Business and Business Environment Report: Case Study of IKEA

This report provides a comprehensive analysis of IKEA's business operations and its interaction with the external environment. It begins with an overview of different organizational types, sizes, and structures, followed by an examination of the interrelationship between various functions within a business, such as marketing, finance, human resources, and operations. The report delves into the positive and negative impacts of macro-environmental factors, using PESTEL analysis to assess political, economic, social, technological, environmental, and legal influences on IKEA. Furthermore, it introduces the SWOT and VRIO frameworks to evaluate IKEA's internal strengths, weaknesses, and external opportunities and threats, ultimately providing a holistic view of the company's strategic positioning and challenges within the global market. The report highlights IKEA's responses to environmental factors and technological changes, offering a detailed case study of the company's adaptability and strategic decision-making.

Business and business environment

Table of Contents
Introduction....................................................................................................................................3
LO1..................................................................................................................................................3
Different types of organizations..................................................................................................3
Large, medium and small organisations......................................................................................5
LO2..................................................................................................................................................6
Interrelationship of various functions within the organisation....................................................6
Organisational structure...............................................................................................................8
LO3..................................................................................................................................................8
Positive and negative impact of macro environmental factors on business................................8
LO4................................................................................................................................................11
Introduction to the SWOT and VRIO........................................................................................11
Conclusion....................................................................................................................................12
Reference......................................................................................................................................13

Introduction
Business is always surrounded by the internal and external Factors that have huge impact
on the company’s profitability and their growth. It is necessary for the company superiors to be
aware of internal and external factors so they can . identify the opportunities and take
competitive advantages within the market where they are operating their business.
This report will cover case study of IKEA Is Swedish multinational conglomerate That
sells and design readyment Furniture call my home accessories and kitchen appliances among
the other useful goods and occasionally home services.
This report will explain the scope, type, and size of organisations. it will explain how the
function within the organisation are interlinked with each other, including influence of positive
and negative impact on the macro environmental Factors. in the end of this report will
determine how the weakness and strength of the company interrelate with macro factors.
LO1
Different types of organizations

Profitable and non profitable business
There are always two type of organisation of one who always work to identify the needs
and demand of the customers so they can sell their product and earn the probability (Oliva and
et.al., 2019.). Ikea is also Profit earning organisation who sell their product and services to their
customers and earned probability to grow their business more. the other side some of the
organisation does not work to earn probability but their main motivation is to help this society
without earning any profit, they work just to add value in society not to earn money. Examples
of the known profitable businesses are NGO's.
Micro, small and medium sized enterprise and different purposes of businesses
Small medium sized businesses whose personal number fall below certain limits. they're
having a huge contribution in the economy to grow and create large number of employment
within the country. every business start with micro, small and media and slowly they grow to the
large businesses. The Made purpose of every business is to earn profitability by selling their
good sense services. they always come up with the new product and services that can add some
value in customers life and help them to grow effectively within the market. they said their
objectives and supply, good sense services on various channels and their stores.
The range of legal structure associated with the different form of business
The most common legal structures are the soul proprietorship, partnership and private
limited companies. this all type of legal structure have their own way of working and contracts
are totally different from each other.
Sole traders
Sole partnership Or the sole trader is the business which is individually owned by the
person. They are owner of the business alone so they do not share their profits and liabilities with
any other person. If there are need probability then it will be their own and liabilities are also
their own.
Partnership
Partnership business has done between two or more than two people where partners come
in a contract to do business with each other. they share fix amount of capital, profits and shares.

Private limited companies
A private limited company is an entity that is owned privately and used in many
justification, In contrast to a publicly listed company with some different from country to
country.
Size and scope of organisations
Large, medium and small organisations
And Lara organisation is formed when there are more than 1000 employees and more
than 500 personal computers is called large organisations. The large organisations are stand to
for more services and product to the varieties of customers (Čepel, And et.al., 2018). Their main
objective is to earn probability, their market share cover the international and national markets
and growth of companies very high.
Medium
Medium size organisation can have employees from 100 to 1000. it is also used by
growing business who are seeking to manage their working capital, examples of the medium
sized businesses are transport, wholesalers and manufacturers. their main objective is to provide
best possible services to their customers and clients and there market shares are limited and
profits are equally distributed and their growth is also slow.
Small businesses
A small enterprise can have employs around 0 two 250. their main motive is 2 provide
protecting services to the local people and there profit ending and market share are limited.
Global growth and developments of transactional international and local organisation
Transitional businesses are the store that are locally owned and offer the product and
services to their local customers. their growth is limited and their provide product and services to
local community.
International

