Business Strategy - Telecommunication Sector

Business Strategy -
Telecommunication Sector

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
Influence of environment on IKEA ...........................................................................................3
TASK2.............................................................................................................................................6
Internal environment and their capabilities for IKEA ...............................................................6
TASK3.............................................................................................................................................8
Outcomes of Porter's Five Force Model......................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is a method of business which is use by the organization for attract the
consumers, competing successfully in competitive market, marking company performance
stronger and for achieving the goal and target of an organization. Business strategies are also
beneficial clarity, focus and direction for business. With the help of business strategies, business
can better understand the current business environment and achieve long term business goals.
IKEA is European multinational organization which provides kitchen and home
appliances, accessories, ready to assemble furnitures and other home services. The company
headquarters is established in Netherland. In this study will describe about the influence of
environment on IKEA and also represent vision, mission and objectives of IKEA . The report
will also include the internal environment and their capabilities for IKEA . The report will also
explain about evaluating and apply outcomes of Porter's five force model. In the end of this
report will conclude the interpreting strategic directions.
TASK1
Influence of environment on IKEA
VISION: Company vision is “To create a better everyday life for the many people”
MISSION: The mission of IKEA is “To provide a wide range of well designed home furnishing
products at prices so low that as many as people can afford them”
OBJECTIVE:
 The company objective is for medium to long term target.
 Company design long strategy for organization growth.
PESTLE analysis: Pestle analysis a method which is use by the marketers or an organization for
evaluating and monitoring the macro environment components that influence and impact the on
company (Rastogi and Trivedi, 2016). The main components which are use in pestle as follows:
Political factors: Political environment means political and government conditions of a country.
Political forces are applied at every country, and they are very much responsible for affecting
business environment. Political stability of a country leads to economic stability and that is
responsible for better sales and the profit of an organization. Political factors are also impacted
and influencing the strategic decision and tactical conditions of IKEA (Zahari and Romli,
2019). Just because IKEA operate a various countries and each and every country political
stability, condition, laws and rules are different. IKEA sales their products in different country

that is impacted by the government attitude towards the foreign brand. The political condition of
a country also impact the supply chain of IKEA . Therefore, the decisions and the tactical action,
management of an organization have to design as per the government rules and norms. If a
country, political conditions stable than company can don't face any kind of problem at the time
of import and export.
Economical factors: Economic factors also play significant roles in the business climate or
environment. The situation of economical condition of country and the world decide that how
much revenue and profit will earn by the business. IKEA company is also impacted by the
economic condition of the market, but the management team of organization design and shape
the price of their products as per the people capabilities (Rastogi and Trivedi, 2016). Those price
strategies give chances to people to buy or purchases IKEA products also it will manage
company buy and sale process. Economic conditions such as recession, tax and interest rates,
low, policies extra are impacted the IKEA business environment also the strategic decision and
the tactical action.
Social factors: Social factors are those components, which are make impact and influence by the
person or individual attitude, lifestyles, personality, their belief and values. These factors are
impacted a business very deeply. For these it is important for an organization to learn about local
market before going for international market (Akter and et.al., 2016). For IKEA it is important
to learn about the social condition of a country, the age group of society, their interest, belief and
values. This awareness is helping an organization for surviving long time. If IKEA have detail
knowledge about their local market than they are efficiently sales their product in market and
customers also show their interest. But company policies and norms are differed from the
society, company products and service hurt the society people believe and values than it will be
directly impacted on the IKEA productivity and company can't survive in local market.
Technological factors: Technological factors is very important nowadays. At every level of
business such as marketing. Finance, sales etc. at all level technologies are use. IKEA is also
used various modern technology for kitchen appliances and furnitures in market. Company also
use modern technology for designing the home appliances (Zahari and Romli, 2019). But if in
condition, IKEA not adopt the integration of smart technology and features in its equipments
and products for enhancements their business, than it will affect the company production
process, marketing process and customers base. That will also responsible for creating new

