Business Environment: Sectors, Legal Structures, IKEA Company Profile

This report provides a comprehensive overview of the business environment, examining the public, private, and voluntary sectors, and their respective roles and objectives. It delves into various legal structures like sole proprietorships, LLCs, and partnerships, outlining their characteristics and implications. A significant portion of the report focuses on IKEA, presenting a detailed company profile, including its history, goals, organizational structure, and operational functions such as information systems, communication, and product development. The report further analyzes the size and scope of organizations and their relationship with business objectives. It concludes by exploring the macroenvironmental elements that impact IKEA's operations, providing insights into external factors that influence the company's performance and strategic decisions. The assignment is contributed by a student to be published on the website Desklib.

BUSINESS AND THE BUSINESS ENVIRONMENT
INTRODUCTION
The term "business environment" refers to the surroundings as well as the internal and external
elements that affect the firm. The business environment is made up of different variables that
influence and give changes to the business. The business environment includes a variety of
external and internal factors that influence business choices and operations. Employees,
consumers, stakeholders, the government, supply, demand, legislation, and other factors all have
an impact on business outcomes.
Public Sector
The public sector firms are government-owned organizations that aim to provide public goods
and government services such as military, police, public infrastructure, public transportation, and
so on for the benefit of society.
Company purpose: Public sector organizations are founded to increase the economy of the nation
by boosting employment levels and to promote to the country's development.
The following are the purposes of the Crown Prosecution Service:
 The primary goal of this organization is to provide assistance to the police regarding
investigations and to assist them in finding the true criminal in order to determine his
punishments.
 Another goal is to help the victim realize his condition and to punish the true culprit.
Private Sector
They include for-profit organizations owned from both the government and other private entities
such as groups and individuals.
The private sector is in contrast to the public sector, which would be normally controlled by the
government. Non-profits and charity are frequently separated into a third category known as the
volunteer or third sector. Therefore, these organizations are usually regarded to be part of the
private sector.
They are an integral aspect of the nation economic structure which is held by private persons and
groups consequently performing operations for creating profit. They are indeed a major source of
growth and development for the nation, as well as a source of per capita income, consequently
broadening the GDP.
The private sector contributes significantly to the economy. Businesses in free enterprise
economies face little government regulations. Such economies are diametrically opposed to
countries with a dominant public sector and dominant governmental control over the economy.

Businesses in the private sector are formed by starting a new firm or privatizing a former
governmental organization. A significant private-sector corporation may also be listed on the
stock exchange. Private-sector enterprises fight for customer dollars, lowering prices for goods
and services.
The private sector has a wide range of organizational types, ranging from small family firms to
international conglomerates.
private sector examples:
 Sole proprietorships,
 Partnership
 Small and medium-sized enterprises
 International conglomerates
 Professional organizations
 Trade unions
Employees in the private sector are often compensated from the company's profits. They enjoy
more regular wage rises, a wider range of professional options, and more prospects for
advancement, but they have lower job security and fewer comprehensive benefit programs.
Extended working hours and a more challenging work environment are frequently the result of a
more competing private market.
The private and public sectors may collaborate to advance mutual interests. For financing,
holding, managing, and promote effective services and facilities, private companies frequently
use governmental assets and resources.
The following are the objectives of the IKEA group:
 Its primary focus is on supplying clients with economical, high-quality products in order
to meet organizational goals.
 Another goal of this group is to increase profits by growing their business globally.
Voluntary Sector
The voluntary sector is mostly made up of nonprofit organizations founded for social objectives.
There are many different types of institutional frameworks, vary from large local societies to big
professional organizations. The phrase can relate to religious organizations, social clubs,
including arts organizations, and also financial organizations, campaign organizations, and
public service organizations.
The phrase "voluntary sector" refers mostly to independent nongovernmental groups that may
engage in economic activity; while, in other nations, the guiding premise is the utilization of
volunteer or unpaid employment. This does not exclude the participation of paid employees a
voluntary organization may be distinguished by the presence of a voluntary committees or by the
activities of volunteers directed by paid workers, and voluntary activity can be performed under

