Analyzing the Business Environment of IKEA: SWOT, PESTLE, CSR, and Leadership Styles

Context of business

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK ..............................................................................................................................................3
Swot analysis of IKEA :..............................................................................................................3
Pestle analysis of IKEA :............................................................................................................5
Evaluating how the changes in PESTEL factors has influenced the Opportunities and Threats
in IKEA. Critically commenting on how IKEA is addressing their Strengths to negate Threats
and Weakness that affect their Opportunities :...........................................................................7
Daniel Goleman's different leadership styles and recommending one that can help IKEA to
meet its objectives :.....................................................................................................................9
Corporate social responsibilities in context of IKEA :...............................................................9
Reflection of the report :...........................................................................................................10
CONCLUSION .............................................................................................................................10
REFERENCES:.............................................................................................................................12
Books and Journals:..................................................................................................................12

INTRODUCTION
Business can be said as an activity of an organisation or enterprise engaged in any
commercial, professional or industrial related activities through buying and selling of different
products or services and is done with the main motive of earning livelihood through the profits.
Although some businesses can be made for welfare activities such as charity without the motive
of any profit and are known as NPOs (non profit organisations). These activities are guided and
regulated under some laws made by governments for maintaining a loyal and smooth functioning
and avoiding scams. The following report is based on the analysation of business environment of
a particular company. The chosen business entity is Ikea which is a multinational conglomerate
giant. It deals in big product line that consist of kitchen appliances, home products, ready to
assemble furniture and some other home related services and goods. It was found in 1943 in
Sweden and today have presence in many different countries of the world (Lawrence, 2018). The
report includes the analysis of external environment of the company through swot and pestle
models in detail. Through pastel, the influencing opportunities and threats are identified. Then,
Daniel Goleman's leadership style is explained with one recommendation according to the
related company. At last, is consists of the ways in which IKEA maintains corporate social
responsibility in its process.
MAIN BODY
TASK
Swot analysis of IKEA :
It is a framework that helps in analysing important factors that affects a company's
business performance and are part of its basic business environment both, externally and
internally. It can help IKEA in its strategic management. The detailed swot analysis of Ikea is as
follows :
 Strengths – This factor consists of the strong areas which help a company in forming a
competitive edge over other competitors in the market.
◦ Customer knowledge – The key advantage of the company is its extensive knowledge
about its customers (Cosenz and Bivona, 2021). Through researches and the bond it
share with the customers from a long time, it clearly understands the purchasing
factors that affects its customers and work in implementing the best practises which

can attracts and hold them. New designed products are continuously introduced and
different income level people are targetted with its huge variety.
◦ Cost centred – driving the costs down is one of the main strategy of the firm. It keeps
on innovating and working on finding new ways that can prove to be efficient t in
cutting down the cost. The cutting down of costs provides the company with
attractive with two choices, one is providing the customers with products at low
prices and second is enjoying good profit margins.
 Weaknesses – This is consisted of the weak areas which can prove as a problem for a
business entity and must be rectified or focused on.
◦ Low quality of products and services – As the main strategy of driving the costs low,
the brand has also compromised with the quality of its products. As it is very hard and
the company could not find the methods of cost reductions without harming the
quality. The number of damaged and returned products is increasing of the company
and it aslo decreases the satisfaction level of customers (Lombardi, 2019).
◦ Negative publicity – IKEA has been criticised many times due to its related issues
such as treating the employees poorly, suing wrong and unideal methods of
advertising its products. This impacts the goodwill of it negatively in the market and
this also decreases the loyalty of its customers with it.
 Opportunities – The use of this factor is to provide with elements which can help an
organisation in the growth building process when considered in the strategy
management.
◦ Diversifying product line – IKEA has been dealing in a not much diversified and
small line of products. It can consider the increasing demand of healthy food and
grocery products. It is already successful in managing food outlets, so the expansion
into grocery business would be well aligned and with less risks involved.
◦ Growing online platform – The increasing market of online buyers is increasing
rapidly in the whole world. IKEA has been less focused toward its online selling with
only 17% of the total sales in UK. The brand has high number of visitors on its
website, it can fulfil their demand by increasing the brand loyalty and providing the
complete range of products online (Pafford and Schaefer, 2017).