IKEA Business and Environment Report - HND Business - Semester 1

This report provides a comprehensive analysis of IKEA's business environment, covering various aspects such as different types of organizations (private, public, voluntary), their purposes, size, and scope. It explores the interrelationships between organizational functions (marketing, HR, finance, etc.) and how they contribute to achieving organizational objectives and structures. The report also examines the complexities of different business structures, with a focus on IKEA as a case study. Furthermore, it identifies the positive and negative impacts of the macro environment (PESTLE model) on IKEA's operations and decision-making. A SWOT analysis is conducted to identify strengths, weaknesses, opportunities, and threats. The report concludes with an evaluation of how these factors influence IKEA's strategic decision-making processes.

Businesses and businesses
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1.................................................................................................................................................1
P1) Different types and purpose of organisatio........................................................................1
P2. Size and scope of different types of organisation.................................................................2
M1) Discuss how the size, structure and scope of different organisations link to the
businesses....................................................................................................................................3
D1) Analysis the complexities of different types of business structures and interrelationships
of different organisation function................................................................................................4
LO2..................................................................................................................................................4
P3) Justify the relationship between different organisational functions and how they link to
organisational objectives and structures......................................................................................4
M2) Analyse the advantages and disadvantage of interrelationships between organisational
functions and its impact on IKEA company structures...............................................................5
LO3..................................................................................................................................................5
P4) Identifying the positive and negative impact the macro environment has upon businesses
operations with suitable examples .............................................................................................5
M3) PESTLE model ..................................................................................................................6
D2) Evaluating the impact of micro and macro factors have upon businesses objectives and
decision making for IKEA .........................................................................................................7
LO4..................................................................................................................................................7
P5) External analysis of particular organisation in order to identifying the strength and
weaknesses of the IKEA organisation.........................................................................................7
P6) Explain how strength and weaknesses interrelate with external macro factors of the IKEA
.....................................................................................................................................................8
M4) SWOT analysis and explain how they influence decision making ....................................9
CONCLUSION................................................................................................................................9
Books and journals ...................................................................................................................10

INTRODUCTION
IKEA is making home products, it sells furniture, bathrooms and kitchen items. It is
world largest furniture organisation. This reports identifying the different kinds of businesses
and environment in which they work (Armstrong and et.al., 2015). It included types of purpose
of the organisation. This file also providing the comparison between profit main company, non-
profit making organisation. It also explaining the organisational functional, structures, their
scope and objectives.
LO1
P1) Different types and purpose of organisation
Covered in PPT
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4

5

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Notes
Every organisation’s main aim is to expand their businesses and earn more profit; there
are many kinds of company divided into three sectors such as private, public and voluntary
organisation. Private business are at individual level. For example, IKEA run their enterprise at
own’s level, the purpose of this corporation to make profit, grow their work and increase market
share (Armstrong and et.al, 2015). Public firms refer to the run by government for group of
people. Every one pay taxes to authorities and the main purpose of public industry is to provide
best services to public. Voluntary firms are not owned by any single person, it is related to
specific types of persons like leaders, The main motive is providing services to social welfare.
Public: it is usually comprised of firms that are owned and operated by the government and
provide services to the community, it is similar to voluntary company in the public, they do not
main motive to generate a huge profit, for example education, electricity department main
purpose raised their fund through several of methods like taxes, fees through funds transfer from
the government (Crane, and Matten, 2016). TESCO is a public company and its main motive is
to provide satisfaction to their customer's but firstly they focus providing quality services with
reasonable prices to their consumers. The legal structures of this firm’s government also spend
their money for economic development and main purpose this company to full their customer or
public needs.
Private: IKEA is the private sectors it is multinational company. It has world's big retailer
industry, it main motive to expand their businesses and earn more profit mean this firms main
aim to operate more profitability. The purpose of this corporation is growing their current
business and also sells their product while using new technology to expand their work through
effective advertising, social media through or other innovation (Crane, and Matten, 2016). The
legal structure of this organisation, they follow are those rules and regulations which is make by
government like proper usages of resources, maintaining health environment to society.
Voluntary: British Red Cross is a non-profit making company in UK. The aim of this
organisation is to serve society welfare (Armstrong and et.al, 2015). This industry also helps in
finding missing persons, giving refugee support and also providing health related services and
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also gives social support. The legal structures of this firm to government always supports these
types of organisation main motive to providing services social welfare.