the supervision of governmental organizations. Unpaid work performed outside of a formal
organizational structure, on the other hand, is regarded to be part of the "informal sector."
The position of the voluntary sector is decided by the attitudes and engagement of all those who
volunteer instead of the needs of the community served. It has led to accusations that
volunteerism is sometimes misguided, is often related to historical causes rather than present
concerns, and is frequently unavailable where it is really needed.
These are bodies that carry out social activities, specifically those carried out by particular not-
for-profit organizations that seem to be nongovernmental in nature.
Being made up of diverse organizations, their main goal is to provide advantages and improve
society as a whole without regard for profit. They contribute to the creation of social prosperity
and the advancement of civilization.
Legal Structure
The legal framework used to construct and define business organization and ownership from its
commencement in a certain nation is referred to as the business structure. below are the business
structure kinds:
 Sole proprietorship
The sole proprietorship is the most basic business structure with which to run a business. A sole
proprietorship is not a legal entity in and of itself. It basically refers to the individual who owns
the company and is personally liable for its debts. A sole proprietorship can do business under its
owner's identity or under a fictional name.
 Limited Liability Company
The LLC originated from the desire of business owners to embrace a corporate structure that
would allow them to operate like a traditional partnership. Their purpose was to transfer money
to the members, who declared it on their personal tax returns, but also to shield oneself from
personal culpability for the debts of the business, as the corporate business form does. Except if
the business owner forms a separate company, the owner and partners are personally liable for all
of the company's debts.
 General and Limited Partnership
A general partnership's partners operate the business and are personally liable for the
partnership's debts and other responsibilities. There are both general and limited partners in a
limited partnership. The general partners own and operate the firm and are personally liable for
the partnership, whereas the limited partners are merely investors with no influence over the
business and are therefore not subjected to the same obligations as the general partners.
Every organization must adhere to a variety of legal regulations.

 The central government- is in charge of all of the government's government personnel.
For the country's development, the central government creates many laws and regulations
for state and local government.
 State government- This is a separate thing of government in the United Kingdom that is
overseen by the central government. furthermore, it has control over educational
organizations in order to boost the national growth.
 Local government- entails public administration that encompasses the local economic
area. The main goal of this government is to strengthen policies and procedures for
economic growth.
COMPANY PROFILE – IKEA
IKEA has been chosen as the organization for this assignment. IKEA is a British firm and a
home furnishings trademark in the United Kingdom. The company is well-known for its elevated
products and services. In order to provide customers with enticing items, the company offers
high-quality furnishings, such as house and work furniture, to original and imaginative designs.
The head office are in Delft, the Netherlands.
According to the firm's vision and purpose statement, the business is engaged in the
manufacturing of a vast range of furniture that is accessible to clients at a reasonable cost. The
company's objectives describe the goals for which the company was formed.
Brief history of IKEA
 Ingvar Kamprad founded IKEA in 1943.
 The first advertising issued in the local press in 1945.
 Furniture sales begin in 1947. Local craftspeople create the furnishings.
 The first exhibition hall opens in 1953.
 IKEA begins selling furniture in 1955.
 IKEA Stockholm opens in 1965.
 in 1981 IKEA opened its shop in France.
 The first IKEA store in China opens in 1998.

The company's goals include the following:
 Having a well-known brand image in the market.
 To generate a lot of money.
 To achieve a market competitive advantage.
 In order to achieve client happiness and loyalty.
 To produce inexpensive furniture at a low cost.
 To broaden and diversify the company's operations.
The company's organizational structure is separated into two primary heads: owning stores
and factories and franchising businesses. The organization's structure is intricate and difficult
to grasp. The company's goal is to maximize revenues by supplying high-quality products to
clients, as well as to achieve maximum customer happiness and a high ranking in the
business world.
The company's organizational functions also include following functions, with explanations
of how they relate to the company's aims and structure: information systems, communicating,
buying, distributing, product development, and selling. The organizational structure
determines franchising and managed stores, which encompass the organization's
responsibilities.
Interdependence and reliance on other functions are referred to as interrelationships. The
interdependence enables the dependent organizational activities and operations to meet the
business's organizational goals and objectives. Those operations are interdependent and must
work together to meet the organization's goals and objectives. The functions of an
organization are related to one another, and they also give a line of responsibilities and a
command structure.
Human resources, finance, marketing, sales, and information technology are all functions of
the organization. These various functions must be handled in order to get the best possible
results and benefits.
benefits of organizational function interrelationships:
 It provides efficiency and effectiveness in the task done since individuals are assigned
tasks based on their specialty and abilities.
 The management gains competence in the various functions as well as the benefit of
performing the various functions concurrently since it offers the interrelationships of
the organizational functions.
 Employees increase their abilities as well as gain information about the many
functions of the business by focusing on the various activities of the business.
SIZE AND SCOPE OF ORGANIZATIONS AND ANALYZING
Ikea's company is spread over many nations around the world, and its scope is very broad. The
company operates 46 outlets and 38 in Unites States. The company has over 338 locations in 40
countries.