International business refer to the trading off their coats and services across the word as
of the country an at the global level. growth of this kind of companies are very high and having a
huge network.
Global business
Global businesses company that operate their business in various Princess in all around the
world. IKEA is one of them who are operating their business in various countries and having
higher growth in all of this segment.
Difference between franchising, licencing and joint ventures
Franchising, joint venture and licencing
Franchising involves a relationship that goes behind the grant of, I like science and
includes a relationship of control where underlying, joint venture is the business where two
business plan to work together an expand their business in other countries. . licencing is a legal
relationship that is limited in relates and scope only to the use of trademark or technology
Stakeholders and responsibilities of organising to meet different stakeholders interest and
expectation
Other stakeholders of the companies are investors and shareholders, it is necessary for the
organisation and stakeholders to meet the demand that is return on the investment to fulfil I
providing probability can help to create trust among the outside investors.
LO2
Interrelationship of various functions within the organisation
Various functions within the organisation
There Are various Department at the workplace of IKEA company who help them to
achieve success within the market where they are offering their business. all the functions of this
Department are interlinked with each other and they have common goal which is producing a
goods and services that can satisfy the needs and demand of their customers.
Marketing

marketing is one of the most important function Of IKEA company because This
function is responsible to bring customers who can buy product and service from the company
and help them to achieve their goals and objectives (Grizane, and Jurgelane., 2017). marketing
function interact with other functions as well for example- Marketing team of the IKEA
company help to connect information of the customers needs and demand and they hand over
this information to the production team of the company where they product and services
according to the customers need.
Finance
Finance manager is responsible to ensure the flow of find within the workplace of IKEA.
They provide budget to run other functions of the company because Without having a proper
budget other function can't run their day to day activities and achieve their objectives. they also
ensure Proper use of financial resources to get the best possible result for the company.
Human resource management
Human resource management another most important function of the company because
They are responsible to bring skilful and talented employees who can help company to achieve
their goals and objectives. they also provide training and development programme where
employees get chance to develop their new skills and improve their career. this function is also
interlinked with other function of the company because HR Manager recruit the employees for
every Department whenever they need.
Operations
An operational Department help IKEA to ensure that the production process of the
company is completed from the start point to the end point. This production process needs to line
up with the company’s goals an the other departmentally functions of IKEA. This is how
operational Department is interlinked with the other functions of the company and help them to
achieve their success and daily goals.
How functions relate to overall of organisational mission objectives
Each and every function of the company it’s entirely to the companies missions and
objectives because Their main objective is to produce service an product that can be helpful to

satisfy the needs and demand of the customers (Prajogo, and Oke., 2016). Set increase in
satisfaction level can help company to be successful in their business. Each and every
Department work together becausr they all need each other to run their day to day activities.
Ultimately their final goal is to make final product that can satisfy the needs and demand of the
customers. each and every purchase create achievement of the objective and lead them toward
the mission of the company.
Organisational structure
IKEA company is using Metrix organisational structure at their workplace that make
sure the flow of communication within the company. Metrix organisational structure helps to
increase the flow of communication from the bottom to the top. similarly at work whenever the
top management need to flow the information which is important for the lower level employees
then they can use the Metrix structure to send that information to the lower level. Each level of
the company is attached or linked with other channel. This hierarchy is followed by every level
of the company to send the information.
Organised structure and complexity of transactional, international and global
organisations
In each kind of organisation have different structure according to the numbers of
employees working with in there company (Hudáková, and Masár., 2018). It means then the
transitional level it is not necessary for the organisation to have a complex structure for their
company. international level they required organiser structure becausr here they have various
places where they are operating business but on the global level each and every organisation
need a proper organisational structure to operate their business.
LO3
Positive and negative impact of macro environmental factors on business
PESTEL analysis
Political factor
IKEA is operating their business And more than 41 countries recently which means this
company is exposed with the various potted political environments. UN stability in the politics

have negative impact on the company and again may lose that profit. On the other side a good
relationship is blessing for this company and some of the international markets like India and
China are open for the businesses like a Kia, seeing this positive shift is considering moving into
Asian market. IKEA is taking advantages of opportunity.
Economical
Economical Factors like increasing prices of raw material can have negative impact
IKEA on their profitability but on the other side IKEA come up with the new strategies By
creating a good relation with the supplies helping them to relief and discount on raw material
prices (Aithal., 2017). it is positive impact on the company because Company and of ability and
also provide satisfaction to the customers by providing product and services in lower prices.
Social
Social factors like changing the perspective of customers is affecting the care company
and customers are shifting their brand. It can create positive impact of social factors, if company
follow the Social trends And understand the needs and demand of the customers.
Technology
IKEA is using old technology At their workplace which is affecting their profitability
and other companies are taking competitive advantages by pushing the IKEA beside. Comedian
convert negative impact into the positive impact, if they use the latest and trending technology
at their workplace. It will help them to increase their production level and company will able to
achieve success in their business.
Environmental factors
Environmental factors is creating negative impact on the IKEA because they are getting
Force from the governmental bodies to do their support toward the environmental issues. on the
other side company can use it to create positive and good image toward the society, a good work
towards the society or the environment can help company to create good imagine customers
mind and they can take competitive advantages.
Legal factors

