Pestle and Porter's 5 Force Analysis of IKEA in Australia

Running Head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
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STRATEGIC MANAGEMENT1
Table of Contents
Pestle Analysis.................................................................................................................................2
Political........................................................................................................................................2
Economic.....................................................................................................................................2
Social...........................................................................................................................................3
Technological..............................................................................................................................3
Legal............................................................................................................................................4
Environmental..............................................................................................................................4
Porter's 5 force analysis...................................................................................................................5
SWOT analysis................................................................................................................................9
Conclusion.....................................................................................................................................10
Recommendations..........................................................................................................................10
Reference.......................................................................................................................................13
Appendices....................................................................................................................................16
Appendix 1.................................................................................................................................16
Appendix 2.................................................................................................................................17

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Pestle Analysis
Political
According to Rastogi and Trivedi (2016) the political factors are identified as the most
important aspect for any business organisations in doing business internationally. For IKEA, the
political factors are considered to be the most important aspects in order to bring sustainability in
business. The political stability plays a pivotal part in order to bring better and healthy business
practice. As a result of that it becomes important for IKEA to focus on the political stability of
the Australian government (Van den Steen and Galor 2006). Based on figure 1, it can be stated
that in Australia the political stability is a bit disturbed due to the internal pressures. As a result
of that for IKEA also some business disruption can be emerged that can leave negative impact on
the entire business orientation of the company. However, a strong political decorum and
constitutional government can help the organisation to create effective business environment for
the company in near future.
Economic
As IKEA is an international company therefore, it depends on the liberal economic
structure. Despite of having a great set back from the international recession, IKEA is able to
develop its Australian market due to economic opportunities and steady growth of the market. A
steady growth of economy in the Australian market with an average of 2.6% can deliver a good
and effective exposure for IKEA to set its market effectively in the Australian market. In this
context, it can be stated that the economic liberty and free trade practices in the Australian
market help IKEA to refurbish its business effectively. High competition in the Australian
market with healthy transformation of the customer behaviour is considered to be a healthy

STRATEGIC MANAGEMENT3
business environment for IKEA to do business. High pricing with quality material is one of the
basic feature in the Australian market. As one of the important developed countries, continuous
inflow of financial support is a common trend in Australia. Therefore, it will never be a problem
for IKEA to survive.
Social
The Australian people are very friendly and fond of quality and aesthetic matters
products. According to the research of Finger et al. (2018) it can be stated that most of the
Australian are living a high lifestyle. Therefore, price is not a factor for them to buy products.
However, the quality of the products and its uniqueness is definitely a close concern for the
Australian people and is considered to be one of the major success factors for business
organisations. Therefore, for IKEA also it will be a great opportunity to grab the market of
Australian in an extensive manner do that it will deliver a strategic advantage for the
organisation to facilitate better market capitalisation. Apart from that another important facets of
the Australian society is its open cultural practices. Liberal viewpoint with respecting personal
vision and taste are major attributes of Australian society. Therefore, for IKEA those factors can
be a key aspects to deal with in order to get success in a proper manner.
Technological
Technology is considered to be one of the mainstay for getting rapid success in business.
Howell, van Beers and Doorn (2018) advocated that the advent of globalisation made it more
critical and complex for the business companies to survive without having high progress in
technology. Moreover, Mian, Lamine and Fayolle (2016) opined that technology would provide
a unique brand value for the business organisations in order to survive in the market strategically.
Therefore, for IKEA also technology plays a pivotal role in the context of organisational success.