IKEA is an international manufacturer of furniture; it is a retail company in UK. Its main motive
is to earn profit by providing variety of products to their customers by applying different
innovative ideas. The purpose of these firms is to provide quality products or fulfil their
customer's requirement (Cull and Zeiler, 2015). They also focus on their businesses, through
social media, email, text messages, or through existing customers. The size and scope of this
institution has spread their work all over the world and this organisation is also having large
numbers of worker in their enterprise. This firm provides consumer satisfaction and values of
this company are unique to others. This company has different functions of finances, human
resources, marketing, sales etc. and are very important to work in different ways and managed in
effective manner and maintain their inter personnel relationship among employees as well as
workers. TESCO is a public company and has large number of groceries stores, providing
electrical and clothing products. This company run their businesses and some time they sell their
products online.
The purpose IKEA is providing the best services to their customer and generating
profitability of the company (Cull and Zeiler, 2015). It is a British multinational and is the third
largest retailer organisation in the world. It also expands their businesses all over the world as
well as in UK market. They also earn huge amount and increase their market share. The scope of
this enterprise is large number of employees work with this and they also giving the best
opportunities to their worker. The main objective of this firm to develop their economic and
providing the best quality of services to their customer. This company has different functions of
marketing, human resources, finances department and managed their work in effective manner
and establishing the relationship with customer.
TESCO also improves their employees’ skill for providing effective services to their
consumers; they also get skills about unique functions of company by operating on the different
function of the corporations (Cull and Zeiler, 2015). This firm include many scope like work in
different types of functions because they expand their services in large quantity so they connect
with company main mission and using new technologies, communications, distribution channels
and developing their products qualities they also distribute their services in different nations The
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main motive of this corporation is to give the best product to public and to focus on their
earnings. The value of this company, its objectives, working place environment is total different
rather than other public organisation, they also providing lot of opportunities to their employees’
as well economic people. It is very important aspect the size and scope of the different types of
organisation; it shows their organisation structures and performance of the businesses.
TESCO also improve their employees skill for providing the effective services tho their
consumer, they also get the skills about unique functions of the company by operating on the
different function of the corporations. This firms include many scope like work in different types
of functions because they expand their services in large quantity so they connect with company
main mission and using new technologies, communications, distribution channels and
developing their products qualities they also distribute their services in different nations the
main motive of this corporation to giving the best product to public then focus on their earning.
This industry make better marketing strategies for developing their variety of good and services,
they also maintain the interrelations with their whole staff (Cull and Zeiler, 2015). The value of
this company, its objectives, working place environment is total different rather than other
public organisation, they also providing lot of opportunities to their employees as well economic
peoples. It is very important aspect the size and scope of the different types of organisation, it
shows their organisation structures and performance of the businesses.
P2. Size and scope of different types of organisation
Covered in PPT
M1) Discuss how the size, structure and scope of different organisations link to the businesses
The size, scope and structures of the company is direct link to the business, because it is
very important aspect to run their businesses in long time so every organisations depend on their
size of the firm, structures and the scope of the businesses (Cull and Zeiler, 2015). These
different types organisation is also earned more profit is depended on their size like IKEA and
TESCO run their businesses all over the world. The main motive of these organisations earn
more profit and providing effective services to their customers. The objective of IKEA firms
expand their businesses in globally and generating more profitability ratio.
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D1) Analysis the complexities of different types of business structures and interrelationships of
different organisation function
IKEA is the largest furniture manufacture company, it has the largest numbers of
employees and its main purpose to sell their product all over the world. But some time large
company also face some problems like if they expand their businesses worldwide. So they open
many branches in different location so it is very difficult to mange their entire work or
organisation. They can not operate their businesses easily (Cull and Zeiler, 2015). This firms
businesses structures is also decreased their performance, it is not easy to compete their task in
proper way.
LO2
P3) Justify the relationship between different organisational functions and how they link to
organisational objectives and structures
Organisational functions is very important for every businesses, it helps to dividing the
work in different department such marketing, productions, accounts, human resource.
Organisational structures can be defines the relationship and interactions between the part of the
corporation (Cull and Zeiler, 2015). The relationship between organisation functions is direct
link with business objectives and its structures. There are various factors which helps to achieve
organizational objectives and structure, such as,
 Human Resource (HR) Management : This is the most important function of the
organization as it is very crucial to recruit eligible candidates for the company which can
help them to achieve their targets. The HR should make sure that recruited candidates are
well qualified for the post and is able to understand his work. HR also ensures that they
get proper training on skill development which will enhance their qualities.
 Research And Development (R&D) Management : The main objective of the R & D
department of IKEA company is to research and help in developing new products and
services based on that research for the company. It also helps to improve the existing
services of the organization which are already present in the market, such as, there are
variety of furniture which available for their consumers in the market but to attract more,
it is very important for them to bring new and unique designs in their product range.