The structure, size, and scope of any organization are linked to the commercial organization's
aim. It has been found that whenever a corporation has a good organizational structure it can
create a large aim as its target. If a company has a tiny amount of people in its organizational
structure but no one ever knows what their role and duties are, meeting the goal will be difficult
due to a lack of definition in the position. In contrast, any commercial company establishes goals
depending on its size. If a company is large and produces a lot of money, it will set a significant
aim as its desired outcome.
Organizations can define their business objectives by assessing their corporate scope. If a goal of
the company is to serve national customers, its objectives will reflect this. While, on the other
hand, they observe that they serve a global audience, they will adapt their business objectives
accordingly. The product and service determine the structure, size, and scope of an organization.
Whether or not a corporation knows that their product does not require a massive organizational
structure, they do not employ it. If the breadth of a product or service is big, an organization
develops a fully integrated size and scope; otherwise, they create a smaller company.
Macroenvironmental Elements
IKEA is a furniture retail company that deals in world-class furniture with creative and
traditional designs, attracting clients from all around the globe. There are numerous external
influences that influence company functions. The uncontrolled macroenvironmental elements
have an impact on the organizational operations of the company. These macro - environmental
elements have an impact on the organization's functions, both positive and negative.
The external environment in which the business's works is referred to as the macro environment.
Organizations' external environment encompasses aspects such as political, economic, social,
and technological considerations. Changes in these parameters have a direct impact on the
company's growth and success. These macroenvironmental elements have an impact on a
businesslike IKEA, which is in the furniture manufacturing industry.
Advantages and Disadvantages of Interrelationships between organizational functions
Beneficial effects: The positive effects that the macro-environment may have on IKEA's firm
can be ascribed to favorable things such as tax rates, rules, and legislation as they relate to the
business. Satisfied customer, for example, could be beneficial to the firm.
Negative effects: The negative effects of the macro - environmental on the firm could include
abrupt changes in advances in technology, economic factors such as things like tax prices,
cultural factors such as market shifts, and changes in government policies, all of which have
been used for macroenvironmental political factors.
ADVANTAGES AND DISADVANTAGES OF INTERRELATIONSHIPS BETWEEN
ORGANIZATIONAL FUNCTIONS AND THE IMPACTS THEY HAVE
Advantages
 It supports specialization by allowing you to complete even greater task in less time.

 It assists in the establishment of coordination since personnel working inside a
department are really in their individual tasks and can readily communicate with one
another at the department level.
 It assists in enhancing managerial efficiency by having personnel repeat the same tasks
until they become more effective, hence increasing earnings.
 It assists in the facilitation of training.
 It enables the organization to conduct tasks in accordance with the purpose, minimizing
duplication of effort.
Disadvantages
 Because activities are undertaken by numerous top managements, customers may not
receive the most up-to-date project status.
 It may cause disagreements amongst top management, which could stymie project
development.
 It may result in a lack of cohesiveness.
 It has the potential to damage interactions among members of the group.
Since organizational functions assign tasks into separate departments that rely on one
another, the interrelationships among organizational functions may have a negative impact on
the organizational structure. Whether any department fails to do its duties, the entire
organization suffers.
INTERNAL ANALYSIS
The internal analysis of the organization is that which is evaluated, as well as the examination of
internal elements affecting the firm. Internal factors are those that can be controlled, and internal
factors of the organization also include elements of the organization's strength, weakness,
opportunity, and threats to enhance business operations. Internal analyses are performed in order
to enhance and concentrate on the companies' weaknesses and strengths. IKEA's internal analysis
comprises the company's inner business environment, which includes management as well as
employees, vendors, and stakeholders. The access of resources in the organization is the
business's strength, and the company makes optimal use of organizational resources for
organizational performance. Another component is the company's effective management, which
is committed and strives toward the attainment of the corporate goals.
EXTERNAL ANALYSIS
The external analysis of IKEA describes the core advantage as the social aspects that reflect
IKEA's customer delight, and the weaknesses as the rapid technology developments to which the
company must react and keep prices updated.
Strengths and Weaknesses that are linked to the external macro factors.
STRENGTH

