Business and Business Environment: IKEA Analysis Report - HND Course

This report provides a comprehensive analysis of IKEA's business environment, addressing various aspects crucial for business studies. The report begins by defining business and its environment, emphasizing their importance for organizational success. It then explores different organizational types, including private, public, and cooperative organizations, and their respective scopes. The report delves into the relationship between organizational functions, such as human resource management, marketing, R&D, finance, and operations, and their contribution to organizational objectives. It examines the positive and negative impacts of macro environmental factors, utilizing a PESTLE analysis to assess political, economic, social, technological, legal, and environmental influences on IKEA's operations. Finally, the report concludes with a SWOT analysis, evaluating IKEA's internal strengths and weaknesses in conjunction with external opportunities and threats. This detailed examination offers valuable insights into IKEA's strategic positioning within the business environment.

BUSINESS AND BUSINESS
ENVIRONMENT

Illustration Index
Illustration 1: PESTLE Analysis....................................................................................................10
Illustration 2: SWOT Analysis.......................................................................................................11

INTRODUCTION
Business is an activity or process which is carried out by an individual or group of people
to earn money from this by selling their products and services in the market to customers. A
business structure does not allow for corporate tax rates. The proprietor is personally taxed on all
income from the business. It is known as the overall surrounding aspects of that business. It is
very important for the effectiveness of organizational functions to achieve their goals and
objectives. It is a set of conditions which can be institutional, political, economical, legal or
social that is uncontrollable and affects the functions of the organization. Maintaining the
business environment is very important for the owner to run it successfully.
This report will focus on different types of organization and its size, scope and range and
different organizational functions exist in the market. It will discuss the positive and negative
impacts of the macro environmental factors on IKEA and will analyze its strength and weakness.
LO 1
P1 & P2 Different types and purposes of Organizations and size and scope of different firms
Slide 1
Bussiness and Business
Environment

Slide 2
P1 Different types and purposes of Organizations
• Public Sector : These are those organizations which are operated and
owned by the government for the people. In this sector, tax which is
payed by the public is used to finance most of the public sector
organization. It helps to improve the business.
• Purpose : The main purpose of these organizations is to provide
services to the people for their well being and for the benefit of the
society as well.
• Private Sector : These are the organization which is owned by people
for their own profit. All the expenses are maintained by them only. All
the profit earned is used to develop their business in order to increase
their sales in the market. For examples, franchises, companies (private
and public), partnership and sole traders all these come under private
sector business.
Organization is an entity consisting of multiple people, such as an institution or an association,
which has a collective goal and is linked to an external environment. Business environment
also contains different factors like customers, government, suppliers, competitors, local
communities and distributors etc. It can be of different types based on their structure, such
as, public sectors, private sectors and voluntary sector organizations.

Slide 3
Continue...
• Sole proprietorship : These are also known as sole traders. It is
generally owned by a single person. However, he can hire employees
to work in hid business. All the expenses required for the business is
done by him only.
• Partnership : In this type of business, there are two or more people
who are engaged in the business. All the decisions are taken by a
mutual understanding between both the parties. All the profit and
expenses is divided between them.
• Franchises : It a process in which an entrepreneur purchase the rights
from a large organization to open and run a business. This practice can
help them to expand their business in the market and earn a good
profit.

Slide 4
Continue...
• Corporation : These are those business where the owner has a
separate legal personality in the market. It can be both, government
owned or privately owned.
• Cooperative : It is a limited liability business which can organize as
for-profit or not-for-profit. It is different from corporation business, as
it has members, not shareholders, and they share their decision-making
authority with its members.
• Purpose : Their main purpose of this sector is to increase there market
share and maximize the sales which can help them to earn a good
profit. Introducing new and innovative products which can help to
increase their sales.

