Analysis of IKEA's Business Environment in Household Furniture Sector

This report provides a detailed analysis of IKEA's business environment, focusing on the household furniture sector. It identifies two key issues affecting the sector: changing consumer tastes and preferences, and the growth of technology. The report utilizes the PESTLE model to analyze the political, economic, social, technological, legal, and environmental factors impacting IKEA. It discusses the positive and negative impacts of these issues on IKEA, including the influence of technology on product innovation and the importance of adapting to evolving consumer demands. The study also reflects on the challenges faced during the analysis and concludes with the significance of understanding the business environment for IKEA's success. The report highlights the need for IKEA to adapt to technological advancements and consumer trends to maintain its market position and build customer loyalty.

Business environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Identifying two key issues affect to the sector............................................................................3
PESTLE analysis of key issues...................................................................................................4
Impact in both negative and positive manner.............................................................................6
Reflection....................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is the combination of collection of whole internal and external
factors that includes employees, supply and management, clients, customers needs, suppliers,
owners, activity of government, innovation, new market trends and economic changes. It is very
monetary for companies to study their business environment because of the reason company
exist in the environment that is very dynamic because the continuous changes in market place.
The present study is based on the analysis of Household furniture sector and the company is
IKEA. This is company is design and sells ready to assemble furniture and various kitchen
appliances. The report will identify two key issues which is affect to sector and its growth
factors. This study will use PESTLE model for explaining issues and reasons for doing work as
well as positive and negative impact on business. At the end of study, reflecting the challenges
and overcoming strategies for further work.
MAIN BODY
Identifying two key issues affect to the sector.
In the market place have various issues which can affect to industry ad its growth factors
in negative and positive manner that is not good for industry health. This section is identify two
key which can highly affect to industry such as change in consumers taste and preference and
growth of technology (Cepel and et.al., 2018). In the present technology is more advanced
through that customer's preference are change. Explanation of both key issues are as follows:
Increasing technology:
The growing technology is the main issues in household furniture sector. This is the main
reason that with the increasing trend of globalization many of new technologies has the coming
in the country in household sector in effective manner. The new technology is a key issue
because household sector is not adopted this in effective manner. Through that this is the key
issues which is affect to industry. Also, this includes the highest installation charges on cost
which is not prefers by consumers (Deasy and et.al., 2016). Another side this increase, training
requirement for industry if they are adopted this technology within the workplace is in the
effective manner. The latest technology is use of CNC wood working which provide proper
solution to furniture for looking great. Another, most of the customers are book their furniture
with online system. In that industry faces problem when their websites are not working in proper
manner.

Change in consumer preference and taste:
The company within the household industry works in order to satisfy customers needs by
providing comfort. But this is the changing very frequently because of new trends and
modernization. This is the challenge for company and industry. Now a day various kinds of
furniture are comes in trend which impact to customers and their needs. Those trends are
menswear inspired furniture unique metal furniture, jungle patterned and mid century modern
furniture. It is the majority because of reason if the sector does not adopt these trends and
preference of customer and make changes accordingly with those needs of customers and trends
of furniture.
Also, those are very costly for the furniture companies because companies had to make
changes in their products and it is possible that if the company brings in new and innovative
products (Elkington, Burke and Hailes, 2017). It is very complex job for the company to manage
time to time do a market research in order to change needs and requirements of customers and
latest and new trends in market place.
Those are key issues which affect to industry and its related companies in order to adopt or not
adopting situation.
PESTLE analysis of key issues.
This section is include PESTLE analysis for analyse the impact of changes which are
taking place within the external sector over the working of company. This tool is more beneficial
and important because this helps company in getting knowledge of the changes in the
environment than make changes in the products and services of company. Application of
PESTLE analysis are as follows:
Political factor:
Political factor is relates to the changes in government and political sector. For example:
in the present case selected sector is household furniture which is brings in new technology form
outside the country (Erasmus, Strydom and Rudansky-Kloppers, 2016). In that they have to pay
some charges to the government as per the norms like taxes and because of this source of income
the government will support new technology.
Economic factor:
The economic factor is related with inflation rate, tax rate and labour rate. Company is
bringing in new technology and also working in accordance with the taste of the consumers then

this will increase the income and profits of the company, profits will be increased then it will
have to pay more of the taxes which is beneficial for the government. In that case government
has support to household furniture sector in effective manner.
Social factor:
The social factor is relates to the attitude and preferences of the people of the society
towards the company. For example: when the Household furniture follows all the latest trends
and requirements of consumers then the society will like the company as well as support to them
in effective manner (Hillary, 2017). This is because of company is thinking about the consumers
and in the same way the consumer will also support the company whenever the company
requires support of public. Through that customers are more satisfy with company and their
products which are more beneficial for companies.
Technological factor:
The technological factor is another factor which impacts the whole household furniture
industry because underlying the fact is this sector adopts to these technologies then it will be
more benefit the company. This will increase the profitability and productivity of the companies
under the household furniture industry and sector (Lee, 2017).
Legal factor:
The legal factors include various rules and regulations which are often by government
within the market place for more security. This is also main factor which impacts the growth and
working of the household furniture sector because when the company goes for globalization it
does business with many countries and every country has its own set of rules and regulation
which the house hold furniture sector needs to follow.
Environmental factor:
The environmental factors include the changes in climate and weather. This factors are
from environment in which the company operates (Prajogo and Oke, 2016). The house hold
furniture sector needs to take care of the environment as the company operates in the
environment and if the sector harms the environment then it will not be liked by the consumers.
Those are the factors of PESTLE model which are support to business and country as
well as government because through that government have various benefits. Throughout that
government completely support to business and household furniture industry.

