An international retailer of home products, IKEA is a privately held retailer chainthat sells flat pack furniture, bathroom and kitchen accessories all over theworld. Founded in 1943, IKEA is an acronym. The name IKEA is derived from theinitials of its founder Ingvar Kamprad, the farm where Ingvar grew up and thehome country of Ingvar. IKEA is however owned by a foundation which is Dutch-registered and is owned by the Kamprad family.Since 1943, Ikea has expanded its operations steadily in many countries withmost of the stores of the company concentrated in Europe, USA, Canada, Asiaand Australia. The IKEA group also has existence in Israel and Middle East.IKEA originally started by selling picture frames, wallets, pens, watches, tablerunners, jewelry, and nylon stockings etc. Furniture was first added in the year 1948 and IKEA started manufacturing its own furniture since 1955, providingfurniture that could be self assembled at relatively low cost. Since then, the namehas been synonymous with self-assembled furniture.Using the current socio-political-economic outlook, I will examine Ikea’sexternalgeneral and industry environments, internal analysis of the company as well asprovide an assessment of the performance of the company in terms of thecompany in terms of efficiency, effectiveness and returns to investors.
2.1 External general and industry environment
2.1 Political FactorsIncreasing globalization and protectionism, presents a challenge as well as anopportunity to IKEA. The challenge will be to compete against unknown forcesand to source the best quality/financially viable products from world over. IKEAcan enter the markets of emerging companies through joint ventures or partnerships to explore these new markets. At the same time, however, thecompany has to be wary of protectionist policies of many host countries itoperates in since there is a real risk that countries may impose high tariffs ongoods imported in an attempt to spur domestic production.However, IKEA may stand to lower its costs as governments begin to lower taxesor provide subsidies to help businesses stay afloat in this economic crisis.