PESTEL and SWOT Analysis of IKEA: Addressing Strengths, Negating Threats, and Recommended Leadership Style

This report provides a PESTEL and SWOT analysis of IKEA, including how changes in PESTEL factors influenced opportunities and threats, comments on how the business is addressing their strength to negate threats and weakness affecting their opportunities, and a recommended leadership style from Daniel Goleman's theory. The report also covers the corporate social responsibility of IKEA.

Business

Table of Contents
INTRDUCTION..............................................................................................................................4
TASK...............................................................................................................................................4
Perform a PESTEL and SWOT analysis of chosen business......................................................4
Explain how the changes in PESTEL factors has influenced the opportunities and threats
business.......................................................................................................................................7
Comments on how the business is addressing their strength to negate threats and weakness
affecting their opportunities........................................................................................................8
Recommand a suitable leadership style from Daniel Goleman's that according to you will help
them meet their business objectives............................................................................................9
Critically comment on their corporate social responsibility in the process using evidence from
your research.............................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRDUCTION
Business basically refer to firm or enterprise which is essential for engaging the the
commercial, professional and industrial activities. But the ultimate aim of doing any type of
business is to increasing their revenue long term and also for achieving success. The company is
chosen for understanding the whole business activities is IKEA and it is a multinational retail
based firm. The company is established in 1943 which is headquartered in Netherlands and their
products are kitchen appliances, ready to assemble furniture, home accessories and other services
and goods. This report will covered PESTEL and SWOT analysis of chosen business, how the
changes in PESTEL factors has influenced the opportunities and threats in business (Akcigit and
Ates, 2021). It also covers in which way business is addressing their strength to negate threat and
weakness affecting their opportunities, recommend a suitable leadership style from Daniel
Goleman's which helps to meet their business objectives and Critically comment on their
corporate social responsibility in the process using evidence from your research
TASK
Perform a PESTEL and SWOT analysis of chosen business
PESTEL Analysis -
It is a method which is used by IKEA firm for analysing the macro external factors
effectively which are described below -
 Political – It refers to those factors which effects the performance of organization in
political manner. It includes, trade regulations, policies, rules, laws and other type of
government activities. In context to IKEA, management must follow the various policies
of government for running their business successfully. It means when management
follows their policies then definitely their popularity and service activities are easily
increased at large level in various locations.
 Economical – It is related to those factors which effects operational and services of
organization economically (Bocken, Morales and Lehner, 2020). It includes salaries of
employees, interest rates, taxation, fixing of price and others. In context to IKEA,
management must use different type of pricing strategies for attracting the consumers in
large number. It includes various beneficial schemes, discounting offers and so on. Due

to using these strategies the revenue of firm are easily increased at maximum level which
is essential for maintaining their economic stability in long term between competitors.
 Social – It refers to the set of those factors which influence the behaviour of the
consumers regarding their product and services. It includes culture and subculture, social
class groups, family and others. In context to IKEA, management must facilitate
fashionable furniture and cloths to customers according to their desire, wants and current
traditions. Then in this way people liked their product very much which is essential for
maintaining sale of their product consistently for long period.
 Technological – It is connected with those factors which is essential for running the firm
activities and services inn smooth manner which includes use of updated software and
equipments. In context to IKEA, management must use AI technology for increasing the
reach of their services and product to customers. In this technology various types of
facilities are also used by firm which includes self checkout and check in system. Due to
use of this technology the buying power of customers are effectively increased through
online and offline both modes.
 Environmental – It is connected with those factors which effects the activities of
organization in natural way (Broekhuizen, Bakker and Postma, 2018). It includes
temperature, food, pollution, population density and others. In context to IKEA,
management must initiate recycle, reuse and remove plan and it is also known as green
policy. According to this plan eco friendly materials are used by firm for packing their
products with beautiful colours and designs. In this way the young generations are highly
attracted for buying the product at large scale.
 Legal - It refers to those factors which effects the company's activities legally and
directly by government which includes regulations and rules, various norms etc. In
context to IKEA, management must follow the norms of government sincerely for
maintaining transparency in their activities between public effectively. Due to
maintaining transparency by the firm positive relation with suppliers and customers are
sustained effectively for long period.

