Write a Description of Strategic Analysis of IKEA Company (Research Paper Sample)

Strategic Analysis: IKEA
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1 Introduction
The performance of an organization depends more on the strategies employed. Organizations that have good strategic planning end up achieving most of the expected results. On the other hand, managers who plan badly for their organizations fail to achieve their objectives.
This report focuses on strategic issues of organizations. The strategic understanding is done through a thorough analysis of IKEA in terms of strategy. The report focuses on the macro environment, microenvironment, internal environment, organisation capabilities and competencies, product ranges, competitor approaches and current strategic approaches of IKEA.
The Company
IKEA is a Swedish company operating in the furniture industry. It is considered to be a giant in the industry since it has been able to gain large market share than its competitors. This company was formed in the year 1943. This company has been able to provide employment to many individuals across the world. It is worth noting that the workforce for this company currently stands at 155,000. These employees are drawn from diverse nationalities, making the workforce well blend in terms of culture and perspectives. This company has been able to spread its presence to about 43 countries.
2 Macro environment
PESTEL Analysis of IKEA
Variable

Construct

Political

Stability of Government- China is known t be one of the countries where political stability has been enjoyed for a long time. This means that IKEA does not need to operate under fear of being destabilized politically. Additionally, the political class in this nation supports investors.
Business Freedom- Freedom to do business in a nation is something that determines the progress that an organization makes. Luckily, China has been friendly to the world thus allowing organizations to do business freely is a reality. This gives IKEA an opportunity to benefit from international business.
Tax Policy-China is known to have fair tax regimes. The nation works towards abolishment of double taxation. This gives the organizations that operate within its boundaries fair deal when it comes to taxation.

Economic

Economic Growth- The rate at which economy of a nation grows counts a lot in the performance of an organization. In an economy where economic growth is high, organizations tend to perform well since consumers have the capability to purchase. Additionally, nations that are economically empowered create room for organizations to do business. To make it better, economically strong nations improve the condition of infrastructural systems. This is the case of China whose economy has been growing consistently. This gives IKEA the much needed business environment.
Globalization- The international business arena has been experiencing positive changes in the recent past. This means that proper policies and procedures have been put in place to ensure that organizations on the global business platform are fully supported. This gives IKEA an opportunity to maximize the opportunity available as a result of globalization.
Labor Costs- The cost of labor determines the level of profit margin that an organization should expect. Luckily, China is one of the places where quality labor is available at low cost. This gives IKEA an opportunity to deliver more within low cost levels.

Social

Population Growth Rate- For businesses to well, there has to be potential consumers. These consumers are usually drawn from the population that a nation has. Luckily for IKEA, the population in China is large and grows in a reasonable rate. This gives the company a good consumer base for its products.
Educational Infrastructure- Education has been identified as the driver of societies nowadays. China has not been left behind when it comes to sensitizing communities on matters of education. This has led to strong educational infrastructure in China thus offering enlightened society capable of supporting businesses. This is an opportunity for IKEA to think of strategies that may thrust the company to success through the utilization of the favorable educational infrastructure in China.
Cultural Taboos- The population in China is known to be very strict when it comes to cultural practices. The principles that the citizens of this nation hold are very strong thus the need for the leadership of IKEA to pay attention to them.

Technological

Rate of Technological Change- It is interesting to learn that technology has been experiencing positive changes regularly. It is worth noting that positive technological changes are very beneficial to businesses. This being the case, IKEA stands to benefit much from the available technological advancements in the market.
Technology Incentives- According to Jones et al. (2011, p. 43), from the available technological platforms, there are incentives that come with it. The incentives make an organization's operations more efficient enabling it achieves more in a short span. This being the case, there is an opportunity for IKEA to seize and work towards reaping maximum technological incentives.
Technology Transfer-The availability of advanced technological platforms in places like china gives organizations a chance to transfer the same to other nations of operation. This makes trading under uniform technological settings an easy task. China is known to be a starter in technology, something which gives companies such as IKEA an opportunity to explore and transfer for use in other nations.

Environmental

In business, there are considerations that have to be made with regard to preservation and protection of environment (Ali, M et al. 2012, P. 56). China is one of the countries that do not entertain destruction of the environment. Therefore, the leadership of IKEA should ensure that all processes are friendly to the environment. According to Sharma (2012, p. 35), it is important for organizations to have high responsiveness t environmental issues.

Legal

IKEA has been able to take note of the rights of the consumers. This company has been able to recognize and uphold these laws for the purpose of being within the legal expectations. This has been able to reduce the legal battles that face competitors who are reckless. Additionally, health of employees has been put in the forefront as per the health and safety act.

PESTEL analysis is a technique used in analyzing the external environment in which an organization operates from (Engwall 2012, p.24). It looks at the major surroundings of a business that are likely to affect the performance of an organization. PESTEL analysis is derived from certain factors that include political, economic, social, technological, environmental and legal.
 
3 Organisation capabilities and competencies
Capabilities and competencies of an organization are usually understood well through carrying out proper classification. In terms of resources, several capabilities and competencies emerge.
Resource

Capability

Machines, Constructed facilities, inputs, end products, records

One of the capabilities that IKEA has is availability of state of the art industrial plants. This company has been able to develop reliable industrial parks that can benefit this company much if well utilized. Another capability held by IKEA comes from the fact that this company has been able to come up with ways of raising raw materials for operational sustainability. This has enabled IKEA continue having maximum production continuously. If the process of obtaining raw materials is managed properly, this company can be able to satisfy its market needs in the long run. Another capability that the organization has is the availability of computer integrated systems. This means that the processes in the organization have been improved mainly because of the benefits associated with use of technology.

Financial Records

Financial capability of this company has been very useful in generating funds for the business. The books of accounts have been kept in a way that allows the company consider them to be useful resources. According to Strazewski (2009, p. 92), the financial records are a source of strength for funding needs. The balances of these financial records have been attractive to financial partners that availing an opportunity to IKEA to source for funding. Availability of the financial records is a capability of the company that has created competence in matters touching on creditors and debtors. For IKEA, management of debtors and creditors has been very easy due to the financial records as a key resource for the business.

Stakeholders

As a result of the company having human resources, several capabilities have emerged. From the employees, the company has enjoyed capability in terms of skills and knowledge harboured by the well selected workforce. This has enabled the company operate with confidence that it will have the best results from competent individuals.

IKEA is seen to be a company that has resources that have been creating the much needed capabilities. The capabilities are able to make output for the company admirable. This has been able to cement the presence of the company in the market.
6.0 product range
Product range refers to the collection of products that an organization has in the market. IKEA has been able to place itself in the market in a way that its clients appreciate. This can be done by ensuring that the concept of diversification is applied widely. According to Whittington et al. (2014, p. 10), diversification ensures that consumers get a wide range of products to choose from.
7.0 competitor approaches
In lucrative markets, competition is usually a challenge organizations ...