Demonstration of IKEA's Understanding of Austrian Business Environment

This report provides an in-depth analysis of IKEA's business operations within the Austrian marketplace. It begins by assessing the business environment, highlighting Austria's economic stability and attractive market conditions for IKEA. The report details IKEA's background, its global presence, and its expansion strategies, focusing on factors like birth rates, housing trends, and environmental considerations. It explores the application of Porter's five forces model to IKEA's Austrian business, examining the bargaining power of customers and suppliers, and utilizes PESTLE analysis to assess sociological, technological, and cultural environments. The report also includes data and graphs illustrating IKEA's growth and market share in various countries, including Austria, and concludes with an overview of IKEA's competitive advantages, including product differentiation and pricing strategies.

DEMONSTRATION OF
AN UNDERSTANDING
NATURE OF
ORGANIZATION

Table of Contents
INTRODUCTION...........................................................................................................................3
Assessment of the business environment prevailing in Austria marketplace.........................3
Background of the business ...................................................................................................4
CONCLUSION .............................................................................................................................11
REFERENCE ................................................................................................................................12

INTRODUCTION
In order to understand the environment every organization includes various system of
activities and behaviours. In addition to this, it helps to enable human and their machines to
accomplish goals and objectives of the enterprise (Hooper-Greenhill, 2013). It also joint
functions of human characteristics and nature of the task environment which consist in
environment of the firm. Present report is based on IKEA which operate their functions Austria
marketplace. Now they want to expand their market in Austria workplace. In respect to this, they
can use strategy to enter in new place of cited country. They offer services through online and
offline stores through customers can access according to their convenience (Wang, Solloway and
Busemeyer, 2014). In this report covers, report should be focused around the cited firm. In
addition to this, report covers confirmation of the country and organization's feature which create
major impact on the businesses.
Assessment of the business environment prevailing in Austria marketplace
IKEA group is the largest global retailer of furniture. They offer their products in online
and offline both stores. In addtion to this, Austria is the most popular market which conduct
activities for farmers, flea and potters. They offer most preferable brand of furniture in the world.
Austria is developed country which has stable and strong performing economy (Kirst-Ashman
and Hull Jr, 2014). In addition to this, their economic resilience and sustained growth provide an
attractive, safe and low-risk environment to IKEA. Thus, organization can perform their
functions in a systematic manner. The business can expand their operations through providing
their products at different places. In respect to this, they can make new products in term of
expanding products in movable furniture (Wynn, 2013). With the help of this, organization can
produce goods which can be carry from one place to another without facing any difficulties. In
this criteria they have enough capital to attract potential customers at global place (Bickmore,
2013). Along with this, Austria has a strong political and financial system which has low public
debt and low unemployment. Beside this, Austrian market support to cited firm because in the
nation there high-skilled workers available and workforce is diverse. Therefore, Austrian

economy is supported by long standing and healthy political system of the country (Taylor,
McNicholas and Reed, 2014). Further, government of Austria provides a framework which
ensure trading of chosen business is fair for consumers. The framework is administrated and
enforce by the Austrian Competition and Consumer Commission (ACCC).
Austrian Consumer Law (ACL) also made by the government which provide regulations
on unfair contract terms, consumer rights guarantees and penalties. In this term, government
protect to the customers from the operations of IKEA functions. In addition to this, Product
liability regulation regulate by the national statutory framework of Austria marketplace
(Tomlinson and Fai, 2013). In this chosen enterprise follows safety and information standards
related to products. These standards designed to ensure harmful products are not marketed in the
Austrian marketplace.
Background of the business
IKEA is business which sale their five star furniture in the whole world. The company
started their business to sell furniture in 1943. Their first Mobel-IKEA store is established in
Almhult, Smaland in 1958 which is known as Mobel means “furniture” in Swedish. Outside
Sweden the store is opened in Norway (1963) and Denmark (1969). From the starting time IKEA
taken different path through they decide to sell products throughout the world. This is because
people have different perception, needs and tastes (Hooper-Greenhill, 2013). Thus, those people
who want to improve their home and creating better everyday life, IKEA is help to offer wide
range of the products and services in the world. In this context, they combine good design,
function and home furnishing in IKEA stores. The business started selling their products at very
low prices.
IKEA is the major international business in the whole world which provide furniture,
home furnishing and housewares. In respect to this, company design their products by their own
way (Taylor, McNicholas and Reed, 2014). Their main stores around the world established more

