IKEA's Strategic Response: Analyzing Leadership, SWOT, PESTLE & CSR

This report provides a comprehensive analysis of IKEA's business strategy and response to market dynamics. It includes a SWOT analysis to identify strengths, weaknesses, opportunities, and threats, and a PESTLE analysis to assess the impact of external factors. The report examines how PESTLE factors influence opportunities and threats, and how IKEA's strengths can be leveraged to overcome weaknesses and threats to capitalize on new opportunities. Furthermore, it discusses suitable leadership styles from Daniel Goleman's framework to meet business objectives, focusing on changes in the business environment. Finally, the report critically comments on IKEA's Corporate Social Responsibilities (CSR) in its processes, highlighting the role of CSR in organizational development. This student-contributed document is available on Desklib, a platform offering study tools and resources for students.

STRATEGY AND
RESPONSE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
SWOT and PESTLE analysis of IKEA.......................................................................................3
PESTLE influences on the Opportunities and Threats on the business......................................5
Suitable leadership style from Daniel Goleman’s leadership styles to meet their business
objectives with focus on changes in the business environment...................................................6
Critically commenting on IKEA's Corporate Social Responsibilities in the processes...............8
Conclusion.....................................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Swot analysis helps in identifying the strengths, weakness, opportunities and threat of a
business and PESTLE analysis is used to find the impacts of external factors of a business. The
affects of PESTLE factors influences on the opportunities and threats, and to over come by the
strength of a company, and the suitable leadership style by Daniel Goleman's to meet the
objectives and goals of a organization. IKEA is a furniture and home accessories company. It
deals in functional home furnishing products at low prices. It is a Swedish founded, and its
headquarter is located In Delft, Netherlands. The report is consist of SWOT and PESTLE
analysis, with the influencing impacts on weakness and threats, and to overcome with its
strengths to find new opportunities for an organization, and also a suitable leadership style by
Daniel Goleman's , in respect to development of an organization. This report also discussed the
role of CSR in an organization.
MAIN BODY
SWOT and PESTLE analysis of IKEA
Swot analysis
It is a model that is used to identify the Strengths, Weakness, Opportunities and Threats
of an organization. It is used to evaluating a company's competitive position in the market, to
develop strategic planning for the organization.
Strengths
It is known as the excels of the organization, that separates the firm from its competition
in the market. IKEA has a loyal customer base, a strong balance sheet, unique techniques and a
strong brand (Lesovik, and et. al 2022). Its biggest strength is their clear vision, this will add a
value to its customers in respect to its market conditions. Another strength IKEA has its metrics
provided by the key performance indicators, which is assembled by its customers.
Weaknesses
These are known as the hindrance of the company, that stops an organization to perform
in its optimum level(Kim, Lee, and Park, 2022). It is well-known that IKEA is operating in
around the multiple countries of the world. Therefore, it is difficult to maintain the standards
across its locations in the world. There are many environmental concerns are also in respect to

facing the challenges by IKEA for example environmental policies to its customers and
shareholders.
Opportunities
This is referred as a favourable factor of organization, that give a competitive advantage
to the firm (Frank, Hoopes, and Lester, 2022). IKEA is looking for drawing an exposure plan, to
enter in markets of other countries like china. IKEA has the biggest opportunity that the firm has
the cost leadership.
Threats
These are as to factors that have the potential to harm the firm. The threat faced by IKEA
is, the constant innovation it has to do, to be focused on to stay ahead in the competition. IKEA
has to come up with new and advance strategies, to lead continuously in the market.
Pestle analysis
It is used as a tool by organization to keep a record of external factors, that are impacting
the business. PESTLE stands for.
Political
Political factors include the tax policy, environmental rules, tariffs and the political
stability (Kertzer, and Renshon, 2022). This can impact positive and negative both on IKEA as it
gets the support of political factors, it will help in the growth and development of IKEA, and
may affect negative if there is any change in policies under the political factors.
Economic
This includes the economic growth, interest, inflation, exchange rates and wage rates
(Jordà, Singh, and Taylor, 2022). It will affect positive o IKEA as it helps in attaining the
objectives effectively and efficiently. For example if the economic factors are favourable, like
low inflation and less interest, it will create a positive impact on organization.
Social
Social factors includes the cultural norms and expectations, health, population growth
rate and safety (Kordsmeyer, and et. Al 2022). It is helpful for IKEA to plan better in their
marketing analytics and strategy. In result, it will help in growth and expansion of IKEA.
Technological

