Analysis of Business Environment and Organizational Structure for IKEA

This report provides a comprehensive analysis of IKEA's business environment, focusing on both internal and external factors that impact its operations. It begins with an introduction to the business environment, highlighting the importance of understanding these elements for effective business management. The report then delves into different types and purposes of business organizations, categorizing them into public, private, and voluntary sectors, with IKEA as a prime example of a private sector multinational. It further explores the size and scope of business organizations, distinguishing between large, medium, and small businesses. The report examines the relationship between various organizational functions, such as finance, human resources, marketing, and R&D, and their impact on organizational structure and objectives. The report also touches upon the concepts of shortage and free market activity. Finally, the report concludes by summarizing the key findings and emphasizing the importance of strategic analysis for business success, using SWOT analysis and the PESTLE framework to analyze IKEA's position in the market.

Business & Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Different types and purpose of business organisations.........................................................3
P2. Size and scope of business organisations..............................................................................4
TASK 2............................................................................................................................................6
P3. Relationship between various organisational functions with structure and objectives.........6
TASK 3............................................................................................................................................7
Covered in PPT...........................................................................................................................7
TASK 4............................................................................................................................................7
Covered in PPT...........................................................................................................................7

INTRODUCTION
Business environment majorly contains two factors i.e. external and internal elements
that can effect working of business organisations. Therefore, it is required for company's
manager to see all the elements and then take initiatives so that business can get run in a proper
way. The factors mostly consists with many strengths and weaknesses (Chetwood and et. al.,
2014). IKEA which is a multinational brand has been chosen for conducting this report. Along
with this, assignment will consider different types of organisations that carries various scopes.
On the other hand, it will also show some pros and cons of PESTLE analysis of company and
their impact while running business.
TASK 1
P1. Different types and purpose of business organisations
In modern era, it has been located that companies all over world contains different sizes
and scopes. Therefore, governmental bodies have distributed these in three major parts which are
being discussed beneath:
Public sector organisations – In this era, pubic sector firms can be known as any
commercialized industry which majorly owned by federal authorities that mostly works in order
to improvise working of a country (economical conditions) and also does work for societal
welfare.
For example – Department for education (DFE) which is upholded and maintained by
government of United Kingdom and was formed in the year of 2010 (Crane and Matten, 2016).
This governmental body is majorly amenable for child protection, education and many more. On
the other hand, they have also made some policies as well in order to serve to women and
handicapped in a befitting way.
Legal structure:
Departmental management – Majorly, these firms are associated and stay connected to
delivering appropriate services to citizens of UK. Financial department does comes under these.
Public corporation – It has been analysed that mostly companies in this sector deals in
different sections and contains a whole different legal entity so that various purposes can get
achieved right on time.

Private sector organisations – A private firm's owner carries an aim to earn profit as
much as he/she can. Motive of these organisations mostly stay focused on hitting targets so that
enhancement can be done of profitability and productivity. Companies in this sector can be
owned by single person or by partners.
For example – IKEA a Swedish organisation which was found in 1943 by Ingvar
Kamprad. This company designs and sell ready-to-assemble furniture along with home
applicances to its targeted customers.
Legal structure:
Sole traders – It has been analysed that companies under this is being owned by single
person who handles or bear both profit and losses (Gharajedaghi, 2011).
Partnership – Two or more members if owns an organisation with the help of partnership
deed then this firm can be considered organisation that is carrying partnership.
Voluntary sector organisation – Companies that are coming under this sector mostly
works as to deliver products and services to needy people and works as charity. It has been
located that organisations who are delivering services to people majorly without asking for any
money.
For example – The Holbeck Charitable Trust can be taken under which is a good
example of voluntary section. It is located in Monks Cross, YORK and was found in the year of
2012. It is majorly deals in general charitable purposes.
Legal structure:
Trusts – Charitable trusts in this sector majorly deals in different sections and delivers
general services to citizens of UK right on time (Gilboy, 2016).
Industrial and Provident Society (IPS) – This type of society majorly being maintained
and opened by a company and these mainly delivers benefits to local community people of
United Kingdom.
P2. Size and scope of business organisations
Firms in modern world are carrying various sizes and runs their businesses with different
scopes. In present context, these are being distributed are three major parts which are discussed
below:
Large business
organisations
Multinational companies that are doing business at international level or at
domestic level but with wide area and carrying high range of products, comes

