Name:

Student ID:
Course: BA (Hons) Business Studies with Foundation
Subject: Context of Business
Mail ID:
Introduction:
The company chosen for the analysis is IKEA, the world's leading retailer of household goods. It
is our vision to create a better life for a few people every day. There are 18 IKEA stores in the
UK and you can shop and order online through their website. IKEA has responded to the
growing public interest in sustainability. To make business practices strong, it believes in a
strong eco-friendly stance. As a global business company, it has to overcome more barriers and
face more competition.

1. Perform a SWOT and PESTEL analysis for the chosen business

SWOT Analysis: SWOT analysis is performed to identify strengths, weaknesses, opportunities,

and threats for the strategic evaluation of a company. Ratings provide important data about
reliability. This is the art of assessing internal, external, negative, and positive assessments of a
situation. In order for an organization to make the necessary changes to improve performance,
the company must identify its strengths, weaknesses, opportunities, and threats. Businesses must
capitalize on strengths (strengths) and overcome weaknesses to create opportunities and
communicate threats. (Benzaghta et al., 2021)
Strengths:
Strength is the characteristic of a business that adds value to a product or amenities. IKEA's
strengths:
● A strong international brand. IKEA has become a global brand in terms of quality and
service.
● A vision with a clear purpose.
● strong awareness.
● Design that meets a democratic balance of quality, purpose, planning, and price.
● IKEA's performance is measured with a dedicated Key Performance Indicator (KPI) tool.
This measurement shows how far IKEA has moved towards its vision.
IKEA's strengths throughout the entire production process are:
● In an environmentally friendly way, it has set its sights on increasing materials from
renewable sources.
 ● Minimize waste of raw materials through smarter use.
● The relationship between them and the supplier is long-term.
● The scale has its own economy. (Benzaghta et al., 2021)

Weaknesses:
● Given the fact that IKEA operates in many countries around the world, this is a big, big
business, which means it's hard to control the standards elsewhere. Although the
company works hard to ensure consistent quality across its entire product range and
across all facilities, reproducible and scalable quality control is a major weakness.
Quality sometimes fails due to our obsession with a cost advantage. This is especially
true in the current environment where the cost of many inputs and raw materials rises,
affecting the profitability of the company. It's important to note that maintaining quality
is sometimes difficult with rising costs and the need to replicate standards all over the
world.
● IKEA's operations have environmental concerns, and the company struggles to
communicate and formulate its environmental policies to customers, shareholders, and
other stakeholders. (Benzaghta et al., 2021)

Opportunities:
Possibilities that leverage IKEA's strengths include: Here, consumer demand plays a key role in
strength. they are
● There is an increasing demand for eco-friendly products that do not harm customers, the
company, and the environment as a whole.
● IKEA creates a constant demand for its products at affordable prices.
● Demand for products has increased by using less water to produce them and reducing
their carbon footprint.
In addition to products, IKEA offers:
● Tips and ideas for coping with family life are available online.
● Zero waste to reduce waste and water in landfills.
● The cost of reducing the transportation and packaging of goods.
 ● It supports charities that help develop social engagement platforms in their communities.
(Benzaghta et al., 2021)

Threats:
Potential deficiencies must be recognized, remedied, and managed. they are as follows:

● Standards control can be challenging due to the size and scale of businesses around the
world.
● Quality must be maintained at a low cost.
● As a large corporation, it will be difficult to communicate about environmental
performance with the company's stakeholders and consumers.
● Companies should also be brief about possible external threats. This challenge must be
managed to overcome weaknesses and threats and create a viable environment.
(Benzaghta et al., 2021)
● Social trends keep changing. For example, few consumers buy household items more
than once in their lifetime so they should look after them.