competition in market. The technological factors are also responsible for influencing the tactical
action and strategic decision of company. Because, management have design policies and
procedures as per new technology.
Legal factors: Legal factors are those components, which are design and shape by the powerful
authorities and the government. Government designs these laws for betterment of the business,
their employees and for the customer. Legal factors are includes laws such as health and safety
act 1974, anti- discrimination act 2019, minimum wage act 1998 etc. Legal laws are always been
threatened for big and for huge business (Akter and et.al., 2016). Government designs those laws
and act, and company have to follow them. IKEA can face adverse implications by the legal laws
of the government if it will not follow the employment, privacy and other business related
legislations. So, it is very important for IKEA management that not happen these types of
activity in business.
Environmental factors: Environment factors earlier introduce and IKEA focus these factors
very efficiently. The environmental factor reduce the brand's operation cost and also enhance and
make strong image of the business (Zahari and Romli, 2019). IKEA actively participated in
CSR actively and donate a billion for renovation of energy and helps the poor nations. Just
because actively participation in environment welfare activities IKEA become a strong brand.
But if IKEA not participate in this activity than company not be able top caret a good image in
front of country. Being a furniture industry organisation may also utilise innovations in its raw
material instead of wood and other natural resources to contribute in environment sustainability.
It will enhance the brand value of organisation.
Stakeholder analysis: Stakeholder analysis a method for evaluating the stakeholder
identification and for examine their needs (Cuppen, 2016). It is the important part of stakeholder
management. The method use at the time of preparing for projects to find out the attitude of
stakeholder. It can be done once or on the regular bases.
Satisfy stakeholder Work with stakeholder
Investors,
Customers,
Board member and Government
CEO,
Top management,
Analysist
Monitor stakeholder Inform stakeholder

Employees,
Suppliers
Colleagues,
Team members,
Employers
Satisfy stakeholder: The very first step of these model, management of IKEA have to satisfy
the basic needs and requirements of their stakeholder such as investors, customer, board
members and the government. If company take any new action it is required that, management
must involve and consider them than took any action forward (Cuppen, 2016). If company
management not follow those terms than those stakeholders not satisfied and that will impacted
the environment of firm.
Work with stakeholder: The next step of this model is work with the stakeholder. In these step
IKEA management have to work with their stakeholder such as CEO, top management, analyst.
Because they are mange all the task and duties of company. If they have no idea about new
policies than it will impacted the environment of IKEA .
Monitor stakeholder: The another important step of IKEA management is monitor their
stakeholder. The team IKEA examine all the activities of their stakeholder such as employees
task performance efficiency and the suppliers duties.
Inform stakeholder: In the next step team IKEA have to inform about their new policies and
procedures to the colleagues, team members and employers. Because without informing them
task not efficiently perform (Paletto, Hamunen and De Meo, 2015). Also, if they have no idea
about the new project it will also influence the climate and improve the conditions of disputes.
So, with the help of these strategies will evaluate that how external or micro environment is
impacted the environment of IKEA .
TASK2
Internal environment and their capabilities for IKEA
Resource based view: Resource based view method is implies on two resources i.e. tangible and
intangible. To know the capabilities of the organization these resources can be classified in the
bases of VRIO model.
VRIO model: VRIO model is use by an organization for evaluating the firm capabilities, their
strength and weakness. These model include four important aspects such as valuable, rare,
limitability and the organizable.

Valuable: It means all the resources and assets are valuable for the organization. Those
resources make organization strong to surviving in the market. IKEA also a strong brand and
company resources are also valuable for providing them capabilities to survive in competitive
market (Lopes and et.al., 2018). If the company resources are valuable than they provide them
strength and capabilities, but in case IKEA resources are not valuable than it is weakness for
firm and be the reason for competitive disadvantages. Also, it is very important for IKEA to
long term survive in the market, constantly examine their resources for continuous changes in
internal and external environment.
Rare: Rare means only be acquired by one or few firms are considered rare. These resources
provide company temporary competitive advantage. Or other hand if more than few companies
have the some resources than it leads to competitive parity (Min and et.al., 2016). If IKEA
resources are rarer than they are provided company to strength to survive in market and also
make company capable enough. Rare resources of IKEA give a different image in the market
and also leads the new business opportunity, market to the IKEA .
Imitable: Imitability means those resources, power and assets of company that can be theft by
other company. Such as company product price, relatable packaging, product and service
delivering concepts etc. If IKEA resources are imitable than it will create the temporary
competitive advantage for firm. It is less risky concept. If IKEA resources are theft by other
company than it will increase the chances of competition in the market and organization have to
design for improving their capabilities and strength against the competitors.
Organizable: Organizable are those things which are company can use for exploit the full
competitive potential. It includes, the suppliers which can a company use for their own benefits.
But IKEA resources are very rare and also the market is also strong presence and brand
recognition, which help IKEA for successful deals in other countries.
Name of Resources Valuable Rare Imitable Organizable
Research and development Yes Yes Yes
Innovation in self assembled furnitures Yes Yes
Logo name Yes Yes

