IKEA's Business Environment: Leadership Styles, SWOT, and CSR Analysis

This case study provides an in-depth analysis of IKEA's business environment, focusing on leadership styles, SWOT (Strengths, Weaknesses, Opportunities, Threats), and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) factors. It evaluates how PESTLE factors influence IKEA's ...Read More

Leadership and
Business Environment
– Case Study

Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
SWOT and PESTLE analysis of IKEA.......................................................................................3
Evaluate the manner in which the factors of PESTEL are influencing opportunities and threats
in business. Also comment on the way company is using its strengths for handlings its threats
and weaknesses affecting their opportunities..............................................................................5
Recommend a leadership style from Daniel Goleman leadership style that will help the firm in
attaining its objectives.................................................................................................................5
Comment on Corporate Social responsibility of IKEA...............................................................6
PART 2............................................................................................................................................7
Reflection report..........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business Environment refers to the surroundings of a firm in which it operates. It can be
internal or external. Change in it affects the whole business which can be positive or negative. It
is important for companies to analyse it by application of various tools and techniques (Bhagra
and Sharma, 2018). The company chosen in this report is IKEA. It is Swedish company
headquartered in Dutch. It deals in manufacturing ready to assemble furniture, home and kitchen
appliances and many other goods. The report is divided into two parts. First part conduct analysis
of firm through SWOT and PESTLE. It also mentions the manner in which the factors of
PESTLE are affecting the opportunities of firm and the way company is using its strength.
Further, it recommends on a leadership style that can be adopted by firm. It also comments in
corporate social responsibility of business. At last, it provides a reflection report.
PART 1
SWOT and PESTLE analysis of IKEA
SWOT analysis refers to identification of strengths of a firm that can be used to tackle its
weaknesses and the threats which can harm the ability of grabbing opportunity for business.
Here, is a SWOT analysis of IKEA.
Strengths Weakness
 Its biggest power is its vision of
providing value to the customers. So
they try to grab all information about
the client which helps them in making
them unique from its competitors.
 They create innovative products and
make them easy to transported and
assemble.
 The brand is widely recognised.
 There are some complaints related to
the product and behaviour of
management with employees for IKEA.
This tarnishes its image.
 The quality of products are not that
good (Caseiro and Coelho, 2018).
 They are being criticised on social
media.
Opportunity Threats
 It has chance to grow in more countries
as the company is not operating in
many nations.
 Competition is biggest challenge to the
company. They are providing goods at
low cost.

 It can focus more on its online store
sales by advertising more.
 IKEA also deals in food outlets, it can
convert them into grocery stores
 Due to complaints it can have to face
lawsuits in future.
 Economy is going high and people are
having money in their hands, so they
would not by low quality goods.
PESTLE analysis examines the external environment of business and its impact on the
functioning of a company.
 Political – it checks the influence of government decision on business. IKEA works in
multiple countries and has to follow rules of all those nations. So, any change in stability
of government in these countries will directly impact its functioning (Habib and Hasan,
2020).
 Economic – it analysis the impact of economy on company. IKEA have taken the
opportunity from the slow in market. In recession they prepared low cost products.
 Social – it examines the effect of choices and demands of sales of organisation. IKEA has
to face many offending on social media for removing a same sex couple and a Saudi
Arabian women from their magazine and catalogue.
 Technological- here, the impact on technology on the operations of business is reviewed.
IKEA has changed itself with time. It is no longer using paper mode for its catalogues. It
is availing its catalogues through digital media.
 Legal- It checks the impact of legal policies on firm. IKEA follows all the rules and
regulations in all countries. But still it may have to face legal consequences for proving
low quality goods (Novak and Janeš, 2018).
 Environmental- it analysis the result of environment on the entity. IKEA is focussing on
converting all its in store energy usage through renewable source.
Evaluate the manner in which the factors of PESTEL are influencing opportunities and threats in
business. Also comment on the way company is using its strengths for handlings its threats
and weaknesses affecting their opportunities.
The external factors of environment make their effect on the opportunity grabbing capacity
of business whether positive or negative. All the above analysed factors will have direct impact
on the opportunities of business. IKEA has an opportunity to open its stores in more nations but

it would not be easy for it due to regular changing political scenario of countries. It is not
advisable to enter into politically unstable market. It produces low cost products which can help
it in raising its economic condition by taking the advantage of opportunity of more online
advertisement. But the complaints against the firm can affect its social image and can make the
customers not to buy its goods. IKEA is adopting modern technology which can help it in raising
its reach to the customers via online platform. Business has chances of facing legal obligations
which will affect its opportunity in entering into new market or country. It is engaged in social
activities and contributes in environmental safety (Rendtorff, J.D., 2017). They can provide
organic food material of good quality for increasing its sales and profits. This will also help in
improving its image of providing bad quality products.
All business should use their strength for tackling their business and threats that are
making them lack behind for making use of opportunities. IKEA focuses on collecting
information about customer and provides them goods of their choice. It can be used for making
goods of high quality through which the complaints of low quality product can be handled. It
will help them in entering into new market. The idea of preparing innovate products can be used
for beating high competition level of industry. Through this strength they can make more
effective us of technology. The brand is well recognised, this will help them maintaining its
customers and can help it in arranging customers for its grocery store (Skobkin and et. al., 2017).
Recommend a leadership style from Daniel Goleman leadership style that will help the firm in
attaining its objectives.
Leadership means to provide guidance to the people who are following it. Daniel Goleman gave
6 styles of leadership that are discussed below:
 Coercive (or Commanding)- They takes initiative in every task and take it to success. But
they do not involve any other person in decision making or taking any initiative which
makes negative impact on people.
 Pace-setting- This is like blindly following a person. In this a person asks its subordinates
to perform the task in manner it has done it. But this is applicable only if the person is
highly competent and the team is fully motivated.
 Authoritative – These people are visionary and is applied when there is need of clear
direction. They are highly confident and engage people into the vision of organisation
(Teece 2018).