These factors are useful in innovations and development of technologies. This will
impact on the IKEA's operations, it will affect positive on the development of information
technology department of IKEA. In results, it will help in the expansion and growth of IKEA.
Legal
Under this factor the changes of legislation on employment, imports and exports are
considered (Smith, Thompson, and Cadigan, 2022). This will impact positive on IKEA because,
compliance of legal law on business will make the work flow smooth for IKEA.
Environmental
These factor mainly focuses on the environment protection. It includes the nature
protection laws and energy consumption regulation. Opting this in IKEA will create a good
image of it, and helps in the growth and development of IKEA.
PESTLE influences on the Opportunities and Threats on the business.
Affects on opportunities of the businesses
According to PESTLE analysis legal and technological factors will help a business to
grow and gaining new opportunities for the organization. Legal aspects says that, every
organization needs the support of legal formalities in growth and development of the businesses.
Legal formalities like, tax policies, import and export policies (Wu, and et. al , 2022). These
plays an important role in grabbing new opportunities for an organization. In case of IKEA,
when it will get the opportunity of expanding its business, the legal formalities and policies will
help in making the flow of expanding business smooth. It will help in avoiding the legal
hindrance, that an organization has to face by the time of growing a business.
Affects on threats of the business
PESTLE factors can increase the threats of the business, the political factor will increase
the threat of an organization, for example the political factors like policies and other legalities.
(Du,Bstieler, and Yalcinkaya, 2022). This will lead to increase the threats because, the change in
policies will create the threat for IKEA. Other factors of PESTLE that can lead to the increase in
threat, is the social factor, the change in taste and preferences of the customer and the change in
growth rate, these will come with a great threat to IKEA, for example IKEA has threat of
customer switching by the change in taste and preferences of its regular customers, IKEA has the
big threat of maintaining the top position by innovating new products in the market, this factor

will influenced by the economic change in the market, by the change in rates, interest and
inflation in the market.
Role of strengths in overcoming from threats and weakness of a business.
Strength is the capacity of business can use effectively to attain its goals. It provide the
power of surviving and leading a company in the market (Song, Shu and Zhu, 2022). An
organization's biggest strengths is, its core competency, which gives a competitive advantage to
an organization. Core competency is the uniqueness, a business. It will help the organization
from overcoming the threats and weakens of the business. Threat of leading the market, can be
overcome by bringing unique products in the market. It will help in sales of the organization. In
terms of IKEA it has the weakness of, maintaining the standard of its products in all over the
world. As it has its stores all over the world, it is difficult to look at all locations at same time
and maintain the same standards among all of them. In this case they can use their strength of
loyal customer base. The major strength of IKEA is its vision, that motivates the firm for
achieving more opportunities and can over come from its weakness and threats of losing the stay
ahead position in the market. Clear vision of IKEA, work as a motivating tool for the
organization that helps in continuous motivation of defending the threats and weakness of the
business.
Strengths can also negotiate with threats and weakness in respect to opportunities
Finding new opportunities for business is a difficult task to do. The strengths of an
organization can help in, affecting a business from threats and weakness, in respect of grabbing
new opportunities for an organization (Dugar, and et. al 2022). Threats and weakness will
become a hindrance in finding new opportunities for an organization, but strengths can help in
overcoming from this, and in searching new opportunities for the business. IKEA has the threat
to lead the market in regulation. And the weakness of maintaining the standard of its product in
all over of its stores in the world. such as, unique techniques and strong brand image will help in
grabbing new opportunities for IKEA. Opportunity to expand in the other countries will be
fulfilled by its strong brand image in the market.