SWOT analysis -
It is a strategic planning tool which is used by firm for handle various types of difficult
situations within the organization. The management of IKEA used this method for easily
identifying their strength, weakness, threat and opportunities which are explained below -
Strength includes -
 Effective brand reputation – In context to IKEA, management has good reputation
between customers and in market (Di Benedetto and Lindgreen, 2018). Because it is one
of the retail firm who is equally focused on all customer segments In this way good
relationship are easily maintained with old and new clients in long term.
 Facilitating quality product – In context to IKEA, management is facilitating best
quality service to all categories of customers according to their desires and wants. For
facilitating good quality products management always used reliable suppliers and quality
raw materials at the time producing product.
Weakness includes -
 Maintaining level of customer satisfaction – Due to wide range of products and vast
operational and service activities some time their policies are not worked effectively
which are made for the customers. It includes exchange and return policy of product due
some particular reason which leads to decrease consumer satisfaction level effectively.
 Low presence in global market – Due to ineffective analysis of trend and culture of
various countries the sale of their product are not increased effectively (Hastig and Sodhi,
2020). It increased the chances for losing financial stability of IKEA in market.
Opportunities includes -
 Targeting new customer segment and market – Due to high profit in their service and
operational activities IKEA decided to expand their functions globally. Therefore, due to
the global expansion popularity of their product and service are increased easily at
maximum level.
 Effective utilization of technology – Technology is one of the important element for
IKEA for promoting their product effectively. In this technology company used various
mediums which includes mobile and TV adds, print media etc. In this way awareness are
easily spread between consumers regarding their products at higher rate.

Threat includes -
 Large competition – In today's time firm is facing lots of challenges for sell their
products due to competitors in same line. Competitors includes TESCO, Marks and
Spencer, Sainsbury and others.
Explain how the changes in PESTEL factors has influenced the opportunities and threats
business
 Political – In aspect of threat due to subsequent changes in the policies by the
government management face difficulties to adapt new policies which effects their
organizational activities. Due ineffective adaptability their products are not produced in
good quality which create negative impression in the minds of stakeholders and
customers. Then in this way political instability are occurred for IKEA in long run. Due
to political instability the relationship with various political parties and suppliers also get
damaged. But in the aspect of opportunities due to effective utilization of policies
flexibility are easily maintained departmental functions. It leads to increase the
productivity employees and good communication are also maintained between employee
and employer or IKEA and consumer in long term.
 Economical – In aspect of threat due to high price in their some products which includes
furniture, cloths and other products chances are highly increased for their financial loss
(Jannach and Jugovac, 2019). The main reason for decreasing their profit is that due to
heavy price only upper class segments are able to buy their product and due to this
customers are limited in numbers. But in aspect of opportunities if IKEA maintain their
price in average level then all categories of customers are able to buy their product at
higher rate. In this way the sale of their product are also increased effectively.
 Social – In aspect of threat due to consent changes in taste and preferences such as
designs and colours of customers IKEA face difficulties for delivering the product to
consumers in time. It creates negative impact in minds of consumers towards the firm and
work efficiency are also decreased (Kalogiannidis, 2020). But in the aspect of
opportunities it is necessary for management of IKEA that they must invest huge money
in the research and development department. Because with help of research firm easily
understand the wants, desires and preferences of customers effectively and in this way
their sales are automatically increased.

 Technological – In the aspect of threat due to the use of new technology investment and
cost are highly increased in operational activities and in training. The main reason for
increasing the cost in training is that employees are not properly aware about updated
equipments. Due this ineffective productivity and misunderstanding are increased by
employees in their job role. Therefore for increasing the awareness level of employees
regarding technology management must facilitate practical training to all categories of
workers. But in aspect of opportunities due to the use of upgraded technology the work of
the employees are completed in time and in easy way. Advanced technology also helps to
run the operational activities in smooth manner and also helps to deliver the product to
customers in time
 Environmental – In the aspect of threat use of carbon foot print and increasing of
industrial waste create problems for organization (Laasch, 2018). Because due to
increasing of industrial waste and carbon footprint pollutions are highly increased in
environmental atmosphere. Due to pollution oxygen are get highly polluted which is not
good for the health oB81934f living organisms. Due to increasing of pollution
government will definitely take strict action against IKEA in the form of assigning huge
amount of penalties. But in aspect of opportunities management of IKEA must initiate
green policy for reducing this problem. According to this policy management always use
the eco friendly materials for producing and packing their product before deliver to
customers.
 Legal – In the aspect of threat when company did not follow their laws of government
effectively then the misconduct activities are highly increased. Due to increasing
misconduct activity IKEA are responsible for facing legal consequences by the
government. But in aspects of opportunities when management follow the consumers and
employee law effectively then the goodwill of the firm are increased effectively.
Comments on how the business is addressing their strength to negate threats and weakness
affecting their opportunities
 For reducing the weakness of IKEA in it is necessary for management must maintain the
brand reputation between consumers with help of utilizing the policies effectively. For at
time of buying the products if consumers received the defective peace then user apply for
exchange and return policy. Due to this it is necessary for management that they solve