 Affiliative- They keep people at first. Such leaders have strong communication skills and
empathy and are good in building relations. They bring the team out of difficult situations
and keeps them motivated. This style does not focus on goals and is carried out for
making the people understand what the firm demands from them.
 Democratic – Such leaders are highly collaborative and shows good team leadership and
communication skills. They involve people in decision making process. but under this
process the work starts will slow pace and takes time to take a momentum.
 Coaching- under this, leaders try to convince their members that they can do the work
providing to them. They allow them to use various approaches for finding solution to the
problems. They exhibit high level of skills for developing the opposite person (Van Looy
and Van den Bergh, 2018).
All the above mentioned leadership styles are very important for the business according to
the nature of the situation. Different types of leadership is required to be adopted for various
situations. No one style can handle all sort of circumstances. But IKEA can make use of
Democratic style for raising its sales high. It can make use of it for brainstorming the ideas for
bringing innovation in the goods produced by them. This will help in attracting more customers.
Also, such tasks should be performed by taking time and with accuracy.
Comment on Corporate Social responsibility of IKEA.
Corporate Social responsibility means to involve ion such activities which are beneficial
for society, community and environment of country. IKEA is been involved in many CSR
activities. They are discussed below:
 The IKEA Group is operating 422 stores in 50 stores worldwide. The home improvement
chain of group aims to have a good impact on the local communities where their shops
are localised.
 At a packaging event held by IKEA stores in Sweden, Save the Children, - customers and
representatives were involved for preparing more than 37,000 welcome backpacks of toys
and other products for them.
 In the UK IKEA planted a million trees in communities across the country In Australia
IKEA Perth and IKEA employees carry Adelaide helps improve the environment where
children live and develop.

 Firm launched MY Learning online portal for providing employees face to face and
digital learning platforms (Zhou and Wen, 2020).
 70% employees of IKEA are women and 40% are managers.
 Most of the operation of IKEA are performed through solar panels.
 It owns and operates a number of wind tribunes and has invested a lot for building solar
panels around the world.
 It is making use of renewable and recyclable products. The firm has an aim of using
100% renewable energy.
PART 2
Reflection report
By conducting the above research, I came to know about the importance of analysing the
environment of business. Why the companies conduct SWOT and PESTLE analysis. I learnt that
SWOT analysis helps the organisations to know about their strengths and weaknesses. It assists
them in finding out the opportunities that can be used by them for capturing the market or
increasing their profits. I also came to know that there are various threats for companies which
they should analyse in time for preventing themselves from problems. I also learnt that by
PESTLE analysis organisations try to check out the impact of various external forces on the
operations, profits and reputation of a company.
Earlier, I was not aware that there are different styles of leadership. But through this
research, I not only learnt about them but also checked that these styles should be adopted by
firm according to the situations. The management should check the circumstances and examine
that which of leadership should be adopted. I also learnt that firms should engage themselves in
the activities of corporate social responsibility. It is beneficial for themselves, society and
environment as well. This research helped me a lot in my project. As now, I employed these
theories in mu business and analysed its environment.
CONCLUSION
From the above report it can be analysed, companies must evaluate their internal as well as
external environment for checking their position in market. This will help them in reviewing
their strengths and weaknesses. By this, they can generate information about the opportunities

available to it and what are the threats related to them. This will also aid them in knowing the
external market situations and their condition in respect to that scenario. In addition to this, they
must know that there are different types of leadership style which must be adopted by companies
according to their circumstances. This will assist them in maintaining flexibility in the working
environment and employees will also fell satisfied. Involvement of businesses in corporate social
activities is must. They should take care that they are not harming the society for fulfilling their
own motives. This will too help them in raising their position and reputation in market as well as
customers.

REFERENCES
Books and Journals
Bhagra, A. and Sharma, D.K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills. 12(2). pp.7-24.
Caseiro, N. and Coelho, A., 2018. Business intelligence and competitiveness: the mediating role
of entrepreneurial orientation. Competitiveness Review: An International Business
Journal.
Habib, A. and Hasan, M.M., 2020. Business strategies and annual report readability. Accounting
& Finance. 60(3). pp.2513-2547.
Novak, R. and Janeš, A., 2018. Business process orientation in the Slovenian power
supply. Business process management journal.
Rendtorff, J.D., 2017. Cosmopolitan business ethics: Towards a global ethos of management.
Routledge.
Skobkin, S.S. and et. al., 2017. The development of a business-processes model for the quality
management system in the hotels. Journal of Environmental Management &
Tourism. 8(4 (20)). pp.775-783.
Teece, D.J., 2018. Dynamic capabilities as (workable) management systems theory. Journal of
Management & Organization. 24(3). pp.359-368.
Van Looy, A. and Van den Bergh, J., 2018. The effect of organization size and sector on
adopting business process management. Business & Information Systems
Engineering. 60(6). pp.479-491.
Zhou, P. and Wen, W., 2020. Carbon-constrained firm decisions: From business strategies to
operations modeling. European Journal of Operational Research. 281(1). pp.1-15.