Suitable leadership style from Daniel Goleman’s leadership styles to meet their business
objectives with focus on changes in the business environment
Democratic leadership style is the best leadership style which is also denoted as
participative leadership style. In this leadership style, members of the group are more
participative and take part in the decision-making process at large scale. In this leadership, the
leaders and employees work together and how effectively they are able to communicate with
each other for acknowledging and working towards the tasks and activities so that the goals and
objectives are achieved effectively (Rifaldi and et.al., 2019).
Democratic leadership style is the best leadership style which helps in bringing the scale
of how the employees and team members of IKEA are involved in seeking the growth and
development of organization. The leaders and team members work together and collaboratively
ensure that the business objectives and aims are achieved. There has been focus for the changes
in the business environment as they are taking concern as to how effectively and in appropriate
manner the strategies are framed for changes to be observed at large scale within organization.
According to Al Khajeh, (2018), Democratic leadership helps in solving many problems
and allows effective solving techniques which helps the team members and leaders to take
corrective actions within organization. There are higher level of commitment which is followed
in democratic leadership style. The team members and leaders commit certain important business
objectives which helps in creating value for attaining the objectives for the tasks and activities
which is to be accomplished at large scale.
According to Nuraini and et.al., (2018), There are effective and positive relationships
which are build between the leaders and team members at large scale within the democratic
leadership style. Democratic leadership style helps in building the aspects as to how effectively
and in appropriate manner team members are taking concern of working together so that the
business objectives are achieved. There is increased level of morale and job satisfaction to
employees within organization as they are working collaboratively in the manner which helps
them in taking concern of accomplishing the business objectives in effective manner.
There are certain changes which will help IKEA to change its patterns of work and
ensure that they are progressing towards the set goals and objectives to be achieved. The changes
in the business environment helps in reflecting to the basis that the employees are more
concerned about initiating the aspects of growth and development which are linked to IKEA

(Nudurupati and et.al., 2021). There are formulation of certain strategies which helps in knowing
that they are important for the employees and leaders to grow more and complete the tasks and
activities by collaboratively working hand in hand to achieve success. The change helps in
improving and enhancing the future vision which is framed for the analysis of how effectively
and in appropriate manner the employees are contributing to IKEA.
As discussed by Nuraini and et.al., (2018), the changes which are observed in business
environment since start of 2021 is that the organization has changed its business strategy and it
has main concern with the customers and what are their needs and requirements which are to be
fulfilled at large scale within the business environment. The organization has changed its
business model like acquiring TaskRabbit, forming and AR app and selling the furniture on
websites to third party. The customers preferences are changing day to day and this is the major
concern of the individuals. These are some major points which are to be taken into consideration
as how effectively the change is taking place within organization.
As per Cherunilam, (2021), With the help of changes which were observed and noted for
the business environment are concerned with the aspects as to how effectively and in appropriate
manner changes are being observed at large scale. With the help of these changes the
organization is taking positive aspects of growth and development at large scale. The business
objectives are achieved in the manner that helps organization to take concern of all positive
aspects of accomplishing the results largely in effective and significant manner.
Critically commenting on IKEA's Corporate Social Responsibilities in the processes
Corporate Social Responsibility is a self-regulating businesses model that helps an
organization in social accountability to organization, its shareholders and for the public. It is also
be known as corporate citizenship(Fernandes, Friedman, and Kirk, 2022). An organization can
be responsive on the kind of impact they are have in all aspects of society, like economic, social
and environmental. CSR includes the programs like philanthropy and volunteer efforts, this can
give a advantage to society by boosting their brands. Adopting CSR program in IKEA will help
in the development and growth of the business. This program is important for the society and as
equally valuable for IKEA. It will help in forming a stronger bond between an employee and
management to feel more connected with their surroundings. For IKEA to be socially
responsible, they firstly have to be accountable to itself and tom its stakeholders. Adopting CSR

