FDN005 Business and Tourism: IKEA Management Model & Macro Analysis

This report provides a comprehensive analysis of IKEA, a global furniture and home goods retailer. It begins by exploring a suitable management model, focusing on Maslow's Hierarchy of Needs, and how IKEA utilizes it to motivate employees. The report then delves into the macro environment of IKEA's operations, conducting a PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors impacting the company. The analysis includes practical examples, such as the impact of Brexit and cultural considerations, to provide a detailed understanding of IKEA's external environment and its implications for the company's strategies and operations. The report aims to provide a comprehensive understanding of IKEA's business strategies and its response to external factors. It covers topics such as motivation, external environment, and the application of business tools like PESTLE analysis.

IKEA

Table of Contents
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
Discuss suitable management model.......................................................................................................3
TASK 2.......................................................................................................................................................6
Analysis of macro environment...............................................................................................................6
CONCLUSION...........................................................................................................................................9
REFRENCES............................................................................................................................................10

INTRODUCTION
Business is a commercial activity under which goods and services are provided to
customers in exchange of monetary value. There are ample of activities performed in business in
order to convert raw material into finish goods. Business also plays a crucial role in economic
growth and development by offering employment opportunities to individuals. Management is
imperative for running business in proper and systematic way (Esther and Kumar, 2016). Along
with this, external environment also put a profound impact over operations of company. IKEA is
considered for current report which deals in ready to assemble furniture, home accessories and
other products related to home services. It was established in the year of 1943 by Ingvar
Kamprad and has its headquarter in Netherlands. It is a well known brand with strong market
presence nearly across the world. The present report includes a suitable management model with
necessary theories that is applied by company for managing operations in best possible way.
Additionally, PESTLE analysis has also been covered in the report with an aim to carry out
external analysis.
TASK 1
Discuss suitable management model
Management model is a framework which is made by top level managers of organization
regarding objectives, motivating human resources, allocating resources and more. Management
models are applied in order to manage different activities and functions of company in an
efficient manner. In addition to this, management model is also helpful for preparing appropriate
strategies so that organization can attain set objectives within stipulated period of time. Here, H
Fayol, Frederick Taylor, Peter Ducker are some prominent personalities in the field of
management (Swensen, 2018). They evolved various principles such as scientific management,
motivation and more. In management, there are different principles are followed so that all the
activities can be performed in systematic way. In reference of IKEA, it is a well known company
which gives significance to human relations and apply appropriate management model for this
purpose. They make sure to keep employees satisfied so that they put maximum efforts for
growth of organization.

Maslow’s need hierarchy model
It is a model which is based on human behavior at work place. This model was developed
by Abraham Maslow’s in the year of 1943. Main aim of this model is to identify the psychology
behind human behavior and motivate them accordingly for achieving the maximum level of
employee satisfaction. According to this, human resources can be motivated by fulfilling their
needs in hierarchical order. In this, needs are categorized from basic to advance level. Moving
towards next level of hierarchy, it is vital to first fulfill the basic and fundamental needs. In
context of IKEA, they give higher importance to work force and prepare appropriate strategies to
keep them motivated. For this purpose, different levels of needs hierarchy are mentioned as
under:
Physiological needs: It is the lowest level of needs which comprises all the fundamental
requirements without which, it is quiet difficult to survive. All the basic requirements which are
essential for survival are included in Physiological needs. It comprises need of food, shelter,
cloth, education which is really important (Getz and Haight, 2020). Without fulfilling these
requirements, individuals cannot move forwards towards next level. In case of IKEA, they make
sure that all the employees working within company are able to meet with their basic needs. For
this purpose, they provide timely salary, incentives to work force so that they stay motivated and
work hard for success of organization.
Safety needs: After meeting with basic needs, the next level is related with safety needs
in which an individual wants to feel safe and secure. Here, individual seek for protective and
secure environment. It also includes requirement of financial safety and security for meeting with
uncertainties in future period of time. In context of IKEA, they ensure to provide safe and secure
environment to work force for minimizing number of accidents and unpredictable events at work
place. They also provide insurance to employees for covering the risk and stimulating work force
in an efficient manner.

Love and belonging needs: Humans are social elements thus seek for interacting others.
It outlines need of friendship, love, care and so on. In this, individual wish to be a part of group
failure in which might cause depression and loneliness (Katuu, 2016). For stimulating employees
to work harder, it is also vital to fulfill their social requirements. For this purpose, IKEA arranges
sucn activities where employees can interact with each other informally. It is imperative to
strengthen the relationship and bond of employees. Further, it also helps in improving
coordination and collaboration among work force.
Self Esteem needs: It is higher level need which occurs after fulfillment of above stated
requirements. Self esteem needs are related with receiving recognition, acknowledge,
appreciation, respect from others. It provided a feeling of pride which is also vital to stimulate a
person to work in desire manner. In IKEA, authority acknowledges efforts of employees and
provides them appropriate rewards, recognition accordingly. Monetary benefits are not enough
for satisfying a person. If, a persona is well establish then it is important to opt non monetary
ways of motivation. With this, employees consider themselves as a crucial part of company thus
work in predefined way for achieving growth and success.