Technical advancements in its kitchen
appliances
Yes Yes Yes Yes
Raw materials Yes Yes Yes
Brand name Yes Yes
Company patent Yes Yes
Money Yes Yes Yes Yes
This resource are valuable and rare for IKEA company. These resources can be imitable or
organizable by other company.
SWOT analysis: SWOT analysis is a technique for evaluating any organization strength,
weakness opportunity and the threat (Gürel and Tat, 2017). By the swot analysis a firm can
examine their capabilities and their weaken area. With the help of swot analysis, management
also examine the capabilities and capacities of IKEA .
Strength Weakness
 Vision
 Clear concept
 Difficulty in control standards
particularly in its kitchen appliances
Opportunity Threat
 Business expansion.
 Launching new sustainable and long
lasting furniture range per market
trends.
 Imitation by other emerging
organisations
Strength: The biggest strength of IKEA is their vision. The clear vision of company increase
the value of their customers in the market (Gürel and Tat, 2017). Also, the another strength of
company is their clear concept. The clear concept translates all the services that can be built
strong relation with the consumers.
Weakness: The weak point of IKEA is difficulty to control standards across location. Just
because IKEA deals in various countries, and IKEA high and large scale business it difficult to

control standards. For this company establish uniform quality across its goods and services range
and at all location.
Opportunity: The big opportunity for IKEA is the business expansion in new market.
Company can expand their business in various countries because every country use
communication strategies. Also, the another opportunity for IKEA , is they can launch
sustainable products whose demand is rising rapidly among customers and legislative bodies.
Threat: The threat for IKEA is copyright and patent issues. The IKEA low cost business
concept has been copied or imitated by the competitors. For this company design new policies
for stay ahead form competitors. So, it is the threat for IKEA than its resources next time is not
copied by rivals in market.
TASK3
Outcomes of Porter's Five Force Model
Bargaining power of suppliers: The bargaining power of IKEA suppliers is low and company
can easily switch with one supplier to another suppliers. In this case the full power of suppliers in
hand of IKEA company (Lüttgens and Diener, 2016). Because company produce various
resources from by their own side, so the company not need that if supplier increase the price of
their raw materials. Or if any case suppliers increase their price than it is loss for suppliers
because company is in power, and they are shift to another suppliers.
Bargaining power of buyers: Bargaining power of buyers is inconsiderable in case of IKEA ,
as a strong organization they hold some important advantage which is help IKEA for focusing
upon the consumers by attracting and retaining them. Because most of the buyers demand that
low the cost, also improve the quality of products etc. and various company perform as per the
buyers. But in case all the power with IKEA (Zhao and et.al., 2016). Because IKEA provide
self assembled furniture services which is not expected by any other company and also the price
of product is nor much high. So, the in that case the power in hand of IKEA .
Threat from substitute products: IKEA has limited threat from company substitute or the
threat is low. IKEA manufacture products are unique and have various quality that no one
provide in the market. Also, the IKEA image is now become a brand in market and the
consumers show trust on organization. IKEA produce and provide various types products
under one roof. Competitors also wants to supply these type of furniture and home services in
market, but they are not reach at the level of IKEA .

Threat from new entrants: The threat from new entrant for IKEA is low to moderate. New
companies enter into the furniture market, but they are not able to impact the IKEA business
(Zhao and et.al., 2016). If new company enter the market, it will take time and also take huge
investments to grow in the market for becoming the strong brand and for grab large market
share. So, there is no threat for IKEA from the new companies who enter in furniture market.
Level of competitive rivalry: The competition rivalry is high in UK market because various
companies are available for kitchen appliances and furniture services. They are also grab some
share of market. It can be difficult for IKEA company.
Ansoff Matrix Model
The model Ansoff matrix is use by an organization for the growth by the existing
products, new products or in the new and existing market. The model includes four possible
segments of product market competition i.e.:
Market penetration: The market penetration strategy is less risky, since it invest many of the
organization present resources and capabilities. In these conditions a company wants to grow but
with the existing products and the services (Scholes, 2015). Organization, is also used this
method for grab large share market and expand their business with the same products and the
same market. In this type of strategy company main target is increasing their market share.
Market development: In this concept firms wants to grow but by the targeting its present
products and new market segments (Schawel and Billing, 2018). That concept can be successful
if firms product is strong and able to survive in new market. Because organization wants to
expand but in the new market which is more risky than market penetration. Company, use this
method for enter in new market with their same products and services.
Product development: Product development, is appropriate if the organization strengths are
related to the consumers rather than the product and services. In this situation company have to
focus upon the development in product for their existing customer base. This concept company
grow with the help of new product and existing market (Schawel and Billing, 2018). Company
can use this method for grow and expand in the same market. Just because organizations is
facing the competition rivalry in the market, then firm can use the product development strategy
for grow in the market. By the using this method company can develop their product and sale in
the existing market.