than 140 that are spread approximately in 30 different countries. They mainly offer their
products through mail-order, surrounding the stores locations.
Information to plan the business organization
In order to expand the business in various parts of the nation, IKEA mainly concern with
many stores which are established in Sweden, Germany, Belgium and Netherlands. Now they
considered their possible expansion which are linked with trends in birth rates, new housing
started and age structure of the population. (Hooper-Greenhill, 2013) In addition to this, they
also expand their market in other countries through they can enhance their profits easily. In
respect to this, they use precious environmental resources such as forests, lakes and mountains.
Along with this, company also make practices of being environmental friendly. In this context,
they save their money in the production case through making less cost products. In this, company
also reduced amount of cardboard packaging material used by the organization (Kirst-Ashman
and Hull Jr, 2014). Company websites challenge to customers to search for new and economical
uses of precious environmental resources such as air, river and many more things.
Before making the business plan for IKEA marketplace, business need to establish
aspects on such fundamental elements. In respect to this, they can plan to considered time frame
within the business. In addition to this, business need to analysis planning criteria and need for
business plan. In respect to this, they will easily demonstrate various things which can be
competing within the organization (Bickmore, 2013). In respect to this, organization can also
determine their goals and objectives with considering operations of the company. In this aspect
cited business have need to make sure effective plan through making effective marketing within
the enterprise.
Further, business can select criteria to select appropriate strategy within the updating
business plan. In this aspect, organization can enhance their businesses plan with the help of
business strategies (Kirst-Ashman and Hull Jr, 2014).
Background of Austria
Austria is highly developed country which has high level of economy and prosperity. In
respect to this, global trade and investment has been placed which support to the every business
of country. In addition to this, cited nation has also strong tradition to making reliable protection
of prosperity rights. Further, country has transparent legal system which contribute effective

measurement in the organization with measuring effective goals (Wang, Solloway and
Busemeyer, 2014).
Business environment in IKEA
IKEA has strong business environment which consist monopolistic competition in the
marketplace. In this context, their industry has lot different furniture stores in that they can
compete with others. The cited firm has high degree of market power which is beneficial for
Austria marketplace. Along with this, business has various products' differentiation. The
company also considered flat packing which save shipping costs and reduce labour & stores
costs (Bickmore, 2013). In respect to this, enterprise offer their customers lower competitive
pricing. In this context, company adopt new market structure through pricing, Tweaked and
location strategy.
Plan to make business organization successful
In order to carry business plan, IKEA can apply Porter's five forces model which consist
different elements. In these regards, organization has threats of major components such as
pricing decisions, ability to supply, cheaper price and make products be different from existing
(Hooper-Greenhill, 2013). In this context, following aspects can be considered: Bargaining power of customers: In Austria market has very strong affects on IKEA
businesses. In this aspect, organization considered intense competition in cited
marketplace. In addition to this, customers has wide choice in global and local
marketplace. Thus, major effects of this power, organization can improved relationship
with their customers. As results, customers has positive response such as better life every
day and they are not alone to operate functions in the marketplace (Tomlinson and Fai,
2013).
 Bargaining power of suppliers: In the term of bargaining power of suppliers, cited firm
do not posses substantial bargaining power within the environment. In respect to this,
cited firm also pursue strategy through IKEA can form strategy to make long term
relationship with their suppliers. Main effects of this is it can be helpful to cited firm as
they can make effective transactions within the businesses. In addition to this, main
response of this is creates distribution and purchasing and close with suppliers (Kirst-
Ashman and Hull Jr, 2014). As results, cited firm can maintain their transactions in
effective manner within the business operations.