Impact in both negative and positive manner.
Both of the two issues have the major impact on the IKEA group which is the sells ready
to assemble goods and services at marketplace in effective manner. Key issues are affect to
business in negative and positive manner which explanations are as follows:
Positive impact:
The positive impact to the IKEA group with analysing changing consumers taste and
preference is company able to know about customers preference with company in effective
manner. This creates various positive impact because this help to make changes in products and
services as per customer's requirement. Through that customers are more attracted toward
company and its growth factors.
On the other side, new technology is also gives positive impact on IKEA group for
making innovative products and services at marketplace in effective manner (Prajogo, 2016).
Through that company is able to introduce various new products for customers and for satisfy
needs of consumers. The positive impact is profit margin of company is increases by getting
proper support from government in effective manner. By using machinery and technology for
produce product is help to save time of employees and company.
Another, if both issues are properly followed by household furniture and IKEA is help to
make positive working environment with positive impact. This help to maintain goodwill of
company at marketplace in effective manner by creating various innovations in products and
services.
Negative impact:
With the very positive thinks and work, here have some bad and negative think which can
affect to IKEA in negative manner. In the same way both issues of house hold furniture sector
which is technology and changes in consumer preference also having various negative impact on
the IKEA. The major negative impact of the IKEA group are mentioned below:
The most important and basic negative impact of the both issues on the IKEA is the
adoption of both issues for increasing cost for the company (Tallman, Luo and Buckley, 2018).
This is the major impact due to company is install new technology within the business and its
environment in ineffective manner. This involves the highest cost and cost of installation new
technology is very high.

On the another side, the negative impact of both on the business and IKEA is company
have to appoint employees and candidates for research and development team within the
business environment. This is important to study on consumer's preference ad taste for IKEA
group because through that they are able to make possible changes in company.
The negative impact on IKEA is company is hire some experts to train their employees
for latest technology in proper manner (Uchihira, Ishimatsu and Inoue, 2016). This is the
expenses for company and decrease profit margin which is not good for company and for its
growth factors because it is responsibility of company to provide training to employees for
company.
Another, the negative impact is that takes lots of time. This is because of the reason that
till the training is not completed to employees cannot perform task on the machines. For
understanding needs and preference of consumers takes a lot of time then after understanding
needs and modification in the products and services are made for lunch within the marketplace.
Reflection.
From the above study I have learned various thinks is very tough job is many crucial
steps needs to be taken within the business workplace. At the starting of project it was very
difficult for me identify key issues which affect to industry of house hold furniture. This was
very important to analysis that because those factors has affect to business. By doing very long
research and analysis two issues were identified in proper manner by using internet and taking
idea from guidance from the tutor.
On the another side, the second issue is uses of data for report. This was the problem
which is created because there have many of websites which all provide different data and I
though all has important for report making. Now the problem and issues which I faced at the
time of selecting source of data the select and which information is best for report. This process
was very time-consuming process because in that I has waiting for making the report till the end
of data is being finalized. In that various problem I faced for making this report but at the end all
had been solved in effective manner by using proper sources and taking guidance from seniors.
CONCLUSION
From the above study it had been concluded that the analysis of business environment has
very important and effective for industry and company for gaining extra profits and build
customers loyalty. The report had been identified two key issues which has faced by household

furniture industry which has growing technology and changes in consumer taste and preference.
That had been analysis by using PESTLE model for explaining the reason government has
supported to that because through that government has various benefits. On the other side, those
key issues has created various negative and positive impact on company. The positive impact has
company able to build loyalty of customers and maintain their goodwill at marketplace. On the
other side, the negative impact has created training expenses for company. At the end of report,
reflective summary has shown different issues faced by me with overcoming solutions.

REFERENCES
Books and Journals.
Cepel, M. and et.al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness. 10(2). p.21.
Deasy, S. and et.al., 2016. Controlling use of a business environment on a mobile device.
Elkington, J., Burke, T. and Hailes, J., 2017. Green pages: the business of saving the world.
Routledge.
Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Lee, I. ed., 2017. The Internet of Things in the Modern Business Environment. IGI Global.
Prajogo, D. I. and Oke, A., 2016. Human capital, service innovation advantage, and business
performance: The moderating roles of dynamic and competitive environments.
International Journal of Operations & Production Management. 36(9). pp.974-994.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
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pp.241-249.
Tallman, S., Luo, Y. and Buckley, P. J., 2018. Business models in global competition. Global
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Uchihira, N., Ishimatsu, H. and Inoue, K., 2016, September. IoT service business ecosystem
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International Conference on Management of Engineering and Technology (PICMET)
(pp. 1195-1201). IEEE.