Running head: IKEA COMPANY 1

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 IKEA COMPANY 2

Table of Contents
INTRODUCTION.........................................................................................................................3

TASK 1...........................................................................................................................................3

SWOT.............................................................................................................................................3

Strengths.....................................................................................................................................3

Weaknesses.................................................................................................................................3

Opportunities..............................................................................................................................4

Threats........................................................................................................................................4

PESTEL..........................................................................................................................................5

Political Factors:........................................................................................................................5

Economic Considerations:.........................................................................................................6

Social Factors:............................................................................................................................6

Technological Factors:...............................................................................................................6

Environmental Factors:.............................................................................................................6

Legal Factors:.............................................................................................................................7

TASK 2...........................................................................................................................................7

TASK 3...........................................................................................................................................8

Leadership Style according To Daniel Goleman’s (2000)......................................................8

TASK 4...........................................................................................................................................9

CSR.................................................................................................................................................9

IKEA Corporate Social Responsibility Policy.........................................................................9

IKEA’s Healthy and Sustainable Living Programs................................................................9

IKEA’s Climate Positive Programs..........................................................................................9

IKEA’s Social Equality & Fairness Programs......................................................................10

COVID-19 Relief......................................................................................................................10
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CONCLUSION............................................................................................................................11

References......................................................................................................................................12
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INTRODUCTION
IKEA is an established household goods firm that has a presence universally. Since it
began operations in 1943, the firms had a successful development to the pace that it is now
known as one of the largest furniture stores primarily famous for their Scandinavian designs. The
packaging in IKEA stores is flat, prepared for the customer to construct (Wu, 2020). This makes
up for price and packaging reductions. IKEA puts forward a combination of 9,500 goods,
comprising furniture pieces for every place. Clients have the option available of purchasing
majority of their collection through online forums of IKEA that would be same as available in
the stores.

TASK 1
IKEA's SWOT evaluates the company's strengths, weaknesses, opportunities, and threats.
The internal aspects of an IKEA SWOT Analysis are strengths and weaknesses, in the meantime
the exterior elements are covered in opportunities and threats.

SWOT
Strengths

 IKEA's strongest point is its clarity that is to offer worth to its consumers irrespective of
economic circumstances. This has concluded in a simple and carefully planned
corporate action and merchandising method that is creative in its simplification, strong in
its competition target, and efficient in its placement (Solanki, 2021).
 A further essential benefit of the company is its simple and straightforward process,
which converts into a variety of items that purchasers can construct independently,
leading to major savings of expenditures that are then transferred on to the clients. IKEA
has grown to be the one of the biggest retail company because to its single-minded
concentration on price strategy.
 IKEA monitors its advantages using KPIs, or Key Performance Indicators, such as
improved utilization renewable sources, wiser input materials utilization, creating and
sustaining long-term network of contractors, and exploiting the efficiency and synergy
along with economy of scale.
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Weaknesses

 IKEA is a huge and gigantic organisation that functions in a lot of states around the
world, finding it extremely challenging to sustain a uniform quality across all places.
Even after the firm’s constant tries to maintain the same quality spanning its entire goods
range and across all of its facilities, a key problem is the lack of repeatable and
expandable quality assurance (Miller and Smith, 2021).
 Quality might deteriorate as a consequence of a firm's overwhelming focus on cost
supremacy, especially in today's market, when the costs of a range of different factors and
ingredients have grown, harming the corporation's economic success. The claim being
made here, according to Singh et al. (2021), is that sustaining quality may be difficult in
the situation of growing inflation and the need to replicate criteria across all of the firm’s
sites in the world.
 IKEA's functioning are increasing the existing issues in the environment and the
company struggles with conveying to their consumers, shareholders and investors about
their environmental policies.

Opportunities

 With its "green" strategic plan, the company has an excellent chance of attracting
clientele that wishes to purchase these products. The rise of consumer behavior, or the
"Ethical Chic" purchasing system, which suggests that buyers wish to buy
environmentally conscious things, is a potential waiting to be realized for the company.
 Perhaps the company's most crucial potential is its price makers, who focus solely on
priceat the expense of all. Though this has resulted in quality difficulties, their
clients look unconcerned as they are getting their financial worth, and providing clients
with advantages is another essential option.
 The real chance is the company's expansion into emerging markets and the developing
world, in which it has an unexplored clientele that may generate big income. IKEA has
been aiming to enter markets like China and India with a clear strategic plan that it
believes would benefit the company (Solanki, 2021).
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Threats

 IKEA's cost effective strategies of marketing are constantly being copied by their rivals
that means the company should continuously develop to stay ahead of their competition.
For instance, some provincial and municipal businesses are starting trends of DIY and are
focused on cost effective measures, implying that IKEA must implement a methodology
keeping them flexible and adaptable (Singh et al., 2021).
 Wu (2020) noted that DIY that is a major contributor of strategy implementation does no
longer remain a mere USP or Unique Selling Proposition of IKEA, and the growth of
online sellers offering essentially lower price ranges since their physical presence costs
do not exist, are now impacting on IKEA.

