IKEA Essay: PESTLE, Porter’s Five Forces, SWOT, And Competitor Analysis.

The macro- and micro-environmental analyses are about issues outside of your firm.  
Macro-environmental factors
Explain the most important “PESTEL factors that will affect the industry that your company is operating in.   Please remember that you must identify CHANGES/TRENDS under each relevant factor and the impact on the industry. 
Micro-environmental factors
Explain the most important micro-environmental factors that will affect your business. There is no need to discuss competitors here as they will be discussed separately in the next section.
Competitor Analysis
Please choose ONE or TWO direct competitors for this analysis.
SWOT Analysis
Create a SWOT matrix.   Bullet points are acceptable but ensure there is sufficient information for each point that the information is clear and meaningful
Ensure that strengths and weaknesses are about how your company/brand is stronger or weaker than competitors. 
Ensure that opportunities and threats are about positive and negative macro-environmental factors.  They are not about your strategic ideas/recommendations for what your company should do.

PESTLE Analysis of IKEA

In this paper the discussion will be made on the topic IKEA. The purpose of the report is to analyze the internal and external factors or macro and micro factors in context to IKEA. In the first phase of the report, the macro environmental factors will be considered in which focus will be given on PESTLE factors. In the next phase of the report the discussion will be made on the micro environmental factors that will directly impact the operation of the company. The micro factors will be related to PORTER FIVE FORCES. In the next phase the focus will be given on the competitor’s analysis in which the discussion will be made on the competitors prevailing in the market.

 In the last phase of the report, the emphasis will be given on the SWOT Analysis that will help to identify strength, weakness, opportunities and threats.

Political factor

It has been investigated that there are more than 41 countries in which the company operates. In the last past years it has been seen that in the Australian market it is important to reduce the political barriers in context to foreign brands which now have enhanced the presence of the international brands in the markets. IKEA is also focusing on dominating the Asian markets. The red tape is always considered as the major worry for the foreign brands available in the market. Due to political instability the supply chain of the company is also affected which is located in Australia (Beske, Land & Seuring, 2014).

Economical

There are many brands in the market which are in bad condition at the time of recession. It has been seen that recession declined the entire purchasing power of the people. In the present scenario, it has also been seen that economic situation is getting better and also the employment rate is improving which has directly affect the sale of the company with the higher profits.

Social factor

It has been examined that company came under fire for photo shopping women out of its catalogue in Australia. The company also focuses on improving the values. At the time of printing the catalogue the company ensured that think should be showed in a right manner.

Technological

The company is taking into consideration the use of latest technology so that better services can be offered. Through digital marketing the company is focusing on offering effective customer service.

Porter’s Five Forces Analysis of IKEA

Environmental

The company has focused towards considering sustainability. The company has also focused on the climate and planned to invest approximately 1 billion in the renewable energy.   Also company emphasized on investing into the solar panels (Cosmo & Yang, 2017).

Legal

It has been seen that company faced many issues of tipping over and death in the past. Also to penetrate in the market is a difficult task for IKEA. The reason is related with the government who wants foreign brands to be followed. It is necessary for the IKEA to produce 30% of its inventory in Australia.

Threat of direct substitute

It is low as thee are not many products that can satisfy the demand of the furniture and home appliances. There are less threats of substitution in the market in context to IKEA Company.

Rivalry among the existing firms

It is intense as there are many supermarkets like Walmart and Tesco who are selling same types of products in the market. Also there are many local producers that can be threat for the company.

Threat of new entrants

It has been seen that to enter into the business there are less legal requirement. The threat to new entrant is moderate and also there are many brands on the small platform that are entering into the market. So, the new market entry can help in context to economy of scale. Also the access of distribution channel can be considered as the barrier for the company. The barrier to entry is also low but there are many firms who are small and can become the well-known brand in the market.

Bargaining power of suppliers

It is low as the numbers of suppliers are large and their small size with less financial capability does not allow them to fight in the competition. The company has the chance to switch from one supplier to another but if supplier loses the Ikea then it can be difficult situation for them. The company also launched code of conduct for its suppliers named as IWAY.

Bargaining power of buyers

The bargaining power is high in Ikea as there are many companies who are focusing on attracting and retaining the customers. The strategy which is considered by the company is related with marketing and promotion so that customers can be attracted to the company. It has also focused on digital marketing by considering the pricing strategy so that customer experience can be enhanced (Frynas & Mellahi, 2015).

Competitor Analysis

The competitors of the company are Wal Mart and Amazon. It has been seen that the products which are offered by these are companies are same as IKEA Australia. Also these companies focus on grabbing the market share which can affect the goodwill of the company. Through these competitors the company faces a huge threat which can impact thee overall profits of the company. In the Australian it has been seen that level of competition is high which should be reduced by considering the effective strategies related to price.

Strength

The company is considered as the largest retail company which has more than 340 stores in 28 markets. It has been seen that strength possessed by the company is related with good market image and also with large market share. The recent leadership style offers substantial benefits in context to economies of scale and also it create a substantial entry for the new competitors. The company also delivers attractive design products in the fewer prices which attracts more customers towards the products (UA little Rock, 2017).

Weakness

In the recent year it has been investigated that only 9 percent of the global sale was generated in Australian region. There are also many environmental concerns in the activities of the company and also the challenge faced by the company in relation to communication and environmental policies (Fröding & Lawrence, 2017).

Opportunities

The company has an opportunity in context to green model business that should be considered to attract more customers towards the products. Also the biggest leadership is related with the cost leadership of the company. In this, it has been seen that emphasize is given on cost at the expense of everything, next opportunity is related with the market expansion. The company should focus on market expansion so that profits can be earned easily at it will also induce the customers the purchase the products of the company.

Threats

The company low cost business model has also considered by the competitors which clearly states that the requirement of the company can be innovative from the competitors.  The company has to consider new strategies so that it can be simple to attain large market share and also positive impact can be given on the overall market share.

Also it has been seen that with the use of online shopping, DIY is the strategic success driver which is now no longer the USP of IKEA. So, physical presence of the competitors is enhancing which is a threat for the company (Pratap, 2016).

References 

Beske, P., Land, A., & Seuring, S. (2014). Sustainable supply chain management practices and dynamic capabilities in the food industry: A critical analysis of the literature. International Journal of Production Economics, 152, 131-143.

Cosmo, D. E., & Yang, K. (2017). A Further Strategic Move to Sustainability-A Case Study on IKEA. Journal of Strategic Innovation and Sustainability, 12(2), 39-47.

Fröding, K., & Lawrence, G. (2017). Sustainability at IKEA. Linnaeus Eco-Tech, 67-77.

Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press, USA.

Pratap.A. (2016).  IKEA SWOT Analysis. Viewed on 6th September, 2018. < https://www.cheshnotes.com/2016/09/ikea-swot-analysis-2016/>.

UA little Rock.(2017). Strength, weakness, opportunities and threats.  Viewed on 6^th September, 2018. https://ualr.edu/about/home/strategicplan/chancellor/planning-environment/7-strengths-weaknesses-opportunities-threats /