IKEA is having licenced to operate their business on the international market and having
a good reputation with all the government (Ruël, and Wolters., 2016). If IKEA does not follow
the rules and regulation of the government then it can create problem for them and can have
negative impact on their business.
Impact of micro environmental factors on business activities
Micro environmental factors have huge impact on the business activities, new technology
within the workplace of IKEA can increase the production and efficiency of the operational
activities. similarly other social and economical factors like changing customers prospective and
any crisis in the economy affect whole business and their activities.
Digital revolution on production and consumption
The technology has huge advantages for the company to increase their production and
also impact on the consumption of product and services of the company. It is necessary for the
IKEA get up new technology and take competitive advantages through the digital revolution
within there workplace.
Factors that impact
Impact of the social technology the businesses that new technology can enhance the
customer satisfaction and create loyalty among the customers (Kwilinski and et.al., 2019). It is
necessary for the ikea to have a cyber security at their workplace that will help them avoid
leaking their personal data of their business. Emerging BRICS – There are many emerging
market like China and India can have positive impact on the IKEA company, it is necessary for
the IKEA to take benefit of the opportunities they are getting.
Global shifting economy and social power an ethical and sub stainable growth
Slowly economy is growing toward the globalisation and it is necessary for the IKEA to
globalise their business to increase their profitability and achieve success in their business. Social
power can have positive impact on the company, if the company give their contribution toward
the society and understand their responsibility. it will help them to create good imagine
customers mind and they will able to take competitive advantages. It is necessary for the IKEA
to have a ethical and sustainable growth in their business, to gain these sustainable an ethical

growth it is necessary for their business to behave ethically and understand their responsibility
towards society and they should also motivate their employees.
How organisations go through transformation process and overcome resistance to change
in response to change market environment
Change management is important part of the business and it is necessary for the IKEA to
implement necessary changes when it is required (Michael, Reisinger, and Hayes., 2019), change
can create resistance for the company if it is not implemented properly or with the transformation
process. to go through the transformation process at is required for the leaders and managers of
the IKEA to adopt methods of implementing change and one of them is Lewin's Change
management model, It is useful to managing the change, first stage Of this model is unfreeze
where leaders try to motivate their employees by communicating with them another stages
change where real changes implemented an last ages re freeze.
LO4
Introduction to the SWOT and VRIO
SWOT analysis
Strength
 Product sale by the IKEA Are very cost effective an value for the money. customer get a
higher return on the investment the money they spend on their furniture.
 Product sale by the IKEA are famous because of their manufacturing and designing.
Weakness
 Again is operating their business in various countries and political environment of this
countries are affecting because of the corruptions and best example of the corruption with
this company is Russia.
 It is not possible for IKEA to provide quality product and affordable prices because
prices of raw material is increasing day by day.
Opportunity

 Retail businesses are shifting toward the online business and it can be a good opportunity
for the IKEA if they sell their product on online, it will increase the profitability of the
company.
 IKEA needs to keep in cheque about its stakeholders, IKEA has been in the news about
environmental issues many times creating a bad brand image.
Threat
 Competition within the industry where IKEA is operating their businesses very high.
there are many discount sailors who are creating threat upon this company (Çera, and
et.al., 2019).
 Growth of disposable income have lead customers to trade higher in the market chain.
Vrio analysis
Valuable
 The furniture sell by the IKEA his valuable because The design and quality of the
product attract the customers effectively and helping this company to achieve success.
Rare
 Financial resources of the IKEA Is rare because This company is financially strong and
they can use finance to expand their business and spend to adopt new technology within
their organisation to take competitive advantages.
Imitable
 Employees of the IKEA company are not that costly to imitate Because other forms can
also train their employees to improve their skills (Ingenbleek., 2019. ).
Organisation
 Distribution network of the IKEA is organised and this company is using their network to
reach out its customers by ensuring that products are available in all outlets of IKEA.
Key external micro factors including the competitive environment an governmental
intervention that influence business or organisation