PESTEL
IKEA has around 375 shops in diverse locations across the world. Because of its global
reach, the brand is influenced by a variety of factors. Several influences influence brands and
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their businesses in this era of globalization, ranging from political to economic, social, and
technical. These forces have an impact on IKEA as well (Santos, 2019).

Political Factors:

IKEA has locations in more than 41 countries. Politics impacts are there in every state
therefore have a direct effect on companies. Political influences effect all functioning that is
supply functionalities to sales. Financial stabilization is followed by stabilization in the political
arena political that equalizes increased sales and revenues. Apart from that, the state's stance and
regulations regarding international brands are important. Campos and Goyal (2021) highlights
that the atmosphere of a country is determined by how favorable the government's policies are to
commercial branding. Political unrest, on the other side, has the potential to destabilize the
commercial climate.

It also has the potential to impact supply chains. In the previous times, China and India
have tried to decrease political hurdles for companies emerging from outside, leading to growing
international brand being now present in both economies. IKEA intends to take over the
developing Asian markets. For international brands operating in these areas, red tape is always a
huge concern. As these barriers fall away, India and China will become a battleground for global
corporations like IKEA. Additionally, political unrest has the capacity to wreak havoc on IKEA's
distribution network (Alrubah et al., 2020). The majority of IKEA's supply chain is situated in
Europe, where political turmoil may have a substantial influence.

Economic Considerations:
Customers' purchasing power is mirrored in the economic landscape of a state. As a
consequence, it is intrinsically linked to the activities of a corporation. If a company wishes to
enhance its earnings, it might look for reliable markets (Batarfi and Attia, 2021). Here are some
economic problems that might affect the company's operations:

 The IKEA system doubled the number of completed items purchased domestically in the
UK, resulting in a 1% drop in sales production during the 2009 financial slump, owing to
its cost leadership approach.
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 The decline of the pound against the euro and the dollar caused it to happen
(Ongkiehong, 2020).
 Raw material pricing fluctuation is a crucial factor that might have a detrimental
influence on a company.

Social Factors:
IKEA is effected by factors in social conditions in several areas. PESTEL (Pesticide,
Toxic, Environmental, and IKEA demonstrates the influence of social processes on a firm's
marketing strategy:

 In place to evade societal implications from various countries, IKEA must follow huge
advertising traditions (Alrubah et al., 2020).
 The firm must handle the difficulties of clients from diverse countries in order to enhance
its position.

Technological Factors:
IKEA made a technological leap forward by developing an e-commerce portal for the
sale of items. Paper brochures from IKEA remain in distribution. The internet, on the other hand,
may be used to expand a firm's scope. PESTEL (Pesticide, Toxic, Environmental, and IKEA)
should solve a variety of technological challenges:

 The e-commerce infrastructure should be upgraded in order to provide a pleasant

experience to customers. Various customers are now upset with the distributing
management program's inefficiency.
 Good client assessment is crucial to the organization's growth. In order to improve client
satisfaction, the organisation should also reduce technological issues (Campos and Goyal,
2021). They should make reviews and comments available on web forums to acquire
confidence.

Environmental Factors:
The majority of firm marketing today focuses heavily on long-term viability. It's not like
it saves money, but it helps to build a great brand. It not only decreases a business's operational
costs, but it also improves its image and general feeling, as according Batarfi and Attia (2021).
IKEA has also placed a great focus on sustainable stewardship. It has also become involved in
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global warming, according to the Guardian, with plans to invest more than $1 billion in
renewable energy and to help underprivileged nations address climate change. By 2020, the firm
intends renewable energy to account for 100 percent of the energy used in IKEA stores.

