Business Strategy: Retail Sector

BUSINESS STRATEGY: RETAIL SECTOR

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Company overview.....................................................................................................................3
Pestle analysis ............................................................................................................................4
Stakeholder analysis of IKEA ....................................................................................................5
TASK 2............................................................................................................................................6
SWOT analysis of IKEA ............................................................................................................6
VRIO framework of IKEA .........................................................................................................7
TASK 3............................................................................................................................................7
Porter's five forces model............................................................................................................7
Ansoff's matrix to produce valid strategic directions..................................................................8
TASK 3..........................................................................................................................................10
Porter's generic strategies to create strategic plan for organization..........................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy referred as the action course or the decisions set which helps the
company in attaining particular goals and objectives of the business. In other words, it is
considered as the long term action plan that is designed for achieving specific goals or the
objectives. The present study is based on IKEA, an international home furnishing retailing
company which is well-known for its Scandinavian style. Furthermore, the study provides deeper
insights towards the macro and micro environmental analysis of the company by applying
models like PESTLE, SWOT and VRIO. Moreover, the report highlights growth strategies by
applying ANSOFF model based on Porters five forces.
TASK 1
Company overview
Basis IKEA
Introduction It is the largest international furnishing
company that has grown since 1943. The
majority of the IKEA's furniture are seen as
flat-pack and ready to be assembled which
helps the consumers in using it with ease.
Vision To create a better routine life for large number
of the people.
Mission The mission of the firm is to support the vision
through offering the wider range of unique and
well-designed furnishing products at the low
price so that many of the people could afford to
buy it.
Business Objectives To offer wide choice of the home furnishing
products with good design, excellent quality,
durability and function so that people could
afford to purchase it.

Pestle analysis
It is the strategic tool that helps in assessing an effect of the external environment on the
business industries and activities of IKEA. These factors hold special importance as they could
impact the profitability of the brand and its market position.
Political- This factor relates to changes in government policies, framework and political
instability in the country (Alänge, Clancy and Marmgren, 2016). These forces exist in all the
nations and highly affects the functioning of the business. Stability of the government results to a
positive impact as it results to economic stability which in turn increases profits and the revenue
of the company. On other side, instability of government leads to disruption in the business
environment or supply chain and increases complexities for the organization. For example- As
IKEA is operating its business in more than 41 countries so it faces a disruption in its supply
chain government instability in Europe which causes a negative effect on the company's
operations. However, government has provided ease to the international brand in term of duty
which helped IKEA in increasing its profits and sales which seems as the positive effect.
Economical- It is the factor that includes measures like disposable income, currency
exchange rate, tax and interest rates. This factor plays a critical role within the business
environment as increase in disposable income of the people leads to increase their purchasing
power that in turn increases the demand for the product which found as positive impact of this
factor. Contrary to it, in case the income of people decrease, their buying power also declines
which imposes a negative effect on demand of the company products or the service within the
retail industry (Pestle analysis of IKEA, 2020). For example- IKEA has managed the prices of its
products so well that it assist in managing the pressure which might arises from the economic
fluctuations. Still, such fluctuation in the currency rates affected the financial health of the
company as Stronger dollar results to decline in profits of the US based brands.
Social- This factor indicates the beliefs, attitudes and lifestyle of the people within the
country. As different country follows different culture so it creates complexities for the
corporation to work in accordance to all the cultures and without facing any problems relating to
criticisms. On other state, with evolving lifestyle, people tend to buy product that contains
unique design and excellent quality which reflects a positive effect on the company as it sales
will increase. For example- While printing its catalogues for distributing its product globally,
IKEA needs to ensure that wrong doings does not show up a right culture. Moreover, social