Business Strategy

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
P1: Examine the outer factors that influence IKEA....................................................................1
M1: Analyse the macro environment of IKEA to determine strategic decisions.......................2
TASK2.............................................................................................................................................3
P2: Analysing the internal environment and capabilities of IKEA by applying VRIO model.. .3
M2 : Evaluating the internal environment to assess strengths and weakness of an
organization's internal capabilities, structure and skill set..........................................................5
TASK3.............................................................................................................................................6
P3 : Applying Porter's Five Forces model in evaluating the competitive forces of IKEA.........6
M3 : Strategies to improve competitive edge and market position.............................................7
TASK4.............................................................................................................................................7
P4: Explain theories for strategic decisions of business with considering strategic business
plan..............................................................................................................................................7
M4: Formulate a strategic business plan for IKEA.....................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is defined as the process including different activities and decisions that
helps in guiding effective strategies for achievement of business objectives in efficient and
effective manner (Mintzberg, Ahlstrand and Lampel, 2020). Business strategies plays significant
role in protecting or securing business from other players within the industry.
IKEA is Swedish company based multinational group of furniture, home & kitchen
appliances and accessories. The company wads developed through “ Ingvar Kamprad” in 1943
and the headquarter of it is located at Deft in Netherlands. IKEA is a great brand which deals for
helping regular life of general public in terms of making it better.
This report is based on the business strategies for sustainability and growth of IKEA. For
the purpose different forces of internal as well as external analysis of respective company are
considered in the report. Further effective strategies for competitive benefits for respective
organisation are explained. Moreover, theories for interpretation of strategic direction of business
and plan for business strategy are discussed within the report.
TASK1
P1: Examine the outer factors that influence IKEA.
PESTLE Analysis:- This is an important model that helps in evaluating external
elements that has prominent impact on respective organisation (Alam and et. al., 2019). It is
very important to identify and analyses external factors for attainment of specific and strong
position within target market. In respect of IKEA following are the elements of pestle analysis
that impacts its business:
Political: This component of pestle analysis includes taxation, political decisions and policies of
a nation, foreign trade policy of a country and more that affects the performance and expansion
of a business in a dynamic way. Political stability of United Kingdom impacts positively in
terms of respective organisation, due to its immense contribution in country's development
through donation and has effective relationship with government. Thus it creates opportunities
for future expansion o0f business within the country.
Economical: This element of external environmental analysis of respective business includes
economic growth of country, rate of tax & interest, economic recession and inflation rate,
population & employment rate of nation etc. that has an an impact on business entities. In terms
1

of respective business positive impact based on this factor due to offering of effective products
and goods at lower and affordable prices that helps in rising the living standard of society and
leads to economic growth of nation.
Social: It consists as the components such as- geographical & regional disputes, values and
beliefs of people and other that affects the business in huge ways. In terms of respective business
social factor has negative impact on its business due to its display of couple of similar sex in
Russian magazine. It is essential to take care of social beliefs and values also as per this element
of pestle analysis. This leads to generate effective opportunities for business in terms of
expansion and growth.
Technological: This element of pestle analysis includes adoption of information and digital
technology within process and products of business for successful operation and growth of
business in native country as well as expanding in different countries. With respect to IKEA
technological concerns of UK' s government impact in positive ways due to its use of high
technology and robotics in production, operation, distribution process of business that plays
prominent role in terms of formulating effective opportunities for growth.
Environmental:It is also an significant factor or component of pestle analysis includes
environmental rules & regulations of a country. In terms of UK government is very strict about
these rules and laws (Ansoff and et. al., 2019). IKEA focuses on using of renewable sources of
water and energy resources so as to protect the environment that has prominent impact on
business. It helps in creating opportunities for long term growth.
Legal: This Factor of pestle analysis shows fundamental rules and legislations of a country such
as- labour laws, consumer protection laws, gender equality laws etc. that influence business
position and growth. In context of respective organisation this factor has negative impact thus, it
creates threat for business expansion due to ineffective quality of its products and goods. Thus, it
is necessary for firm to concentrate on increasing the product quality.
M1: Analyse the macro environment of IKEA to determine strategic decisions.
As per above discussion it is observed that factors of macro environment impacts long-
term sustainability and growth of business in terms of opportunities and threats. For instance
IKEA focuses on building effective and better relationships with government through giving
donation for social welfare of poor people, generating employment for skilled or non-skilled
employees thus, it has immense support of government in terms of tax benefits etc. although is
2