Diversification: In this concept organization expand or improve their business by the new
products and the new market (Dawes, 2018). It is very risky concept because, in this concept all
things are new such as product and market. Company have no idea about the customers. This
strategy is useful for Company if firm wants to develop something new.
TASK 4
Porter’s generic strategy
Cost leadership – The concept of cost leadership depends upon structure of the industry
including pursuit of economies along with proprietorial technological factors along with
professional raw materials. The procedure of firm must ensure they can achieve and survivor
cost leadership to provide command advantage of industrial range. These focus on accessing
capital needed for production process, effective skills required for developing innovative
furniture and home accessories along with high level expertise for effective distribution of
channels. This practice boost cutting of prices along with retaliating potential entrances, where
they offer low prices to their effective buyers, along with better insulated powerful suppliers that
can help in cutting prices defending themselves from substitute (Al-Hakim and Hassan, 2016).
Differentiation strategies – The concept focuses on development of new and effective
product that stands unique and valued among customers and other factors that involve in
competition of firm type. The supplies of product increase price as being unique because it
involves scientific research, skilled and developed team for product development along with
helping in maintaining quality of corporate maintain its reputation. The practices of
differentiation involve risks as it limits competition and customers taste. These practices boost
large buyers having less negotiation power due to few alternatives with them. They attain
advantage of passing suppliers with increase customers along with maintaining brand loyalty
keeping them away from their rivals of IKEA (Blind, 2016).
Focus strategy – The strategy focuses on narrow segment where they attempt to achieve cost
advantage or either differentiation. The use of focus strategy will enjoy customer loyalty further
discouraging other firms from competition. IKEA tend to succeed in focus strategy as they
broad range of furniture in various kid of costs involving in successfully attainment of market
factors. Firms pursue lower volume along with less bargaining with suppliers. Firms using these
practices goes through some targeted strategy. These practices develop core competencies

through entry barrier having large buyers and less alternatives. These practices defend rivals
from competing them in the operations of business (Cecere, Corrocher and Battaglia, 2015).
In order to understand applying the business strategies within the business environment. It is
important for the management to create the systematic plan for that. Before applying the
strategies of cost leadership. IKEA should need to analyse the business situation and examine
the best outcome growth. In order to identify the cost leadership company should prior to
understand the budget. On the other side, to apply the differentiation or applying the new product
within the business can helpful for the management to measure the demand and need of the
customers of IKEA from the market. It also helps to measure the growth and effective
management performance in order to get the best growth of market (Czarnecki and Dietze,
2017). Differentiation is the complex process for the management which requires deep
understanding into it which also required to understand the aim of the study and objectives to
analyse the systematic growth. Apart from this, in order to apply the strategies company also
need to develop a plan and proper identification of the external business environment. However,
such planning, organizing and evaluation techniques to better get the productive aim and
objectives in the best possible manner.
Tools and techniques for applying strategies within the management
In order to understand applying the business strategies within the business environment. It is
important for the management to create the systematic plan for that. Before applying the
strategies of cost leadership. IKEA should need to analyse the business situation and examine
the best outcome growth. In order to identify the cost leadership company should prior to
understand the budget. On the other side, to apply the differentiation or applying the new product
within the business can helpful for the management to measure the demand and need of the
customers from the market. It also helps to measure the growth and effective management
performance in order to get the best growth of market (David, 2019). Differentiation is the
complex process for the management which requires deep understanding into it which also
required to understand the aim of the study and objectives to analyse the systematic growth.
Apart from this, in order to apply the strategies company also need to develop a plan and proper
identification of the external business environment. However, such planning, organizing and
evaluation techniques to better get the productive aim and objectives in the best possible manner.

CONCLUSION
From the bases of above study it has been concluded that how internal and external
environment will impact the organization environment of IKEA . For evaluating this has been
use Pestle and Stakeholder analysis. That represent the detail about how IKEA is impacted and
influence by the macro environment. Also, in this study has been describes about the internal
environment and its capabilities for the IKEA by using the VRIO and Swot analysis. It has been
concluded the outcomes of Porters five force model and Ansoff matrix, and discus how it will be
beneficial for IKEA to survive in market. In the end of this report it has been concluded about,
various theories, model and concepts for understand and interpreting strategic direction available
in IKEA .

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