Ikea Case Study

Ikea Analysis

International operational activities of IKEA are a positive approach for increasing popularity and result in higher revenue than their competitors in furniture industry. It has been opined by Cepel et al. (2018) that companies striving to conduct business in global platform undoubtedly records better growth model. This viewpoint also reflects the intention of IKEA that allows them to overcome trade and distance issues to invest in regions other than European region. As per the case study of IKEA, it is required by the organisation to not only include new strategic objectives but also imply necessary employee management approach to handle the issues of individuals employed at foreign locations. However, Sun et al. (2018) has highlighted the negative prospect of poor product quality. In order to maintain their current market position, IKEA have to adopt price penetration strategy rather than depending upon cost leadership strategy.

As per the case study of IKEA, it could help the company to not only focus on their premium quality of furniture but also tap into unexplored region through discount offers and relying on low price margin for a shorter period of time. On the contrary, Maletič et al. (2018) has praised the effort of companies making social approach for surrounding communities. Since it is being a developing residential property for average people, it can be expected that their image among UK residents could incline their company to positive and advantageous position in the industry.

Above all UK and other European business region is primarily dominated by Amazon, Wal-Mart and Tesco due to their diversification in product category. As per the case study of IKEA, the competitors of the organisation could be overcome with the help of official website that could be used for commercial purposes. As per the opinion of Toppinen et al. (2019), e-commerce has allowed majority of small and medium and MNCs to expand business portfolio. Similar approach has been undertaken by IKEA for not only conducting business with European residents but also move toward Asian region as most of the online business activity occurs in Asia.

Ikea Pestle Analysis

Table 3: PESTLE of IKEA

(Source: Wits.worldbank.org, 2019)

IKEA Analysis

The political stability in a country plays a vital role for promoting the interest of business communities and paves the way for their success. As per the case study of IKEA, internal politics of UK region has seen stability from political organisation which could be a green signal for IKEA to expand their market into UK. On the other hand, political turbulence due to BREXIT has caused the majority of businesses to lower their export in EU region due to an increase in trade regulation charges. This could have a moderate impact over IKEA as they can be able to focus on internal regions of UK and other countries viable for furniture business through offline and online mode. Influenced by the views of Jahanmir and Cavadas (2018) it can be mentioned that economic stability through export results in increase of growth index for companies situated within the region.

As per the case study of IKEA, the increase of export option in UK can allow this organisation to exploit their market capabilities and increase operational region of the company. On the contrary, Raza et al. (2018) has cautioned about the adoption of high-tech techniques of transportation as it could increase financial budget of the company. As per the case study of IKEA, the organisation could face disturbed financial condition as they have to shell out additional charge for not complying with environmental norms of UK. It can also reduce their profit margin due to higher amount of cost to maintain fuel conservation techniques.

However, IKEA can manage to overcome economic and environmental issues due to influx of diversified population in UK. It might be profitable for IKEA to serve maximum amount of population through online and offline means of communication. As per the case study of IKEA, complying with legal guidelines can provide this retail furniture company authentic stature of business organisation and also empower them to acquire support of law enforcement agencies. The advent of online business opportunity can be certainly helpful for IKEA to make relevant changes into their technical infrastructure and also remains updated with consumer demands. Increase in employment rate is a positive sign for IKEA to improve product quality as more number of consumers could find pleasure in purchasing premium quality of furniture.

Reference List

bankofengland.co.uk (2019). HOMEPAGE. Available at: https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate [Accessed 4 August 2019]

Cepel, M., Stasiukynas, A., Kotásková, A. and Dvorsky, J., (2018). Business environment quality index in the SME segment. Journal of Competitiveness, 10(2), p.21.

ikea.com (2019). HOMEPAGE. Available at: https://www.ikea.com/ [Accessed 7 August 2019]

Jahanmir, S.F. and Cavadas, J., (2018). Factors affecting late adoption of digital innovations. Journal of business research, 88(4), pp.337-343.

Maletič, M., Maletič, D. and Gomišček, B., (2018). The role of contingency factors on the relationship between sustainability practices and organizational performance. Journal of cleaner production, 171, pp.423-433.

Raza, S.A., Qazi, W. and Shah, N., (2018). Factors affecting the motivation and intention to become an entrepreneur among business university students. International Journal of Knowledge and Learning, 12(3), pp.221-241.

Sun, S., Cegielski, C.G., Jia, L. and Hall, D.J., (2018). Understanding the factors affecting the organizational adoption of big data. Journal of Computer Information Systems, 58(3), pp.193-203.

theguardian.com (2018). Ikea to cut 350 UK jobs as it refocuses on small outlets and online. The Guardian [Online]. Available at: https://www.theguardian.com/business/2018/nov/21/ikea-to-cut-350-uk-jobs-as-it-refocuses-on-small-outlets-and-online [Accessed 6 August 2019]

theguardian.com (2019). Ikea gets green light to build affordable homes in UK. The Guardian [Online]. Available at: https://www.theguardian.com/business/2019/jun/26/uk-council-ikea-affordable-housing-worthing-boklok [Accessed 7 August 2019]

Toppinen, A., Sauru, M., Pätäri, S., Lähtinen, K. and Tuppura, A., (2019). Internal and external factors of competitiveness shaping the future of wooden multistory construction in Finland and Sweden. Construction Management and Economics, 37(4), pp.201-216.

tradingeconomics.com (2019). United Kingdom Employment Rate. Available at: https://tradingeconomics.com/united-kingdom/employment-rate [Accessed 5 August 2019]

wits.worldbank.org (2019). United Kingdom trade statistics. Available at: https://wits.worldbank.org/CountryProfile/en/GBR [Accessed 5 August 2019]