Further, organization can also use PESTLE and cultural environments through they can
operate functions in Austria marketplace. In this context following aspects can be uses to make
effective environment:
 Sociological environment: Corporate and social responsibility program consist effective
role in the IKEA. In respect t to this, in sociological social trends and Swedish lifestyles
considered (Bickmore, 2013).
 Technological environment: in respect to this, organization mainly use business tools,
customer services and grown in the websites. In this context, cited firm can make
decisions regarding technology services. As results, business can adopt various functions
related with goals of the firm (Morris, Kuratko and Spivack, 2012).
 Environmental concern: In respect to this, in IKEA marketplace sensitive environment
take place in which business use raw material and energy to produce their products
(Hooper-Greenhill, 2013).
 Cultural environment of IKEA: In terms of cultural environment of IKEA market,
organization follow low power distance and femininity. In respect to this, business can
share vision throughout the world with build relationship with co-workers. It will assist to
balancing responsibility and freedom with making good leader in the business. In respect
to this leader must be good listener (Kirst-Ashman and Hull Jr, 2014).
Hence, it will help to develop global organization to IKEA in Austria marketplace. In
respect to this, company can capture the market in various part of the world. As results, it will
assist to keep strong player by making investment in the country. In addition to this, it will also
helpful to make more profits for the organization. Thus, company has strong cultural
environment (Taylor, McNicholas and Reed, 2014). Further, Porter's five forces model help to
develop transaction with customers and suppliers as well. In respect to this, business can easily
maintain their relation with suppliers through making effective participation in the business. As
results, they can easily monitor on the performance of the company and make it very effective.
Along with this, business will able to demonstrate plan with the help of making effective
parameter in the enterprise. It will assist to make well and good transaction within the
environment of company (Tomlinson and Fai, 2013).
Data/ graphs for IKEA marketplace

IKEA also operating their monopolistic market in Austria in which they grew bigger.
They increasing their potential customers and have loyal clients throughout the world. In the
following manner company grow their business in different part of the country:
In respect to this, business mainly set their targets through they can achieve competitive
advantages (Wang, Solloway and Busemeyer, 2014). In this context, organization develop their
market in various parts of world and Austria as well. In addition to this, firm will develop their
plan which help to them grow their business easily.
Illustration 1: Development of various stores
Illustration 2: IKEA growth in various markets

From the above graph it can be stated that IKEA grow their business in various part of
the world. In respect to this, they will demonstrate their functions in Germany, USA, France, UK
and many more country (Collins, D. 2013). In order to carry this, organization can also operate
their functions with planning and in that they can establish their new market within the country
and outside the nation.
With the help of graph, organization can identify their operations in different part of the
world. In addition to this, it will assist to make company description, market analysis of cited
country, and organization aspects of the enterprise. In respect to this, business can provide
services and products line in different areas (Wenger, 2014). Thus, they can manage marketing
and sales fundamental of the company.

Further, the organization has also considered key sources information regarding their
plan. In this context, the business makes their system which is feasible for them and demonstrate
many things within the enterprise (Mansfield-Devine, 2016). In respect to this, following process
mainly adopted by the IKEA in Austria marketplace:
Analytical approaches
Analytical approach is used to analysis and break the problem into the element which are
necessary for solve the problem. It is uses to choose appropriate method and process for a
Illustration 3: sample layout for company furniture

problem which can take place to make small parts of the whole problems. Each problem solve in
systematic manner (Magstadt, 2016). In this context, cited firm face many problems when they
are operating their functions in Austria market, in this context, they can use following methods
through business can overcome their problems: Observation: With the help of observing. IKEA can take place through they can solve
their problems. In respect to this, they can identify problem at the workplace with the
observation. In this context, business continuous monitor to the organization
performance. If the organization find, they are lack in maximising profits, they need to
take action regarding this and demonstrate way through they can enhance their profits
(Kohonen, 2012). Interviewing: With the help of taking interviews, IKEA can expand their businesses in
Austria marketplace. In this context, organization taking interview of various members
who are working within the enterprise. In respect to this, cited firm taking views of
different members of the businesses regarding operations of the company. As results,
they can find solution to overcome the problems of the enterprise (Mascola, and Haynes,
B. F., 2013).
 Collecting taxes and artifacts: In this context, government collect taxes from the various
parties such as businesses and professionals etc. In respect to this, IKEA has also pay
taxes and they can determine where the company lacking to make effective transactions.
Different methods helps to collect taxes from the organization and it will assist to make
effective participation of each and every member of the firm (Spain, Harms and
LeBreton, 2014).
CONCLUSION
In order to carry this report, organization can make their plan through to understand
different needs of the customers towards the products and services. In this context, cited firm
adopt some information which is related with the planning and optimizing various aspects within
the organization. In respect to this, IKEA make their plan through adopting various informations
related with the business transactions. In addition to this, cited firm use some strategies through
they can operate functions in various parts of the world. In this aspect, business will easily find
issues which they are facing through operating functions within the environment.

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