this problem in time. In this way customer satisfaction level are maintained easily for
long time and in this way policies of company is become a strength in long term (Massa,
Gianluigi and Tucci, 2018). But in aspect of threat for decreasing the competition it is
necessary for IKEA that they must target all categories of customers for sell their product
with help of flexible policies and affordable price. Then in this way positive relations
with stake holders such as customers suppliers etc. are increased which leads to decrease
the threat of organization.
 For decreasing the weakness of IKEA it is necessary for authority that must increase their
presence in various locations which is helpful for increase the convenience of customers
for buying the product. For expanding the market management must use various pricing
strategies and also analyse the current trend, preference of people. Then after using all
these methods the sale of their product are increased effectively. But in aspect of threat
management must fix the average price in their all categories of product. In this way the
profit of their firm are easily enhanced in short duration.
 For reducing the weakness it is necessary for management must use quality raw materials
and reliable suppliers for produce the product (Pedersen, Gwozdz and Hvass, 2018).
Because only reliable products is helpful for spreading positive word of mouth by user in
long term. For overcoming the threat it is necessary for management that they develop
new and unique product which are totally different from other according to their research.
Because when company made lot of research then only popularity of their product are
easily increased.
Recommand a suitable leadership style from Daniel Goleman's that according to you will help
them meet their business objectives
Daniel Goleman's is basically a theory and in this theory various types of styles are
explained which are described below. But the main function of this theory is to enhance the
productivity of organization and employees effectively.
 Authoritative – In this style manager manage their employee with self confidence,
effective knowledge and with enough emotional intelligence. In this stage manager of
IKEA try to maintain the friendly atmosphere in workplace which leads to enhance the
productivity of workers at maximum level. Due to friendly atmosphere lover level

employees easily share their problems without any type of fear and hesitation to
management.
 Coaching – In this method in the form of leaders manager give the proper guidance and
training to workers in strict manner for developing their skills for doing the work smartly.
The main highlight of this method is that in training period the role and responsibilities
are explained in detail manner for every employees (Rondi, De Massis and Kotlar, 2019).
Due to the strict guidance employees easily adapt the new knowledge and lessons in fast
manner. The other difference in this method are rule and regulations are strictly followed
by the manager of IKEA in workplace area. In this way departmental fictions are
smoothly handled by employees in long run.
 Affiliative – In this stage leader is mostly focused on building emotional bonds, better
communication between team members for doing the work in smooth way. Due to
following this method accurate and reliable data are easily shared between employees by
the managers. In context to IKEA when management follow this method then definitely
misunderstanding between employees are highly decreased at the time of doing their job.
With help of this method firm easily achieved their vision, mission and objectives for
long time.
 Democratic – In this stage leader act as a democratic manner with their team members
for running the organizational activities effectively (Sun, Wu and Yang, 2018). In this
style manger did not give the chance to other employees for suggesting their ideas. It
easily creates negative impact in the minds of the employees towards the organization.
Due to musing this type of style by manager the relationship are also get damaged
between all levels of employees.
From the analysis of above information Affiliative leadership style is suggested to IKEA
for managing the employees systematically and also for run their activities in proper manner.
Because with help of this leadership style management easily maintain the good with employees
with help of little bit strictness. With help of using this style manager easily maintain effective
connectivity with team members at the time of doing task. Due to using this style lover level
workers easily share their ideas and problems and ideas with managers with any type of fear and
hesitation. In this way productivity and work efficiency of employees are easily increased in long
term.

Critically comment on their corporate social responsibility in the process using evidence from
your research
Corporate social responsibility refer to self regulation business which is used by
organization for contributing their product and services to the society and poor people. It is
highly helpful for maintaining their vision, mission and objectives in long run. It is also helpful
for maintaining effective communications with stakeholders effectively (Vicario and Coleman,
2020). In context to IKEA, management used this method in various aspects which includes
support to local communities, empowering and educating workers, enhancing productivity of
workers, reduction in recycling and waste, providing charitable donations and others.
In the aspect of support of local communities IKEA operates around 422 stores in the
markets around the world. Due to quality in their product their company image are highly
popular in various countries which leads to generate the revenue of firm at higher rate. Their
main products are home appliances, furnitures, cloths and others. With help of their products
such as furnitures and services the house of various employees and customers are developed
effectively and in unique way. Due to high availability of their products consumers convenience
are easily increased and buy their product from any location.
In context to empowering and educating workers IKEA facilitates the various latest
equipments to workers (Villi and Picard, 2019). With help of this facility employees easily solve
the problems of customers in low time in fast manner. In this way due to solving the problems
regularly the productivity of employee consistently maintained in long term.
In context to reduction in recycling and waste IKEA management used green policy and
in this plan the waste and dangerous materials are effectively reduced. Because this type of
waste is highly harmful for society and living organisms. The mostly products of IKEA such as
Skapro are made of 100 per cent recycled plastic . The IKEA catalogue is the largest print
production ever to be printed on 100 per cent Forest Stewardship Council certified paper.

CONCLUSION
After the analysis of above information it is concluded that effective business is very
important for maintaining the positive communication with stakeholders in long term. Because
good coordination is highly helpful for managing the demand and supply of products in market.
When the supply is properly managed by firm then definitely the goodwill and popularity of their
brand image are easily sustained in market for long time. Due to well established infrastructure
of IKEA various products are delivered by employees to consumers in time in any situation.

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