Self actualization needs: It is the most advance level of Maslow’s need hierarchy which
occurs after satisfying of all above stated requirements (Clark, Guenther and Mitchell, 2016). It
is related with realization of own potential. In this, individuals put efforts to bring the best out of
them. In context of IKEA, they provide opportunity to employees to identify their potential and
work hard for using own talent and skills in best possible way.
TASK 2
Analysis of macro environment
Macro environment is the condition which exists in the whole economy rather a
particular sector, region. It is really wide which comprises a lot of economical aspects which
further put impact over business in an efficient manner. Macro environment comprises various
elements such as interest rate, GDP, inflation and more. Each and every company is affected
with macro environmental factors. For gaining insights about macro environment and its factors,
company conducts a deep study which further provides significant information about political,
technological, socio- cultural and other such factors. Additionally, analysis of macro
environment is also important in order to prepare effective strategies for dealing with external
impacts in an efficient manner. It is stated that IKEA is a well known organization which is
working in various countries including developed and developing nations across the world.
Hence, there its operations are highly affected with macro environment. For meeting with
requirement of macro environment, it is vital to prepare suitable strategy after detailed analysis.
PESTLE analysis
It is a strategic tool which is specifically developed for analyzing external environment.
Although external factors put a profound impact over business operations but cannot be
controlled by managers (Chaouk, Pagliari and Moxon, 2020). Here, PESTLE analysis enables
managers in order to study the external environment and then prepare suitable strategies for
meeting with unpredictable situations which might occur in future period of time. There are
several factors are studied during the analysis. In context of IKEA, certain external factors are
mentioned below:

Political factors: These factors are concern with political environment, rules, regulations
of current government and more (Conrady, 2020). In reference of IKEA, it is highly affected
with political conditions of the country in which it is operating. Currently, company has stores in
nearly 40 countries so it is affected with political decisions of each and every country. If, policies
of government are favorable then it is easy for organization to operate business. So, higher
authorities of company are required to identify political conditions of different countries in order
to operate business effectively.
Economic factors: Economical factors are related with interest rate, GDP, inflation,
employment opportunities and more. IKEA is majorly influenced with GDP, inflation and other
such economical elements of different countries. In addition to this, Brexit also affected business
of organization in adverse manner. Post Brexit, it is challenging for IKEA to get manpower from
Britain. Apart from this, free flow of products & services has also been stopped due to impact of
Brexit. However, company is doing relatively good in developing countries as it has been started
its first store in India and also looking forward for expansion in future period of time.
Social factors: It is stated that social factors such as behaviour, attitude, traits of buyers
significantly affect the operations of company. IKEA is also facing deep impact of social factors
as different culture is prevailing within different countries. It is required to take care of culture
and values of people in which is business is being operated (Mo, Preston and Zaidi, 2019).
Otherwise, company might have to face strikes and protest if, they harm sentiments of any social
group. For instance, IKEA has to taken back one of its advertisement in Russia which
represented homosexuality. Because, homosexuality is still considered negatively in Russia.
Therefore, organization is required to consider the culture and values for getting support of
customers for business growth.

Technological factors: In present challenging world, without implementing efficient and
advance technology, it is not possible to stay in market place for longer period of time. In this
regard, there is requirement to adopt creative and innovative approaches to perform tasks in an
efficient manner. In context of IKEA, manager focuses on technical updation for meeting with
rapid changes in business environment. Consequently, company invests significant amount for
research and development in order to bring new & advance products in market place. At present,
IKEA is also working on robotic powered furniture for meeting with enhanced requirements of
customers.
Legal factors: Legal rules and regulations are formulated so that business can be
operated in systematic and proper way. If, company obeys all the legalities then it is easy to
operate business without any legal hassle. In case of IKEA, they need to follow different laws,
rules, and regulations pertaining to countries in which they are operating business. Violation of
laws not only has legal implications but also hamper existing reputation of brand. It is analyzed
that one of the furniture brands of America named as Emeco imposed allegations over IKEA of
copied their chair design. For running business in an efficient manner, company is required to
imply all the necessary compliances prevailing in respective countries.

Environmental factors: Now, people are highly aware with climate change and
environmental impact of business activities which makes it important to follow sustainable
approaches of production (Schiavone and et. al., 2020). In IKEA, they try to produce sustainable
products without harming to environment. Here, company emphasis on use of recyclable and
renewable material for security and safety of environment. This practice will not only help in
environmental protection but also put positive influence over brand reputation.
CONCLUSION
It is assessed through above points that it is not easy to operate business in successful
manner over the period of time. Management models are related with managing various activities
within company for attaining predefined goals within set period of time. Discussion has been
carried out regarding motivation theory which is used by organization for stimulating work force
in an efficient manner. Further, PESTLE analysis has been applied for identifying impact of
external environment over operations of entity.

REFRENCES
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