PESTLE analysis:
● Political Factors: Entering the Asian Market
Since IKEA stores work in excess of 41 nations, the organization should consent to the
guidelines of every country. A few nations might have comparable regulation or political
impact. However, not consistently. One thing is sure. All nations benefit from political
solidness. Without this, monetary soundness is unthinkable. This implies IKEA can lose
benefits in a single spot and lose benefits in another, contingent upon who is in control
and a big motivator for they (if any). (sin et al., 2021)
● Economic Factors: A Smart Response to a Recession
Similarly as IKEA is impacted by worldwide law, the worldwide economy is as well.
Indeed, even presently, a few renowned brands are going through the 2007 downturn.
Huge number of individuals lost their positions at that point. Accordingly, we've seen
 purchasers settle on informed purchasing choices. Buys depended on need rather than an
extravagance. In spite of the fact that individuals might require furniture, overhauling a
sleeping cushion, dresser, or sofa was a long way from mind.
● Social: International contentions and protests
Know the neighborhood culture prior to opening your entryways. That is a standard each
business ought to observe. Not exclusively to fit the item to the buyers yet to likewise try
not to outrage social qualities. IKEA conforms to this standard for all promoting
materials it discharges. Sadly, their endeavors are not generally welcomed all of the time.
● Technology: Acheiving more with their digital catalog
IKEA keeps on offering paper inventories. It's presently not the best way to exhibit your
items. At the point when the web is in a real sense readily available (because of our cell
phones), individuals are bound to check exchanges on the web. Each business today
needs to have a functioning site. IKEA is no exemption. All organizations benefit from
further developed consumer loyalty. This prompts new surveys, informal suggestions,
and brand reliability. Taking into account how much exertion IKEA places into exploring
its buyer base, a comparable exertion is reflected in its computerized channels.
● Legal
All large corporations face legal threats. IKEA must comply with many laws and
regulations in all countries in which it operates. These are physical stores, so it is
important to familiarize yourself with the labor laws. That's not all. IKEA is in the news
because its products are of poor quality. Objects fell or tipped over, resulting in injury
and death. This devastation has affected families and communities. When such a problem
arises, IKEA must ensure the safety of its products. Otherwise, litigation will arise.
Money may be restored, but reputation may not be restored. (O’brien, 2019)
● Environment: In-store renewable resources
IKEA invests in sustainability. to the letter. They have invested more than $1 billion in
renewable energy in poor countries. They strive to ensure that the energy in their stores is
completely renewable. One way to achieve this is to invest in solar and wind panels.
They also strive to use materials such as wood and cotton from sustainable sources.
2. From the analysis in task 1, in your opinion, evaluate how the changes in PESTEL
factors have influenced the Opportunities and Threats business. Critically comment on
how the business is addressing their Strengths to negate Threats and Weakness affecting
their Opportunities

From the above analysis we have figured out that IKEA is addressing its strengths to negate
threats and weaknesses which are affecting their opportunities in a very smart manner. Lets have
a look that how PESTLE factors have influenced the opportunities and threats of IKEA’S
business. Here's how Ikea gets you hooked on everything from psychological tricks to store
layout and great value.

1. Solve the toughest part of buying furniture. Before Ikea, people saw furniture as an
investment for the next 20 years. According to Schulberg, this caused a lot of anxiety and
indecisiveness. "They're not particularly durable, but they make a beautifully designed product.
It's meant for immediate use... more likely to be worn out or thrown away as users move to
different taste levels or purchasing tiers," he writes. . A fundamental shift in the home business
that mainstream furniture stores are still struggling to cope with.” (Alrubah, 2020)

2. Hitting the right demographics: IKEA resonates with young people.

IKEA is also known for paying workers a living and making the manufacturing process
transparent. IKEA is active in more than 30 countries worldwide. There was not enough room
for growth in Sweden, so the company planned to go abroad from the beginning. All stores
around the world have been renovated to meet the needs of the residents while maintaining the
IKEA brand identity. It's a very difficult game in a country like India, which is the exact opposite
of Sweden in terms of temperature, population and house style, among other factors. As you can
see, the brand has been growing steadily since 1943 and will continue to grow in the future.
(Alrubah, 2020) From innovative ideas to open up a cafe in your store to the bright and colorful
assortment displays, IKEA has once succeeded in a niche of affordable yet beautiful furniture.

3. Not expensive, but not too cheap: According to Schulberg, IKEA's prices are perfect.
Although prices are cheaper at large discount stores like Aldi, shoppers can find good value for
money at Ikea. But Ikea is much cheaper than West Elm and its competitors like Bed, Bath &
Beyond. The materials used in IKEA furniture are detailed so buyers know exactly what the cost
is. One of the most important customer segments are residents who move frequently, such as
tenants, students, and military families. Its low cost attracts such people because it can be thrown
away without burning a large hole in the pocket. Because you don't have to pay for transportation
or buy expensive new furniture. This method of production has enabled IKEA to achieve
economies of scale that few brands in the sector have been able to achieve. (Yu, 2019)

4. Shop is your destination: As e-commerece turns out to be more famous, customers need the
motivation to visit stores. With a refined display area and cafeteria, IKEA has turned into a one-
of-a-kind space for customers. While numerous retailers enter shopping centers for gridlocks,
IKEA is an independent store that customers look for intentionally.

5. store layout: A trip to an IKEA store can be considered a family walk. The average size of a
typical store is very large. You can easily spend an entire day in the store. A day at IKEA is not
just a fun day, with a spacious layout with several departments in different parts of the house.
This is an experience. IKEA is too big and complicated. He has a map. The store is designed to
guide you through your entire inventory (unless you use shortcuts). This phenomenon caused
the store to spend more. If you walk through the store, you'll notice that the furniture is usually
arranged as rooms, not products. Enjoys discovering and influencing emotions by looking at
mockups of what your ideal bedroom or kitchen might look like.