Strength refers to the variables that might bring beneficial aspects to the company, such as varied
ways and strategies for improving its activities. The company's strength boosts its capacity to
compete more successfully than competitors and obtain a competitive benefit.
IKEA's strengths are as follows:
 IKEA's strength is the simplicity of its vision and mission statement, which benefits the
company in terms of social elements because stakeholders understand the company's
goals.
 Customers' satisfaction is also related to the company's social elements.
 The company's success in the shape of a good reputation is tied to technological elements
because it uses advanced technologies to create furniture.
 It incorporates a great deal of innovation into its products.
 The business has a brand image, as a result of which it is more well-known amongst
clients.
 It operates on the basis of an integrated supply chain.
 The company provides a variety of products.
WEAKNESS
Weaknesses are aspects of the business that are weak and have room for improvement in order to
achieve efficiency and effectiveness.
The following are some of IKEA's weaknesses:
 The business's quality has been noticed to be deteriorating and low, that has broken the
link of customers to the company.
 The external variables with which the organization must cope are the control over
business activity in each country.
 The higher manufacturing costs are influenced by the economic variables in which the
business operates.
 IKEA's advertising operations are influenced by technical elements.
M4
STRENGTHS WEAKNESSES
 The organization's most valuable asset
is its well-known brand image.
 One of IKEA's weaknesses is its
inability to maintain control over its

 IKEA has a distinct vision and goal,
and also strong objectives and
strategies.
 Its greatest asset is its ability to satisfy
customers.
enlarged business while adhering to
the same criteria.
 The production cost is significant.
 Given the massive scale of the firm,
there is a lack of advertising and client
interaction.
OPORTUNITIES THREATS
 Clients' demand for environmentally
friendly products.
 Customers are drawn in by the
products' low cost.
 To keep loyal clients, the organization
might also promote sustainability.
 Market entrants who are new rivals.
 The impact of macroeconomic forces
on business.
 There are several market forces at
work in the marketplace.
Political Factors
Political factors are those who have political repercussions for the organization's functioning. It
is government action that influences organizational functions by enacting legislation or
regulations. The beneficial impact of political elements on IKEA's business functions is that they
impose prohibitions on unfair business practices and manage the organization's actions. The
negative influence of political variables is that they disrupt with business activities, creating
hurdles to freely performing company functions.
Furthermore, an unfriendly government could make exporting and importing foreign
items problematic and time-consuming for businesses. IKEA's success is contingent on its
partnerships with the government. Good partnerships will keep the company steady, ensuring
that the firm's revenue is safe and not jeopardized. Asian countries, such as India and China,
have become increasingly open to international firms, creating an opportunity for organizations
to enter Asian market share and expand their operations.
Economic Factors
Economic factors include the demand and supply of the business, which influence organizational
activities and the many economic developments in the financial system. The beneficial impact of
economic factors on IKEA's business functions would be that they constantly reflect the
economic policies and pricing changes, which also attempts to evaluate the desires and
operations based on the requirements, while the negative impact of these variables on the
business is that it provides inflation and deflation, which affects the firm's work.
IKEA is a firm that offers furniture and other non-essential or accessories products. That is,
many customers did not want to spend money at the shop at the time. Because there were fewer

purchases, the company was forced to lay off workers in order to pay bills as well as other
necessary financial expenditures.
Social Factors
Social factors would be those who involve the living, money, and faith of the individuals in the
community, as well as their culture, and have an impact on the company's business functions and
marketing strategy. The social component has a favorable impact on company operations since
the culture of society and religion embrace reforms and creativity, which enhances the
organization's functions. The negative influence of the organization's social elements is that it
restricts the company's ability to function and operate in accordance with the culture and religion
of the various societies in order to benefit from sales and attract clients.
Ikea analyzes what is useful for a particular location depending on the culture and society of the
country. If the organization had printed the same magazine in every country, this would have
faced even more reaction and resentment. As a result, the company would lose money, which is
the primary goal and purpose of IKEA, like any other large corporation
Technological Factors
Those would be the elements linked with technological changes and techniques of doing
business in a corporation. In terms of employee training, the modern technology has an impact
on the company. The positive impact of technological factors would be that it enables businesses
and organizations to function with latest tech and start competing more effectively with the other
competing companies, whereas the negative impact of technological factors would be that it
tends to cause interruptions in organizational operations and activities and has an effect on the
organization's economic business. Human resources are indeed being trained to discuss the new
practices.
Having a website for IKEA is essential since most clients will order online and would like to
view the business on the website. It will enable stockholders to see the major factors of the firm,
the comments on orders, the description, or any other vital things. People can find the nearest
IKEA shop to them by enabling locations or entering their address.
Furthermore, IKEA works hard to achieve the highest level of customer satisfaction since it
benefits much when customers are delighted with their orders and the quality of products. This
results in new favorable reviews, customers referring the store to others, and, lastly, customer
loyalty, which is among the most crucial things in a business. IKEA is the largest furnishing
company to this very day since the team puts in a lot of effort to understand their customer base.
Environmental Factors
Environmental influences include physical environmental changes that influence organizational
activities. The effects on the performance of the organization include environmental changes
such as season, natural disasters and pollution. The beneficial impact of environmental variables
on IKEA is that it helps to prepare risk prevention measures to address worldwide catastrophes
and also helps the enterprise to be environmentally friendly. This would require a great deal of