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 Production And Operation Management : The main objective of this department is
work on developing effective strategies for which IKEA company decides to whether
introduce a new product in the company for their customers or not. This department
generally works on planning and scheduling the process involved in the production of
their products and services. They usually deal with the capital, labour, material, energy
of the company to work.
 Administration Service Department : These services helps in dealing all the
administrative tasks of IKEA which includes the feedback and complaints received from
the customers and tries to resolve it as soon as possible. They are also responsible to do
all the documents related work like forms, newsletter etc.
 Sales And Marketing Department : They have the most important task to follow in the
organization. They have the responsibilities of checking the sales and marketing of their
department is going perfect in the market. Marketing of their products can be done by
using various methods, such as, through advertisements in print media, through social
media, etc. It is a good option for IKEA to implement their marketing strategy on these
platforms. There are many ways on internet which can used, for example, Facebook,
Twitter, etc. which is a great option as it is widely used now-a-days.
 Finance Department : This department of IKEA company operates all the information
related to their financial requirements. This department evaluates the overall financial
statement of the IKEA company which will help them to maintain their budget.
There is strong relationship between structures of company, function and objectives. All
these things impact on each other to great extent. There are various departments in IKEA such as
HR, financial, administration, marketing etc. They work together in order to meet with
organizational goal. The main objective of IKEA is to offer satisfactory products and services to
consumers so that they feel satisfied. This can help in enhancing profitability of company. For
that company takes support of its HR department and they hire skilled people those who can
deal with consumers well. These talented people are able to identify needs of consumers and
provide them good and services accordingly. This helps in meeting with organizational goal of
satisfying consumers. Furthermore, in order to raise its profit entity takes support of marketing
team. They conduct market research and find out requirements of consumers. This helps them in
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making changes in existing products so that entity can provide satisfactory products and services
to consumers. IKEA always involve its employees in decision making process thus, it applies
flat structuring. This helps in involving people and getting innovative ideas. By this way skilled
people feel happy and they retain in business unit for longer duration. All these things help
entity in fulfilling organizational goal of IKEA.
These are organisation function help to achieve the objective of the IKEA company, it
main aim to obtain high profitability ratio and increasing their businesses sales (Cull and Zeiler,
2015). Organisation objective ans structures is also depended on the different types of
organisation functions it helps to expand their businesses and sell their product ineffective
manner. It is also helped full for established the relationship customer's.
M2) Analyse the advantages and disadvantage of interrelationships between organisational
functions and its impact on IKEA company structures
The merits of IKEA functional organisation is it is ensures better division of employees
and they increasing the efficiency of the worker and this company perform limited number of
operation. It is referred to the economy this company facilitates their production on a large size
with standardisations and specialisation mann(Ferrell and Fraedrich, 2015)r. They expand their
businesses rather tan other organisation, this firms does not face any problem of limited
capabilities of the same manager so they manage their work in proper way and employees
facilitates effective control their businesses.
The disadvantage of the IKEA functional organisation is some time they people confused their
work, means too much complicated, some time lack of corporation employees are not to do
work in proper way so it is the biggest problem if this company employees are not work with
coordination so they do not achieve their target.
LO3
P4) Identifying the positive and negative impact the macro environment has upon businesses
operations with suitable examples
The positive impact of macro environment of IKEA company all those external factor
are control in effective manner (Ferrell and Fraedrich, 2015). Political, economical,
technological, environmental, legal and social factors are influence in this company decision
making. This is commonly analysis it is refereed to as a PESTLE, the effect of these six analysis
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on the firms. There are some positive impact on macro environment on this organisation is given
below.
Economic environment : it is related with economic system which is included businesses work
this company work has economical relation with the authorities, capital market, household
sectors, global aspect (Ferrell and Fraedrich, 2015). This company main motive to earn profit as
well as providing effective services to their consumer and though this company services
economic environment is also maintained the stability of this business it depends on economic
environment.
Economic conditions: it is referred with the national income, economic development,
economic resources, so this company also maintain their business income and disturbing in
national income and follow all economic polices. The positive impact of macro environment this
company the political conditions is better if they follow are the rules and regulations so it is also
good for this firm. They proper use technology it is also very effective I help to increasing their
businesses sales through using mobiles phones, effective communications, it is also very
necessary (Ferrell and Fraedrich, 2015). They also maintain their working environment area
means making better decision for long term, take corrective actions and maintain their
relationship with customers. These are factors which is exit in positive impact on macro
environment on this organisation. For examples the positive impact if macro environment if
government reduce their tax rated, providing more rate of wage to their employees so it is the
positive impact.