Legal Factors:

• Legal issues can have a big impact on a company's growth. Ongoing court actions and/or many
litigation give the company a negative reputation. PESTEL (Pesticide, Toxic, Environmental,
and IKEA) recognizes and addresses the following legal issues that the company should be
conscious of:

• The industrial industry's backbone is labour. Workers at IKEA have expressed their
dissatisfaction with the company's working conditions (Santos, 2019). Professionals have filed a
lawsuit against the company. Negative publicity will undoubtedly emerge if people continue
working in miserable circumstances.

• IKEA is required to follow the labour laws of the countries in which they set up manufacturing
sites. • Customer satisfaction is crucial, and low-quality products may undermine it. Clients have
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the right to sue the company.

TASK 2
Importing and exporting foreign products might be difficult if the government is
antagonistic. If these political ties do not remain secure, IKEA's earnings will be jeopardized. On
contrary, the company gains advantage from a favorable relationship for instance the changing
stance of China and India transforming to being more receptive towards international markets.
As a consequence of this beneficial trend, IKEA is continuously tapping into expansion for the
Asian markets. IKEA is capturing this chance to construct a path of good faith (Ericsson, 2018).

IKEA is influenced by international rules, and the financial system has an effect on them
as well. The consequences of the Great Recession of 2007 are still being felt by a number of
renowned firms. The corporation of IKEA is affected by the strength and weakness of the dollar.
Fortunately, the situation has recovered (while still recovering) (Campos and Goyal, 2021).
Additional employment are being created, and revenues are increasing once more.
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While international controversies impact the social stigma causing a threat, IKEA being a
renowned brand would always receive some backlash for instance in the circumstance of
removing same sex couple from a Russian catalogue where it is still a taboo and not supported.
Moreover with the constantly developing technological industry and IKEA’s online sales,
provide an opportunity for the respective brands online growth by serving to countries and
nations they haven’t entered yet (Macura, 2021). Certain trade barriers and constantly changing
legislations can impose as a threat as well as an opportunity for the brand. Moreover, the
environmental factor provide IKEA with the opportunity to make sustainable products that
would attract environmentally conscious market along with helping the environment.

They have a unique selling point of being the largest furniture store that provides
customers money’s worth by supplying furniture at affordable prices. Despite having issues of
maintaining quality standards similar across the globe and threats from emerging DIY companies
who are copying their ideas, they remain in a dominant position. This is because their loyal
customer base is aware that it still is worth the value. Further, they constantly explore
opportunities to grow such as technological advancements, exploring new regions such as Asia
and they are shifting to sustainable environmentally friendly ways of production by equipping
sustainable raw materials attracting environmentally conscious customer base (Alrubah et al.,
2020).

TASK 3
Leadership Style according To Daniel Goleman’s (2000)
IKEA currently uses the leadership style known as laissez-faire which is similar to Daniel
Goleman’s (2000) democratic leadership style that would fit well within the operational system
of the firm (Macura, 2021). Democratic leadership is defined as when motivated
individuals completely engage when the decision are being concluded in a company. any
member of the department can put forward  suggestions and ideas, and decisions are made upon
the agreement of the group  Finally, the democratic leader must determine whether or not to
support the proposition (Reichert and Nguyen, 2021). Democratic leadership is advantageous,
yet it might be too slow at times when urgent decisions are necessary. It has the potential to
spark amazing creativity and concept generation when employed at the right time and in the right
way. For IKEA employees, this style is incredibly inspiring. Supervisors speak with employees
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on a regular basis and seek their feedback before making decisions. As a consequence,
employees are motivated to put in extra effort in their jobs (Ericsson, 2018).

Furthermore, with the imposition of threats with emerging DIY firms, democratic
leadership style, that is well-known for motivating employees being innovative, would help
IKEA gain creative ideas that could additionally boost their brand image and profitability while
giving them an edge over their competitors. Moreover, Seeger and Gustafsson (2021) mentioned
that IKEA has a pressure of creating products in an environmentally friendly way while
maintaining the same quality standards across the globe. Efficient workforce and creative ideas
could assist the firm in establishing such standards. Lastly, such a productive team would help
the firm be more successful with their increased efficiency.