effort to address the effects of environmental components, which results in a postponement to
achieve organizational goals and fulfill obligations on time, as a bad effect of environmental
variables on organizational factors.
IKEA is an environmentally friendly firm that invests in it. Over $1 billion has been donated to
developing countries for renewable energy. IKEA's goal is to use 100% renewable energy in
their stores. This might be accomplished by purchasing wind and solar systems. Another goal of
IKEA is to employ more sustainable materials like wood and cotton.
Legal Factors
IKEA, like every business, is compelled to abide by all government laws and regulations. Since
IKEA is a global corporation that trades globally, it is critical that it follows the rules in each
nation. Failure to do so may result in fines, restraint, and limitations on the firm, or even being
barred from importing or exporting products to the country. Furthermore, because IKEA is a real
business, being up to date on labor rules is important.
Legal factors include various regulations and tax rules that apply to business tasks such as sales,
production, and buying. Legal factors have an impact on these functions. The beneficial impact
of legal aspects on the activities of the organization is that it prevents excess fraud and unfair
influx and outflow of cash and company trade. However, the negative influence of legal aspects
on business activities is that it raises the cost of production for IKEA, and changes in legislation
on a regular basis help to create in the activities and running of the company.
For example, IKEA hit the headlines due to poor product quality. IKEA furniture and products
have crashed or turned over, harming individuals or children and even resulting in tragic
accidents. These incidents compelled the organization to thoroughly examine and assure that
their products are extremely safe. Nevertheless, it may have a significant bad influence on their
reputation, that they may not be able to restore from, as well as financial consequences, which
are impacted by lawsuits.
The PESTLE and SWOT analyses aim to collect data and serve as a foundation for making
decisions on IKEA's strengths and weaknesses, help managers to make the best decisions for the
company's operations.
SWOT analysis is one of the subjective strategies used in attempting to achieve a goal. SWOT
analysis also entails defining the target and identifying external and internal elements that are
bad and good.
SWOT analysis is one of the business tools that assist IKEA in capitalizing on someone's
abilities, talents, and chances. SWOT analysis may assist the IKEA Organization in summarizing
and clarifying the key problems and challenges in any company and assisting the organization in
making decisions in order to build new objectives and strategies.

SWOT analysis assists any corporate organization in maximizing their strengths and minimizing
their weaknesses so that they may capitalize on growth opportunities while minimizing threats.
TOWS Analysis
is the examination of a company's threats, opportunities, weaknesses, and strengths in order to
make strategic choices.
D1
Businesses are the means through which various sorts of companies are founded. Each type of
business with a different arrangement performs a variety of functions. However, the form of such
arrangements and their interrelationships varied, making their organizational and operational
ramifications crucial. Due to the extreme simplicity of the business scope, sizes, staffs, and
objectives, micro firms have the most basic corporate structure. Those companies handle a
variety of business services, but they do so quickly and collaboratively. For instance, a small ice
cream business may manufacture ice cream and offer it to clients in a proper manner, ensuring
distribution and customer service. As a result, the interrelationships between the activities of the
microbusiness are simpler and more obvious in nature, simplifying the enterprise model as well
as general performance of the company. Furthermore, the business structure issues of small- and
medium-sized enterprises as a company or partner organization are modest. Through increased
interdependence amongst the tasks, the work of these organizations has become relatively
distinctive and organizational efficiency has been enhanced. In a multinational organization, the
structure of the company is sufficiently intricate for many diverse functions. The multinational
business with regional activities really does have the most complicated business model.
Corporate functions need to be specified and connected for higher success.
D2
Various macro and micro environmental elements have a direct impact on corporate goals and
decision making at all levels. Managers make critical judgments depending on global and micro
factor conditions. Managers set broad growth future goals if macro and micro circumstances are
favorable. For instance, if economic considerations such as interest rates are lower, managers
might set greater growth goals and pursue a development strategy that would increase the
company's output in new locations. As a result, both macro and microenvironmental influences
have an impact on corporate operations, as well as goals and decision making, in both positively
and negatively. Furthermore, the development of these developing markets and advancements in
the technical parts of the business enable IKEA managers to pursue a business strategy in which
the corporate aim is redefined.
IKEA is a business that mostly deals in the furniture sector and has developed itself in many
regions of the world. The impact of macro and micro effects on the business performance is
detailed in this research. The micro environment consists of aspects such as IKEA's management