain level, Ikea may have faced the loss
in profitability in one location over another.
For instance, Political Factor can directly impact on the Ikea because of unfriendly
government can make exporting as well as importing foreign goods. Sometimes, Ikea depend on
the stable relationship otherwise revenue is at stake. Ikea, seeing this positive shift which is
mainly consideration of moving towards Asian markets.
Economic Factor
This type of factor is affected by international legislation, they are susceptible to entire
world economy. Even still suffering due to COVID-19 and economic recession. Many people
have been lost their job at the time. The price or cost of Ikea were conservatively. Now it adopt
the stylish approach to target more consumers. Usually, Ikea is influenced by other strongest and
weaker dollar, lose their money.
Social Factor
It is consider as important factors where Ikea can follow the specific business rules,
regulations. Not only depends upon the product to their consumer but it also avoid offending
social values. Nowadays, preference, demand of client have continuously changing so that it
directly impacting on the overall business performance (Bayo-Moriones, Galdon-Sanchez and
Martinez-de-Morentin, 2020). Ikea is mainly focused on the deliver the best quality of product
and service to their potential consumers.
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