TASK 4

CSR
IKEA Corporate Social Responsibility Policy 
IKEA company has grown to be third largest recognized company who values
safeguarding the environment accounts for social factors from the beginning of its People &
Planet Positive initiative in 2012 (Elf, Isham and Gatersleben, 2021). IKEA's 2020 Corporate
Social Responsibility (CSR) aims are objected towards three major initiatives, with a
comprehensive and creative objective:

1. Living a good health and sustainable lifestyle

2. Climate-friendly program

3. Social justice and equality

IKEA’s Healthy and Sustainable Living Programs

IKEA will expand its global sustainability initiative in 2020 whilst keeping a close eye on
the firm's ecological consequences (Macura, 2021). A revitalized dedication to helping
individuals personal healthcare insurance and well-being was part of these CSR initiatives. In
effort to match this aim, IKEA enlarged its 2020 home product selection inclusive of air
purifiers, electricity efficient LED lamps, solar panels, and water reclamation solutions for
showering and bathing.
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Last year, IKEA expanded its plant-based dining options in its supermarket stores and
cafes, aiming to make 50 percent of its prepared foods and 80 percent of its processed food
selection plant-based by 2025. (Kullnig, 2020). Moreover,   to these activities, IKEA has set
clear commitments to reduce food production waste by 50% over the next two years.

IKEA’s Climate Positive Programs

IKEA emphasises expense efficient, ecologically favourable goods and practises as part
of its corporate social responsibility (CSR) efforts. By 2020, the company has achieved its goal
of using more sustainably sourced wood in its furniture, with 98 percent of the wood originating
from FSC-certified vendors or discarded materials. Furthermore, according to Al Shuwaler et al.
(2020), IKEA began to operate with consumers and contractors to increase the longevity of its
home furniture in order to lessen its environmental impact.

To assist meet its environmental aims, the firm currently employs recycled polyester in
80% of its textiles and soft furnishings (Elf, Isham and Gatersleben, 2021). Furthermore, the
company stated that they have made significant advances in eradicating single-use plastic from
its home decor, with 44 percent of its plastic being created from recyclable materials by 2020.

In order to meet its renewable energy goals, IKEA put aside $230 million as part of its
climate-friendly effort. The largest of the funds will be used to expand its reforestation efforts
and other forest management initiatives, as well as to expand its delivery business with more
electric vehicles.

IKEA’s Social Equality & Fairness Programs

IKEA's Diversity & Inclusion policy continues to be a pioneer in gender equality,
acknowledging that all people are competent. In 2020, women held 40% of the firms top
managerial positions, confirming the firm's determination to have a 50/50 gender balance by
2030. (Kullnig, 2020). IKEA has implemented a plan to safeguard that its procedures are in
compliance with the UN standards of conduct for exclusion of LGBT+ biasness in the place of
employment and for the promotion of equal treatment of individuals irrespective of their gender
or sexual orientations.

IKEA's CSR aim remains to prioritise civil liberties protection and promotion throughout
their supplier chain. In 2020, IKEA updated its responsible sourcing (IWAY) to make sure that
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the staff has complete availability proper, productive work in a free environment. IKEA and
third-party organisations perform regular audits to ensure that all vendors follow IWAY
guidelines and that supply chain management are truthful and open. IKEA's social entrepreneur
project, which strives to promote positive social change where it is most needed, will continue to
help artisans in rising regions in 2020.

COVID-19 Relief

IKEA adopted specific CSR initiatives during in the COVID-19 outbreak to safeguard and raise
the standard of living and wealth of its workers, customers, business associates, and localities. In
all, healthcare centers around the world received almost 1.7 million facemasks, gloves, bedding,
and food supplies (Seeger and Gustafsson, 2021).

 As part of IKEA's COVID-19 programme, partnering with over 80 local organisations in

Portugal to give "let's play and learn" kits to aid home learning for 10,000 kids.

 Providing around 117,000 items to Chinese medical institutions, including textiles, seats,
and carts (Elf, P., Isham and Gatersleben, 2021).

 In Germany and Switzerland, providing fully equipped houses to prevent family violence
increases caused by closure restrictions.

 Providing medical workers and individuals combating COVID-19 in Daegu, Korea, and
Hyderabad, India, with beds, clothes, and other necessary items such as seats, towels, and
bottles of water.

IKEA also took pains to guarantee that many of its workers were employed in diverse
sectors of the firm, additional to its community participation (Al Shuwaler et al., 2020).
Several IKEA distribution network workers were granted more flexible hours and prolonged
vacations for those with children. Several IKEA franchisees attempted to compensate
employees for lost pay in 2020.
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CONCLUSION
IKEA is a globally recognized brand. IKEA must examine internalization and
externalization factors for success in market. Both will look at the dangers and possibilities it
faces. By evaluating IKEA, it is observable that the company is concerned regarding the human
race and ecological factors.  IKEA, as a whole, integrates the factors of innovation, cost-
effectiveness, and conserve natural resources. It takes into account the sustainability element for
consumers, the environment, and the company as a whole.
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