3. Recommend a suitable leadership style from Daniel Goleman’s (2000) leadership styles
that according to you will help them meet their business objectives with a focus on changes
in the business environment since the start of 2021. Justify your choice using appropriate
literature and examples
The leadership style that will suit IKEA to meet their objectives according to their business
enviorment since the starting of 2021 is Affiliate leadership style from Daniel Goleman’s (2000).
Lets have a look at the brief desscription of the leadership style.

Affiliate Leadership Style: The leadership style managers choose affects the emotional, mental,
and physical health of their team. Whether this effect is positive or negative depends on the style.
Friendly leadership is one of many leadership styles that have a positive impact on employees.
(Goleman, 2017) We will further explain what affiliate leadership is, why it would be beneficial
for IKEA. Here are some of the key benefits of affiliate leadership style that can help IKEA to
achieve its objectives:

● Building effective teams

This leadership style is perfect for building strong and cohesive teams and partners.
Creating harmony in the workplace gives employees a sense of security and inclusion,
which helps reduce employee turnover and increase productivity and job satisfaction.
● Improve employee morale
Partner leadership motivates employees by giving them more freedom to express their
opinions, feelings and creative ideas. When employees have more autonomy, they feel
valuable and important to the company, which increases their desire to do better and
contribute more.
● Building employee trust
Employees are more open to leaders who express concern for their own well-being and
tend to naturally build trust. Transparency between managers and employees is essential
to building teams that trust each other and inspire team members to talk about issues and
ideas.
● Providing leadership in times of crisis
Alliance leaders are often used to help a team or company during difficult times, such as
mergers, downsizing, or other transitions that affect employee well-being. This leadership
style allows workers to analyze what is happening and work with emotion while
maintaining productivity and quality of work or returning it to normal pace.
● Resolve conflicts more effectively
 Partner leadership helps you avoid conflicts before they escalate by taking proactive
steps. Because this style is geared towards emotion, leaders can read team members'
relationships, notice when tensions arise, and quickly find solutions to avoid bigger
problems. This helps maximize team cohesion and productivity. (Wachira, 2018)

● understand the needs of others:Friendly leadership focuses on connecting with people and
reading their emotions to ensure their well-being.
● give praise One of the key characteristics of alliance leadership is to motivate employees
through rewards. It focuses on providing praise and encouragement to support a person's
growth.

This leadership style empowers the progression of inventiveness and creative reasoning,
permitting workers to utilize their creative mind to find better approaches for achieving
objectives and taking care of issues. This additionally urges groups to cooperate and share
thoughts all the more uninhibitedly which is vital for IKEA since the beginning of 2021 is
extremely essential for the entire world this administration style can help IKEA's workers to
confront the pandemic circumstance tranquilly. (Goleman, 2017)

4. Critically comment on their Corporate Social Responsibilities in the processes using

evidence from your research

IKEA's Corporate Social Responsibility Policy: Since the launch of the People and Positive
Earth program in 2012, IKEA has turned into the world's third-biggest forerunner in ecological
supportability and social responsibility. IKEA's aggressive and inventive Corporate Social
Responsibility (CSR) 2020 plan centers around three primary drives:

1. healthy and practical way of life

2. Positive Climate Initiatives
3. Social Equality and Justice

I. IKEA's Healthy and Sustainable Lifestyle Program

In 2020, IKEA extended its maintainability program, intently observing the ecological effect of
its exercises. Specifically, these CSR endeavors incorporate new help for individual wellbeing
and prosperity. In accordance with this objective, IKEA has extended its home product offering
in 2020 to incorporate home air purifiers, energy-proficient LED bulbs, sunlight powered
chargers, and water reusing frameworks for showers and showers. Last year, IKEA acquainted
more plant-based food varieties with its supermarkets and cafés, permitting half of eatery suppers
and 80% of bundled food varieties to be plant-based by 2025. Notwithstanding these practices,
IKEA has found a way clear ways to slice food squander down the middle throughout the
following two years.(Shuwaler, 2021)

II. IKEA Climate Positive Program

IKEA keeps on putting resources into its corporate social responsibility system, which underlines
practical and maintainable materials and cycles. In 2020, the organization has accomplished its
objective of consolidating a more maintainable wellspring of wood into its furnishings. 98% of
the wood utilized in our items comes from FSC-ensured sources or potentially reused materials.
As per this arrangement, IKEA keeps on working with providers and accomplices to work on the
strength of home decorations to limit their natural effect. To meet our environment cordial
objectives, 80% of the present materials and upholstered furniture are produced using reused
polyester. The organization likewise reports that huge headway is being made in the gradually
got rid of single-utilize plastic family things in 2020, where 44% of plastic items are produced
using reused or inexhaustible materials. energy obligation. The greater part of these assets will be
utilized to coordinate more electric vehicles into messenger benefits and extend reforestation
endeavors and other backwoods the executives drives. (Shuwaler, 2021)

