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Economic Theory Assignment Solved

   

Added on  2020-12-24

1 Pages1634 Words278 Views
Fluctuations in raw material cost such as metals and wood,company use is a main factor of economic that also influence onbusiness in significant manner. Economic theory related to the Economic factor: Laissez-faire isrefer as an effective theory of economic that belief functions ofbusiness and economic is essential when there is no interference orintervention of the government. This theory also believe that self-interest of each individual to do better, low taxes and effectivecompetition from others will lead to the powerful economy.Thegovernment of the country should only interact in the economy topreserve life, freedom and individual property. Such type of theoryalso help the IKEA to retain long run sustainability and achievebetter outcomes within predetermined time period. Business audience is refer as a main and foremost part of the eachorganisation. Beside this, government, customers, employees andsuppliers of the IKEA is main business audience that effect onbusiness operations and functions directly. Above all thisinformation regarding the economic factor and theory to overcomeall impacts effectively are provided in clear manner to the businessaudience which will further support IKEA to maximise their salesand revenues within predetermined time period. IntroductionIKEA is a Swedish-founded multinational group whichdesigns and trade kitchen appliances, home accessories, readyto assemble furniture and many other products. Company wasfounded in 1943 by Ingvar Kamprad at Leiden, Netherlandswhich is performing their operation across UK in adequatemanner.CONCLUSIONFrom the above mentioned information, it has been concluded thateconomic factor of the company is highly impacting on itsperformance and profitability. Economic theory is more significantand essential way to overcome economic impact on theorganisation. The business process of IKEA is divided into two parts one isinternal 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 beliefswhich have to be included along with the analysis of businessresources like assets, knowledge, competencies and skills.Under external process, marketing process is best fit anddirectly related with their idea like” Company shall offer adifferent number of home furnishing products of betterfunction and design at reasonable price. Shareholders are thestakeholders who capitalise their amount of money in theorganisation and share profits i.e. made by an enterprise. InIKEA, there are different number of stakeholders such asemployees, government, competitors, suppliers, customersetc. Interest of all stakeholders with the IKEA is due toemployment and success of them which link with theirpromotion. Aim of the IKEA is divided into some partswhich are shown as under: To take responsibility and duty for their workers, suppliersand for the environment. To retain product quality and reduce prices. To manage better reputation and strength in internationalmarketplace. Business Structure The present business structure of IKEA is shown as theoutcome of a main restructuring initiative that was informed in2016. To enhance the system of franchise and clarifyresponsibility, supply and production activities of companywere transferred to the unique Inter IKEA Group oriented byInter IKEA Holding B.V.Impact of the Economic Factor:Consumer spending power and Macroeconomic situation isidentified as a significant and most effective factor of economicthat affect on IKEA performance. The economic of global andfinancial crisis of 2007 – 2009 is a stark and main example forthe effect of external economic factor on IKEA. All the same, itis essential to note that the negative effect of the crisis was at alittle extent for company compared to different otherorganisations due to the IKEA cost leadership strategy.Generally, although company had to eliminate approximately5,000 jobs, the sales volume dropped only by 1% withinduration of half-yearly by 2009. Moreover, revenue of IKEAare also impacted by exchange rate fluctuations in directmanner between USD and EUR and many other maincurrencies because of international scale of IKEA operations. Inaddition, economic factors that highly impact on company indifferent forms such as tax rates, level of unemployment andinterest rates. Business Basics IKEA

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