Demand and Market Equilibrium for Ikea's Sofa: A Management Economics Analysis

Ikea

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Business Description...................................................................................................................3
Identification of demand and market equilibrium and how each factors influence demand of
product.........................................................................................................................................4
Factors indicating whether the demand is elastic or more inelastic............................................6
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Management economics is the branch of economics which involves the application of
economical methods in the managerial decision-making process for the integration of the
economic factors. In this project the chosen organization for the study of the management
economics is Ikea. This project will provide a critical evaluation of economic data in the
international and organizational context. In this project different economical concepts will also
be used for the making managerial decisions. This project will help in analysing the impact of
government policy on markets and its effects.
MAIN BODY
Business Description
Ikea is Swedish-founded organization which is headquartered in Netherlands. It is a
multinational conglomerate organization which designs and sells ready to assemble furniture,
kitchen appliances and home accessories. This organization was founded by Ingvar kamprad
founded IKEA in 1943 at the age of 17 (Elf, Isham and Gatersleben, 2021). It was started by the
selling household goods like pens, wallets and picture frames. It also deals with other goods and
home services. The industry in which Ikea operates in is the retailing of home furnishings that is
known to be the worlds the largest seller of furniture in the early 21st century. Ikea has been able
to gain competitive advantage in its market with the help of the cost-effectiveness strategy. This
explains how the global furniture retailer is able to offer low prices for thanking a combination of
economies of scale and technological integration into the different business processes. The
increasing variety of the products is also the factor which is responsible for the growth of the
organization and is able to generate.
Ikea has different range of home furnishings products. The chosen product from this
organization to study is economic impact on the business is Ikea Sofa's. Sofa which are also
sometimes called couch or a Davenport is long upholstered seat with both arms and a back. This
is considered to be a common luxury product of Ikea made for human comfort. It has been
known for matching with the décor and lift the mood of the person which uses it. The reason for
selecting this product is that it is one of the most sold products of Ikea and it despite being a
luxury product has started to turn into a necessity due to the matching concept that it brings in
the new culture.