III. IKEA Social Equity and Equity Program

With the belief that everyone is equally competent, IKEA's diversity and inclusion policy
continues to lead to gender equality. In 2020, women made up 40% of the company's executives,
highlighting the company's commitment to achieving a 50/50 gender by 2030. To further support
fair and equitable treatment of our employees regardless of gender or sexual orientation, we have
taken proactive steps to ensure that our company policies comply with the United Nations
Standards of Conduct for the Elimination of LGBT+ Discrimination in the Workplace.
Respect and support for human rights throughout the supply chain remains a fundamental
element of IKEA's Corporate Social Responsibility program. In 2020, IKEA updated its Supplier
Code of Conduct (IWAY) to ensure that all employees do appropriate and meaningful work in a
non-discrimination environment. To ensure transparency and fairness in supply chain operations,
both IKEA and third parties conduct regular audits to ensure that all suppliers comply with
IWAY requirements. (Shuwaler, 2021) In 2020, IKEA continued its social entrepreneurship
program for artisans in developing countries to drive positive social change where it is most
needed. Please help COVID-19

IKEA sent off a committed CSR drive to ensure and uphold the wellbeing and livelihoods of
laborers, clients, colleagues, and networks during the COVID-19 pandemic. Altogether, more
than 1.7 million veils, gloves, bedding, and food have been given to medical care offices all over
the planet. Specifically, IKEA's COVID-19 help exercises include: (Elf et al., 2021)

● Working with more than 80 local charities in Portugal, they support homeschooling for
10,000 children and their families by providing Let's Play and Learn kits.
● It supplies more than 117,000 products to Chinese medical institutions, including textiles,
chairs, and carts. they offer fully furnished apartments in Germany and Switzerland to
combat increased domestic violence caused by quarantine restrictions.
● They are donating bedding, fabrics, chairs, sponges, and water bottles to medical staff
and volunteers fighting COVID-19 in Daegu, Korea, and Hyderabad, India.

In addition to working with the public, IKEA has taken steps to hire more employees in all areas
of its business activities. Many employees throughout IKEA's supply chain have been given
additional leave and more flexible working hours for employees with children. In 2020, some
IKEA franchises have taken steps to compensate their employees for lost income.
References:
Benzaghta, M.A., Elwalda, A., Mousa, M.M., Erkan, I. and Rahman, M., 2021. SWOT analysis
applications: An integrative literature review. Journal of Global Business Insights, 6(1), pp.54-
72.
Sin, L.G., Utama, A.G.S., Pandey, S., Pandey, R., Harsha, Y.S.S.V.S., Massand, A., Safitri,
A.D.I., Yan, N.P., Kee, D.M.H., Yue, W.S. and Zhin, P.M., 2021. A Case Study of the Factors
that Affect Consumer Behavior in IKEA. Asia Pacific Journal of Management and Education
(APJME), 4(2), pp.20-28.
O'brien, J., 2019. Category management in purchasing: a strategic approach to maximize
business profitability. Kogan Page Publishers.
Alrubah, S.A., Alsubaie, L.K., Quttainah, M.A., Pal, M., Pandey, R., Kee, D.M.H., Ling, L.K.,
Nadirah, N.A. and Aishan, N., 2020. Factors Affecting Environmental Performance: A Study of
IKEA. International journal of Tourism and hospitality in Asia Pasific (IJTHAP), 3(3), pp.79-89.
Yu, R., 2019, February. Core Elements of IKEA’s Successful Product Design. In Journal of
Physics: Conference Series (Vol. 1168, No. 3, p. 032118). IOP Publishing.
Goleman, D., 2017. Leadership that gets results (Harvard business review classics). Harvard
Business Press.
Wachira, J.G., Karanja, K. and Iravo, M., 2018. Influence of Affiliative Leadership Style on
Organizational Performance of Commercial State Corporations in Kenya. European Journal of
Business and Strategic Management, 3(3), pp.17-28.
Al Shuwaler, A., Quttainah, M.A., Kee, D.M.H., Kei, C.M., Qi, E.J., Wen, E.C., Qu, G., Saxena,
M. and Pandey, R., 2020. IKEA’s corporate social responsibility. International journal of
Tourism and hospitality in Asia Pasific (IJTHAP), 3(2), pp.70-77.
Elf, P., Isham, A. and Gatersleben, B., 2021. Above and beyond? How businesses can drive
sustainable development by promoting lasting pro‐environmental behaviour change: An
examination of the IKEA Live Lagom project. Business Strategy and the Environment, 30(2),
pp.1037-1050.