IKEA Business Analysis Report

This report analyzes the business structure and operations of IKEA, a multinational furniture retailer. It examines the impact of economic factors, including raw material costs and consumer spending power, on IKEA's performance. The report also explores the company's cost leadership strategy and its response to the global financial crisis of 2007-2009.

Business Basics IKEA
Introduction
IKEA is a Swedish-founded multinational group which
designs and trade kitchen appliances, home accessories, ready
to assemble furniture and many other products. Company was
founded in 1943 by Ingvar Kamprad at Leiden, Netherlands
which is performing their operation across UK in adequate
manner.
Fluctuations in raw material cost such as metals and wood,
company use is a main factor of economic that also influence on
business in significant manner.
Economic theory related to the Economic factor: Laissez-faire is
refer as an effective theory of economic that belief functions of
business and economic is essential when there is no interference or
intervention of the government. This theory also believe that self-
interest of each individual to do better, low taxes and effective
competition from others will lead to the powerful economy. The
government of the country should only interact in the economy to
preserve life, freedom and individual property. Such type of theory
also help the IKEA to retain long run sustainability and achieve
better outcomes within predetermined time pe
riod.
Business audience is refer as a main and foremost part of the each
organisation. Beside this, government, customers, employees and
suppliers of the IKEA is main business audience that effect on
business operations and functions directly. Above all this
information regarding the economic factor and theory to overcome
all impacts effectively are provided in clear manner to the business
audience which will further support IKEA to maximise their sales
and revenues within predetermined time period.
The business process of IKEA is divided into two parts one is
internal and other one is external. In case of internal process,
different aspects are included like business structure,
organisation culture i.e. basic values, expectations and beliefs
which have to be included along with the analysis of business
resources like assets, knowledge, competencies and skills.
Under external process, marketing process is best fit and
directly related with their idea like” Company shall offer a
different number of home furnishing products of better
function and design at reasonable price. Shareholders are the
stakeholders who capitalise their amount of money in the
organisation and share profits i.e. made by an enterprise. In
IKEA, there are different number of stakeholders such as
employees, government, competitors, suppliers, customers
etc. Interest of all stakeholders with the IKEA is due to
employment and success of them which link with their
promotion. Aim of the IKEA is divided into some parts
which are shown as under:
To take responsibility and duty for their workers, suppliers
and for the environment.
To retain product quality and reduce prices.
To manage better reputation and strength in international
marketplace.
Business Structure
The present business structure of IKEA is shown as the
outcome of a main restructuring initiative that was informed in
2016. To enhance the system of franchise and clarify
responsibility, supply and production activities of company
were transferred to the unique Inter IKEA Group oriented by
Inter IKEA Holding B.V.Impact of the Economic Factor:
Consumer spending power and Macroeconomic situation is
identified as a significant and most effective factor of economic
that affect on IKEA performance. The economic of global and
financial crisis of 2007 – 2009 is a stark and main example for
the effect of external economic factor on IKEA. All the same, it
is essential to note that the negative effect of the crisis was at a
little extent for company compared to different other
organisations due to the IKEA cost leadership strategy.
Generally, although company had to eliminate approximately
5,000 jobs, the sales volume dropped only by 1% within
duration of half-yearly by 2009. Moreover, revenue of IKEA
are also impacted by exchange rate fluctuations in direct
manner between USD and EUR and many other main
currencies because of international scale of IKEA operations. In
addition, economic factors that highly impact on company in
different forms such as tax rates, level of unemployment and
interest rates.
CONCLUSION
From the above mentioned information, it has been concluded that
economic factor of the company is highly impacting on its
performance and profitability. Economic theory is more significant
and essential way to overcome economic impact on the
organisation.