IKEA's Strategic Management: UK Business Environment and Pricing

This report provides a strategic analysis of IKEA's operations within the UK business environment. It begins with an introduction to strategic management and the importance of environmental analysis. The report includes a SWOT analysis, highlighting IKEA's brand strength and weaknesses related to operating in diverse international markets, as well as opportunities and threats from competitors and changing regulations. A PESTLE analysis examines political, economic, social, technological, legal, and environmental factors affecting IKEA. Key factors influencing IKEA's pricing, such as consumer income, competitor pricing, and consumer preferences, are also discussed. The report concludes that IKEA has the potential for long-term success in the market by adapting its strategies to the specific challenges and opportunities presented by the UK business environment, while also effectively managing factors impacting its pricing strategies. Desklib provides access to similar reports and solved assignments for students.

Business Retail

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Introduction
Strategic Management is the process of monitoring and analysis the environment of the
organisation. This process helps the company to develop the strategies in the terms of
achieving the success in the market. There are different types of models that help in analysing
the environment of the company such as PESTLE and SWOT analysis. In this report, the
IKEA has been taken into consideration in order to identify the position in the market. IKEA
is a Swedish company which is operated in a multinational group that designs and sells the
household goods and services to the consumer (IKEA, 2019).
Internal Analysis
SWOT Analysis
Strength
Brand value is the main strength of the company. It has been evaluated that the company
currently stands at the 46th position in the world. It also comes under the top 10 retailing
companies in the world.

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(Source: IKEA, 2019a)
The company also provides the quality of product to its consumers. It has been evaluated that
it has a unique product as compared to the products of other companies
Weaknesses
The company is operating in the different countries across the world due to which it faces
social issues such as Corruption and many others. It has been evaluated that the company
caught into the corruption case in Russia. The negative image of the company is the main
weakness. As the company is operating in different countries that is why it has to follow the
different rules and regulation due to which the organisation face heavy loss (Ansoff, Kipley,
Lewis, Helm-Stevens, and Ansoff, 2019).
Opportunity
Consumers are getting more conscious about the prices of the product this why it is important
for the company to adopt the cost leadership strategy. Cost leadership strategy helps to attain

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a large number of customers. Internet is also an opportunity for the company to deliver the
services at a large number of customers.
Threat
Changing rules and regulation of the different country directly affect the growth of the
company. Walmart, Amazon, Wayfair, Tesco and Sears are the main competitors that can
beat the company in the terms of market share by adopting different strategies (Noe,
Hollenbeck, Gerhart, and Wright, 2017).
External Analysis
PESTLE Analysis
Political
Different countries have differxent rules and regulation which affect the strategies of the
company. The supply chain of the company is affected as per the changing decisions of
government regarding the business. Red Tape is the main factor which affects the company
brand image (Wheelen, Hunger, Hoffman, and Bamford, 2017). Europe is the main supply
chain network and due to the political disruption it can affect the distribution channel of the
organisation that would be a barrier in the terms of growth.
Economical
Economic forces also affect the demand of the consumer of the countries. It is able to manage
its product prices even in the economic pressure of the country that arises from the economic
fluctuation. The economic condition of the US is strong which helps the US company in
order to attain the high revenue (Amadeo, 2019).
Social

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The company faces the issue of changing the behaviour of the consumer due to the different
social and cultural value of the local market of different countries. The company has done
many mistakes to share the moral values to its consumers. The packaging of the product
affects the sale of the company because the content on wrapping paper is based on the culture
of the country. The company invest more many on the packaging due to the different content
on different products.
Technological
As the technology is developing, the government of the US is investing more money on
technology in order to develop the economy. The company has the opportunity to adopt
technology to improve the level of customer services.
Legal
Consumer Law, Discrimination Law, Employment Law and Health and safety law are the
legal regulations which are followed by the company. As the company is operating in a
different country due to which it can faces the issue of adopting the different rules and
regulation. The company is also caught in the case of poor quality of the product due to
which the many consumers faced the issues of injuries. It is necessary for the company to
follow the legal regulation of the country.
Environmental
US government develop policies and regulation in order to protect the environment from
illegal and harmful activities. The company also invest in eco-friendly activities which is
beneficial to improve the negative image in the market. It invests $ 1 billion in renewable
energy in poorer nations in order to develop the economy.

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Key Factors affect the Price
(Source: Singh, 2018)
Consumer Income
As per the economic factor of PESTLE Analysis, the income of consumer has been fluctuated
that affects the price of goods and services of the company. Low income reduces the
purchasing power of consumer due to the prices of goods and services are decreases.
Fluctuation in Price of the competitor goods
As per the above discussion, competitors can beat the company by reducing the prices of
products. The company reduces the prices of the product in order to beat the competition in
the market.

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(Source: IKEA, 2019)
Taste and preference of the consumer
It has been seen that the social factor of the environmental analysis affects the price of goods
and services of the company. It is observed that the taste and preferences of a consumer is
change with the new trends and fashion of the market. The company has to invest more in
developing new products due to which a large amount of cost is consumed. High cost reflects
the high prices of the goods and services which is change with the consumer taste and
preferences (Grant, 2016).
Conclusion
From the above limelight discussion, it has been concluded that the company has high scope
to survive a long time in the market. The company has a large number of risk and threat due
to operating in different countries but it also has the opportunity to develop a variety of
product in the market. There are many key factors which affect the prices of goods and

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services of the company such as consumer income, taste and preferences. It is observed that
the company achieve success in the future by adopting different strategies.

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References

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References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R. (2019) Implanting
strategic management. Springer.
Amadeo, K. (2019) US Economy Fast Facts and Summary. [online] Available from:
https://www.thebalance.com/us-economy-facts-4067797 [Accessed 25/2/19].
Grant, R.M. (2016) Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
IKEA. (2019a) About Us. [online] Available from: https://seeacareerwithus.com/about-us/
[Accessed 25/2/19].
IKEA. (2019b) Our product range. [online] Available from:
https://www.ikea.com/ms/en_SG/about_ikea/the_ikea_way/our_business_idea/
our_product_range.html [Accessed 25/2/19].
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2017) Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Singh, J. (2018) 6 Important Factors That Influence the Demand of Goods. [online] Available
from: http://www.economicsdiscussion.net/essays/economics/6-important-factors-that-
influence-the-demand-of-goods/926 [Accessed 25/2/19].
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E. (2017) Strategic
management and business policy (p. 55). Boston: pearson.