Slide 5
Continue...
• Voluntary Sector : These are the businesses which can be owned by
any individual or group of people. These organizations collect money
through donations and funds which they use for the business. In this
sector, someone has to take the responsibility to set targets and budget
for the business. These can include NGO's which works in different
sectors, such as, education, environment, women safety, etc. These are
basically identified as non-profit and non-government enterprise which
gets investment in the form of charity.
• Purpose : The main purpose is to help the public by doing various
projects for the betterment of the society.

Slide 6
P2 Size and scope of a range of different types of
organization
• Private Organization : These are the organization which is owned
privately. These companies need to have shareholders but these
organizations cannot issue large number of share to public. These
organizations operate to generate a good revenue and maximize their
sales and production in the market.
• Scope : There is a huge scope for these organizations as they are the
only single person for doing decision making for the business. There
main aim is to provide service to their customers and expand their
business in the market.
There are various types of organization exists in the market. For example, private, public,
cooperatives organization, charities, profit and not for profit and non-government
organizations (NGOs), micro, small, and medium-sized enterprises (SMEs).

Slide 7
Continue...
• Public Organization : These are those organizations which is running
for the welfare of the public. These can be small, medium or business
based on there services provided to the customers. These organizations
are developed to fulfill the requirement or needs of their customers.
• Scope : For public organization there is scope in terms of employment,
as they work for the public. Their main aim is to provide the service to
their customers, whether it a national or international customer
Cooperative Organization : Cooperative organization are those which includes two or more
people which works together to set their business in the market. They work as a partnership
which shares both profit and loss together.
Scope: The scope of the cooperative organization is to enhance their business by coming up with
new ideas to implement. They try to make balance with organization as well as with the
customers.
For Profit Organization : This organization basically works to gain or earn profit from the
business. These usually includes private sector business. The revenue generated by these
organizations is usually reinvested into their business to ensure its development and the
remaining profits are distributed among the parties involved in the business. These can
operate in different fields, for example, retail shops, fashion, technology, etc.

Slide 8
Continue...
• Non-government Organization (NGO's) : These are usually non
profit organization which works independently without representation
from the government. There are different types NGO's based on their
services, such as, operational and advocacy NGOs. Operational NGO's
works on designing and implementing projects which is basically
development based, whereas, in advocacy NGO's, it works for
promoting specific causes present in the society.
• Scope : There is a huge scope in NGO's as most of the people are
interested in giving their services which helps the public in some or the
other way. It operates in variety of fields, like, education, environment,
welfare, etc.
Not for Profit Organization : These organizations operates to provide there services for the
welfare and betterment of the community. These includes charities and social enterprises
which works for a purpose. These organizations generate their funding through donations,
sponsorship's and other similar investments.
Charities : These works to increase the standard of the society by providing services which help
to improve their welfare and culture. They try to make people happy by doing works which
are related to the society.
Scope: There is a great scope in charities. They can widely be used in different fields such as
education, safety policies etc

Slide 9
Conclusion
• There are various types of organizations based on their sizes, for example,
private, public, cooperative organization.
• According to their purposes from the business it can be divided into two
parts, such as, for-profit organization and not for-profit organization.
• There are also some organizations which work for the welfare and
betterment of the society, i.e. NGO's and Charities.
LO 2
P3 Relationship between different organizational functions and their link to organizational
objectives and structure
The organizational function depends on different aspects or factors, such as, human
resource management, marketing, R&D, production and operations, customer service, finance
and IT and administrative. All these factors helps to promote their business in the market and
increase the revenue. As these plays an important role to build a relationship with their customers
and satisfy them by providing services according to their preferences (Karneyeva and
Wüstenhagen, 2017). Proper marketing strategies helps the IKEA to deliver the best service in
the market. There are various factors which helps to achieve organizational objectives and
structure, such as,
 Human Resource (HR) Management : It plays the most important role in the
organization. Recruiting skilled and desirable employees for the organization will help
them to increase service and production. IKEA focuses on their employees in order to
check their growth and work. The HR should make sure that recruited candidates are well