programs will grow the business of IKEA to the point where it can give back to society, IKEA is
a significant successful organization , therefore it has the more responsibility of setting good
standards of ethical behaviours towards its peers, competition and industry. It will also help
IKEA in empowering more to its strengths. In results IKEA will gain more strengths, and can
lead to achieve more opportunities for its betterment. CSR efforts of IKEA includes, they support
the local communities, empowering and educating workers, they also work on the issue of
gender equality and minorities in the workplace. IKEA also aims at CSR issues like, waste
reduction and recycling. They also enforce the supply code of conduct that prohibits the child
labour and discrimination in work at the workplace. This also includes the code of conduct for
freedom of association for employees and the provision of safe and healthy environment.
Corporate Social Responsibility is a self-regulating businesses model that helps an
organization in social accountability to organization, its shareholders and for the public. It is also
be known as corporate citizenship (Fernandes, Friedman, and Kirk, 2022). An organization can
be responsive on the kind of impact they are had in all aspects of society, like economic, social
and environmental. CSR includes the programs like philanthropy and volunteer efforts, this can
give an advantage to society by boosting their brands. Adopting CSR program in IKEA will help
in the development and growth of the business. This program is important for the society and as
equally valuable for IKEA. It will help in forming a stronger bond between an employee and
management to feel more connected with their surroundings. For IKEA to be socially
responsible, they firstly have to be accountable to itself and tom its stakeholders.
Adopting CSR programs will grow the business of IKEA to the point where it can give
back to society, IKEA is a significant successful organization, therefore it has the more
responsibility of setting good standards of ethical behaviours towards its peers, competition and
industry. It will also help IKEA in empowering more to its strengths. In results IKEA will gain
more strengths, and can lead to achieve more opportunities for its betterment. CSR efforts of
IKEA includes, they support the local communities, empowering and educating workers, they
also work on the issue of gender equality and minorities in the workplace. IKEA also aims at
CSR issues like, waste reduction and recycling. They also enforce the supply code of conduct
that prohibits the child labour and discrimination in work at the workplace. This also includes the
code of conduct for freedom of association for employees and the provision of safe and healthy
environment.

On the contrary, IKEA is under scrutiny for its environmental impact. The lower prices of
IKEA not only squeeze more or less out of suppliers operating in low wage countries but also
encourage impulse buying of the customers at large scale. This negatively impacts the global
landfills. There is over consumption of the products and services at large scale which creates
problem for the selling of goods and services at large scale (Ianina, 2018). IKEA having the over
consumption problems continues to invest in prolonging the shelf-life and durability of the
products and services which are taken as major part of concern. IKEA has launched an
innovative and effective strategy of “turn black Friday green” campaign so that the customers
can reach the brand and buy the product and services which are being promoted at large scale.
In 2020, the company was also subjected to an investigation centred for the illegal
logging of beach trees in Ukraine. This became the major issue for IKEA and through this the
company had lost its value in the market at large scale (Al Shuwaler and et.al., 2020). This is
how there was negative influence of CSR activities which were undertaken by IKEA. This also
affected the growth and development of the company's success at large scale. These are some
major aspects of CSR activities which are being noted for the aspects of how insignificant the
CSR is taking concern at large scale. There were aspects as to how effectively there can be
changes which can improve the functions and activities which should be undertaken positively to
improve the growth and development which is to be observed by making effective use of CSR
activities which are to be displayed at large scale. Therefore, it is very important that IKEA's
CSR activities are framed n such manner that it contributes to the success and growth of the
company at large scale. This also helps in creating brand value for the company in the society at
large scale.
Conclusion
From the above report it can concluded that, using the SWOT analysis model will help In
identifying the strength, weakness, opportunities and threat of a business. It will help in the
development and growth of the organization. PESTLE analysis helps in finding out the effects of
external factors of a business. Above report also concluded the influence of PESTLE analysis on
the weakness and threats of the business. The strengths are used as the tool for gaining
opportunities and defend against the threats and weakness of the organization. According to
Daniel Goleman's leadership style, the democratic leadership style is best for an organization to

grow and develop. Report also include the social corporate responsibilities of an organization in
respect to attain its long term effectively and efficiently, adopting CSR programmes in an
organization will help in the betterment and development of a business.

REFERENCES
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