The negative effect of macro economic some time financials crisis arise problem in
stability of the businesses so IKEA company also face this problem in some it is very bad impact
on the organisation. Some time economic conditions is not good like wars, threat create,many
problems so it is also negative impact. Environment changes is also the big issue so these are the
negative impact of macro environment on this firm. For examples the negative impact if this
company adopt technology so cost of per machine is so expensive and working hour of
employees reduce so many worker leave their jobs.
There are many macro elements that impact on overall functioning of business unit.
Political factor is considered as one of the major elements. If government increases tax rates or
makes changes in environmental legislation then it would impact negative on IKEA because it
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will have to change its entire practices. But if employment law has been altered and working
hours is being increased then in such condition employees will have to work more time which
will enhance productivity of workers this will impact positive and will enhance profit of IKEA.
On other hand economic factor is another component. If interest rate gets increased or if there is
situation of inflation. Then in such condition purchasing power of population will get affected.
In such condition people will not be able to buy new products. This will impact negative on
business. But if there is high employment rate then it will enhance income sources of consumers
and they will definitely purchase products which will help in rising performance of IKEA.
Technological factor is another macro factor that impact positive by improving overall
efficiency of operations. Because by using advanadce technologies company can become able to
minimize its errors. On other hand it can increase cost of business which will impact negative on
performance of IKEA.
M3) PESTLE model
It is very helpful for analysis the businesses' environment, it helps to identifying the
performance of the company.
Political: IKEA work across more than 41 nations. Political forces in very country and it is affect
every types of work the stability of this company is better they sales their product ineffective
manner and they also follow government polices it is necessary for expansion of their
organisation and businesses growth.
Economical: this is very important for IKEA organisation, this company managing their product
cost in effective way it is very helpful for handle pressure of arises economic fluctuations (Kolk,
2016). The economic conditions of market places is also played important role that affects the
rate of specific locations.
Social: social cultural is also affected this company it shows the cultural of the businesses,
values of the local area market.
Technological: it is very effective through this IKEA increasing their services adopted new
technology they provide their product services online.
Legal: it is related some major problems like if IKEA start their businesses all over the world so
they follow all different types of norm in according to different country so it is very difficult to
manage.
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Environment: it is also very important aspect it helps to improving the cost of business and
giving better image to the IKEA organisation.
D2) Evaluating the impact of micro and macro factors have upon businesses objectives and
decision making for IKEA
The impact of the micro and macro environment is IKEA develop their market strategies
in proper way, they earn more profit through micro and macro factors. They also maintain their
interpersonal ships as well as customer (Kolk, 2016). So it is very important for this company
grow and expand their businesses in all over the world. The main objective of this organisation
obtaining huge amount and providing quality services to their clients.
LO4
P5) External analysis of particular organisation in order to identifying the strength and
weaknesses of the IKEA organisation
Internal analysis of IKEA
Strength
 Strong brand reputation
 High quality products
 Strong financial condition
Weakness
 Poor investment strategies
 Poor marketing
Opportunities
 Technological advancement
 E-commerce
Threats
 Increasing competition
 Economic changes
IKEA is a multinational organisation, its main motive to earn more profit. The strength
of this company is it is all over world brand reputed firm, they sell their furniture goods at very
reasonable prices. It has strong network with several peoples and they sell their product large
number of stores. It has strong revenue and they also increasing their growth day by day while
using effective technology. This company earn more profitability ration in their businesses.
They also expand their businesses and explore their work in appropriate manner. It is the one
most successful international retailers and is very powerful industry, it sells their product with
new adding unique features (Deasy and et.al., 2017). It also concerted on sustainability, they
operate their work with innovation. The revenue of this company Euros 35.1 billion and the
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growth of these firms 7.3%. They have 389 stores in 48 nations and they maintain their
businesses image for long time.
The weaknesses of IKEA is its high advantage for planing of new shops, they open so
many stores in last five years it is highly as comparison other company. Stores are located away
from the area it so also the big problems. It also includes contention item safety and strength of
furniture they increasing their prices so customer are not easy to ready their buy their products it
is also the weak point so this organisation sell their item in effective or reasonable prices ( Cull
and Zeiler, 2015). Some time they not focus their product qualities so people are not willing to
purchase their services. This company to need to diversify its product or services according to
their local area or according customer taste preferences it will helpful for attract more consumer.
External analysis of IKEA
 Threats of new entrants: IKEA is operating in furniture industry, in this sector threat of
new entrance is low because new firm cannot enter into this market easily and cannot
establish its business without market experience.
