Assessing the Influence of Environment on IKEA: A Business Strategy Analysis

Business Strategy

Table of content
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
Assess the influence of environment on selected organisation..............................................3
TASK 2......................................................................................................................................5
Critically assessing the internal environment and capabilities...............................................5
TASK 3......................................................................................................................................7
Examine and apply the outcomes of Porter’s five force model..............................................7
TASK 4......................................................................................................................................9
P4 Apply frameworks for strategic planning in significance with business organisation......9
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................12
Books and Journals...............................................................................................................12

INTRODUCTION
Business strategy is considered as a procedure and tactics for achieving goal and
objective of organisation in stipulated period of time. It is necessary for entity to make
effective business plan in order to operate different business function in appropriate manner.
In addition to this, it is vital for business firm to adopt advanced technology in order to gain
competitive advantage over rival firm at marketplace. This report is undertaken upon IKEA.
It Is the Swedish multinational company which is located in Delft, Netherland. This
organisation was founded by Ingvar Kamprad in the year of 1943. The manager of this firm
focuses on providing wide variety of products and services such as home wares, food
products as well as furniture to its customer. In this assignment, PESTLE and SWOT is
adopted for assessing internal as well as external environment which imposes direct impact
on performance level of business organisation (Aldea, Iacob and Quartel, 2018). And also,
Porter five force models are used for making effective strategies as well as tactics for
company. Apart from this, Porter generic strategy is used for providing differentiates
products to its customer at affordable cost.
TASK 1
Assess the influence of environment on selected organisation
It is necessary for business firm to make strategy and tactics for increasing efficiency
and profitability of organisation. In addition to the, the business environment is dynamic,
therefore, it is vital to adopt changes related to finance, marketing and human resource for
success and growth of organisation. The manager adopts PESTLE Analysis for assessing
external environment which enforces direct influences on performance level of firm which is
going to be discussed below:
PESTEL Analysis:
PESTLE Analysis is the framework which is used for identifying external
environmental factor enforces direct influence on performance level of business organisation.
It helps in understanding of appropriate assessment of business as well as strategies at various
levels. In addition to this, it is necessary to enhance the awareness regarding market trends in
order to operate their company at global level (Braun, Latham and Porschitz, 2016).

Political factors: Political factor included government regulations, rules, legislation
as well as regulation and many more which enforces both positive and negative influences on
productivity of business organisation. Due to instable political condition, the supply chain of
IKEA which is situated in Europe which adversely affect performance level of business
organisation. On the other hand, the company follow rules and regulation which is imposed
by government, it positively affect the productivity as well as profitability of organisation.
Economical factors: It involves exchange rate, interest rate, wages, and inflation as
well as deflation rate and so on. Due to economic recession, it decreases the income of an
individual person. And, it results in reducing the purchasing power of people of country.
Thus it imposes negative influence on sales of IKEA. On the other hand, the manager
emphasised on providing superior quality products and services to its customer at affordable
cost. Thus, it increases the brand image as well as goodwill of company in front of customer.
It helps in increasing success and growth of organisation at marketplace (Langabeer and
Champagne, 2016).
Social factors: Social factor involves religion, market trends, taste and preferences of
customer which directly affect the performance level of company. It is necessary for business
firm to identify the changing need and wants of customer in order to satisfy them. It imposes
favourable influence on profitability of business organisation. Whereas, IKEA do not focus
on local culture and heritage, therefore, it is not possible for firm to assessing the need of
consumer in an effective manner. Thus, it adversely affects the sales of company at
marketplace (Shmeleva, 2017).
Technological factors: Technology plays an essential role for success and growth of
business organisation. It is necessary to implement advanced technology in order to provide
superior quality products and services to its customer. Therefore, the manager of IKEA
adopts Artificially Intelligence in order to identify the need of customer for increasing their
experience level at workplace. Whereas, the cost of implementation of latest technology is
too high, it adds extra cost to the products and service of business organisation.
Environmental factors: Environment factor involves temperature, weather as well as
climatic condition and many more. The business firm provide eco-friendly products and
services to its customer in order increase their standard of living at marketplace. It helps in
increasing sales as well as profit of company in future period of time. Whereas, due to change