under this sort of section. IKEA was found in 1943 and from then they are
delivering their products and services to consumers in UK and in other
nations as well. Its size and scopes are: employee numbers of IKEA i.e.
194,000 and carrying 411 stores in all over world. On the other hand,
WALMART is also can be considered under this section who is dealing in
same sector and tries to deliver quality items to customers. It was found in
1962 by Sam Walton. 2.3 Million staff numbers that this company carrying
and have around 11,718 stores worldwide (Kian Chong, Shafaghi and Leing
Tan, 2011)
Medium
business
organisations
Companies in this sections carries an aim i.e. profit maximisation through
expanding business in other areas. Firms should have 100 employees and
needs to have turnover in between 5 - 25 million pounds in order to come
under this sector.
moo.com and Whistles are two business firms that are coming under this
sphere.
Small business
organisations
Company that are coming under this section mostly should have 50 staff
members and not more than that and turnover should be less then 5 million
pounds. plan.com and Austin Fraser are two organisation that fitting into this
phase.
Transnational associations – A TNC is a firm which works in just a single nation and
does not think about another nation as its national home. So as to get high focused edge, a
transnational organization empowers to keep up a vast level of responsiveness to neighbourhood
advertises by giving there subjective items and administrations.
Worldwide and universal associations – These are the associations which have global
enrolment, nearness or extension in worldwide markets. Because of globalization, worldwide
associations are quickly spreading over the world revenue driven augmentation and increase high
aggressive edge (Kaufmann, Kraay and Mastruzzi, 2011).
Shortage and decisions – The term shortage implies request of something is higher than
its supply and having insufficient cash to get it. In organizations, shortage happens when there is

lacking assets to fulfil everybody's needs and needs. Aside from this, because of shortage
selections of clients can be changed.
Free market activity – Its a spine of market economy. Request comprises to decide
wanted amount of an item at commercial centre while supply alludes how adequately can react
on request of items.
Pay flexibility of interest assess the responsiveness towards amount which is being
requested by clients for a decent or administration; it happens while changes in pay of
individuals. As though clients salary will change at that point items' request will likewise getting
change.
TASK 2
P3. Relationship between various organisational functions with structure and objectives
Organisational functions plays an essential role whenever it comes to gain competitive
advantages. Therefore, it is much required for IKEA to go through different phases and look into
different aspects so that benefits can be gained. With the help of this, competitive advantages can
easily be gained right on time.
Few functions of a firm association:
Finance department – One of major organisational function which needs to be
understood by companies in an befitting way because every single plan which has been made by
marketing department requires money for execution. Through this only it has been located that
firm can go through different phases and can hit their targets. Budget is only being passed by this
subsection of IKEA.
Human resource department – IKEA which is delivering products and services to
customers always looks for employees who mostly have good communication skills (Li and et.
al., 2011).
Marketing department: This department emphasis on investigating the needs &
requirement of the targeted customers which they are aiming to capture. IKEA's marketing team
gives high preferences to its customer by introducing products for them which are profitable to
the company.

Research & Development department: This function focuses on regular improvement of
existing products and to introduce new products. In context to IKEA, R&D department reduces
cost & extra time consumption to increase its profitability.
Organisational structure
Functional structure: In this structure subordinates are instructed from several superiors.
IKEA functional structure is classified in production, human resource, finance etc.
Matrix structure: This organisational structure is consist of horizontal as well as vertical
authority which flow upward & downward.
Divisional structure: Department under this organisation are divided on the basis of
division, each division is responsible for its owns activities & expenses spend on it.
Relationship between organisational functions & its structure (.López-Gamero, Molina-Azorín
and Claver-Cortés, 2011).
Organisational structure & functions are interrelated to each other as if the organisation
opts the strong structure it supports business to overcome upcoming obstacles. Organizational
functions are performed according to requirement of the structure. Roles & responsibilities of
IKEA's employees are decided according to its structure.
TASK 3
Covered in PPT
TASK 4
Covered in PPT
CONCLUSION
From above mentioned report of business & business environment, It can be concluded that this
project includes different organizational structure with various functions which helps them in
improving the quality of the products as well as develops the company. SWOT analysis of IKEA
have highlighted Strengths, weaknesses, opportunities and threats, in this company can work

more on its negative portions & can grab the upcoming opportunities for the growth of the
company.

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