 Threat of substitutes: IKEA is facing high competition and threat of substitutes is high.
 Consumers power: It is very high and customers can influence overall business profit.
 Supplier’s power: It is moderate because company can switch to other suppliers easily.
 Competitive revelry: It can influence IKEA business because high competition create
pressure on business unit and it has to make changes in its strategies
All these external are helpful for IKEA company to improve their products and services
which they deliver to their customers in the market. It also ensures to give them information
which can be useful for them to bring changes in their production range. To enhance their
services they need to work on the weakness of the company.
P6) Explain how strength and weaknesses interrelate with external macro factors of the IKEA
Strength and weaknesses is also interrelated with external macro environment of IKEA
organisation, it shows the external strength of this comply and also show the weaknesses so it is
very important aspect (Goleman, 2017). This company is also affected to the external factors it
includes political and legal factors of the businesses so these forces is related to the strength of
the company and weakness. If the company follow legal polices and regulation so it is good for
organisation government also support it is the strength of the firm, if this company is not doing
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their work in according to higher authority so they face many problems (Drucker, 2017). IKEA
is the largest organisation in the world the purpose of these firms to making more profit and
customer satisfactions. The objective of this company to gather all the information of the market
so they produce their product in order to the latest trend in the market so it is very helpful for
increasing their sale of the furniture product (Goleman, 2017). The weaknesses of this
organisation it is controversies regarding safety means IKEA has been arising many argument
like enduringness of certain services has to been question mark with specific item facing quality
issues and product standardisations issues is also created problems.
There are strong relationship between strength and external factors of business. As IKEA
has strong brand reputation thus, it adopts advanced technologies. Whenever new technology
comes into market then it implements it that helps in improving quality of products. As it has
strong financial resources that help in responding to technological changes effectively.
Furthermore, company has strong brand reputation; it does not get influenced by high
competition. It has gained competitive advantage due to its positive brand reputation. Changes in
economic condition impact on the firm, but due to having financial resources it manages its
business well and makes changes in its pricing policies so that it can provide high quality
products to consumers at affordable rate in economic slowdown condition. By this way people
buy its products and they feel satisfied.
Strengths of the company helps in getting them the available opportunities that put
positive impact on their organization whereas weakness increases the threats that influence the
functionality of the organization in adverse manner. The internal operations of IKEA is
influenced by the external macro factors which show that there is an effective link present
between each other in the business operations of the company IKEA.
M4) SWOT analysis and explain how they influence decision making
It is one of the most important strategies' tool and analysis the organisation strength,
weaknesses, coming opportunities, and threats. Most of organisation is used and evaluate
businesses environment. It also shows the actual performance of the company and help to
managing effective businesses decision for the future welfare.
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Strength: IKEA is famous brand in all over the nations, they sell their services at very low
prices. It is vast and number of network with attached this company and they also sell their
furniture product in several stores ((Drucker, 2017)). It has strong revenue and they increasing
their profit margin.
Weaknesses : IKEA shops are situated away from mid of the city. Some time they did not
focus on their product quality so it is the big issue, most of the people are not ready buy their
products so the sales of the businesses is low level (Goleman, 2017). They decrease their profit
margin.
Opportunities: IKEA expand their businesses in effective way, the lot of coming opportunities
in future like if they produce variety of product or quality so more customer attract, or if they
sale their services at low level so it is also good for company (Drucker, 2017). If they make
effective plan regarding their operational work so they have lot of choices.
Threats: some times IKEA increasing their product prices, so many people cannot afford easily,
if they not follow rules regulation so government not allow running their continues businesses.
More competitions with other furniture company.
CONCLUSION
It can be concluded that the important of businesses environment, it is very necessary to
maintain their businesses stability of IKEA organisation. Swot and pestle analysis is also very
crucial aspect in this report it shows the present performance of the businesses and opportunities
of the work and external factors also affected this company businesses environment. The swot
cover all the factors that defines the major strength and weaknesses of this furniture retailer
industry. It also understanding the effect of all external factors like political, economical,
technological, environment, and social on the work IKEA firm. This report gives the briefly
about the history company CEO it also shows its revenues.
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REFERENCES
Books and journals
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Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Cull, R., Navajas, S., Nishida, I. and Zeiler, R., 2015. A new index of the business environment
for microfinance. World Development, 70, pp.357-388.
Deasy, and et.al , 2017.User interface for controlling use of a business environment on a mobile
device. U.S. Patent 9,544,274.
Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson
Education.
Goleman, D., 2017. Leadership That Gets Results (Harvard Business Review Classics). Harvard
Business Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
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