Business and Marketing

Business and Marketing
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Table of Contents
 TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc292534678"
1.0 Introduction  PAGEREF _Toc292534678 \h
4
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2.0 New Trade Theory  PAGEREF _Toc292534679 \h
4
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3.0 Business Environment  PAGEREF _Toc292534680 \h
5
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3.1 Facts and Figures about IKEA  PAGEREF _Toc292534681 \h
5
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Co workers  PAGEREF _Toc292534682 \h
5
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4.0 Analysis of the Business Environment-PESTLE  PAGEREF _Toc292534683 \h
9
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4.1 Political Situation:  PAGEREF _Toc292534684 \h
9
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4.2 Economic:  PAGEREF _Toc292534685 \h
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4.3 Social:  PAGEREF _Toc292534686 \h
10
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4.4 Technological:  PAGEREF _Toc292534687 \h
11
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4.5 Legal:  PAGEREF _Toc292534688 \h
11
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4.6 Environmental:  PAGEREF _Toc292534689 \h
11
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5.0 Evaluation of Porters Five Forces  PAGEREF _Toc292534690 \h
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5.1 Power of the Buyers:  PAGEREF _Toc292534691 \h
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5.2 Power of Supplier:  PAGEREF _Toc292534692 \h
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5.3 Rivalry:  PAGEREF _Toc292534693 \h
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5.4 Substitutes:  PAGEREF _Toc292534694 \h
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5.4 New Entrants:  PAGEREF _Toc292534695 \h
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6.0 Resource Based View Analysis of IKEA  PAGEREF _Toc292534696 \h
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7.0 Key Reasons for IKEAS Business Success  PAGEREF _Toc292534697 \h
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7.0 Challenges and Outlook for IKEA  PAGEREF _Toc292534698 \h
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8.0 Conclusion  PAGEREF _Toc292534699 \h
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9.0 References  PAGEREF _Toc292534700 \h
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10.0 Appendix  PAGEREF _Toc292534701 \h
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1.0 Introduction
IKEA is the most successful mass market retailer in the world. It is popular for selling Scandinavian style home furnishings as well as other house goods. The company has more than 2700 stores in 33 countries, most of them being located in Europe while others are found in the United States, Australia, Asia and Canada. IKEA is one of the stores, though few in numbers, that have relations and stores in some Middle East countries and in Israel. One remarkable character of IKEA is its furniture’s which are affordable and which consumers can assemble for themselves (IKEA 2010). The Company hence strives to make its products affordable at all cost and is characterized with a concept of low price but not at any price.
2.0 New Trade Theory
New Trade Theory can be termed as a collection of models in relation to international trade and focuses on the network effects as well as increasing returns to trade. It is therefore essential to indicate that the study will employ new trade theory so as to evaluate IKEA Company. Furthermore, New Trade Theory is envisioned in four components that include an appreciation of market imperfections, the new industrial economics of strategy behavior and new growth dynamics which is an approach to economic growth (Baraldi 2008). The fourth component envisioned by New Trade Theory is a changing appreciation of the political situation.
Analysis of IKEA Company by employing the New Trade Theory aims at illustrating the application of well established economic principle in the market. The analogy behind the theory dictates that even if the free markets are at their best, an introduction of one market imperfection may be beneficial than the pure free market policies. This indicates that they may be cancelled in regard to previous imperfections and prompt the market back to efficiency status. In the absence of free domestic markets resulting from regulations by the government, perfectly free markets in foreign trades may not be optimal.
3.0 Business Environment
The sales of the company have grown by 7.7% due to their determination to provide a better life for many people. The company keeps increasing its knowledge about people. The company is in the mean time undertaking to improve the stores which are currently in place as well as securing of the supply products (Heller 2000). The IKEA culture is being spread across the new co-workers signifying that they intend to reach new trade dynamics. AS mentioned earlier, IKEA group owns over 2700 stores in more than 30 countries with 118,000 employees.
3.1 Facts and Figures about IKEA
Co workers


(About the IKEA Group, 2009)
IKEA Group Stores


(About the IKEA Group, 2009)
Sales in 1999- 2009


(About the IKEA Group, 2009)
Sales per Region


(About the IKEA Group, 2009)
Top 5 Sales Countries


(About the IKEA Group, 2009)
4.0 Analysis of the Business Environment-PESTLE
4.1 Political Situation:
Successful ventures have been recorded by the Company in both the international as well as domestic business due o the national and global trends and changes. The furniture retailer company that is Sweden affiliated, is encompassed by the Scandinavian style of products which have been engulfed with do it yourself flat packaging. The style is popularly known across the globe for it has a global cult brand.
4.2 Economic:
IKEA is generating new concepts in its market strategy due to the economic trends and changes being realized and this aims at attracting several consumers. The strategy is also being undertaken with the sole aim of wining the trust and loyalty of its consumers, who have been drawn with its stylish products. IKEA have continued to grow in strength as a result of the ownership transfer to the Stitching Ingka in business affiliation (Miller 2004). The ownership transfer brought changes to the company resulting to the adoption of other styles of furniture orientation like the dinnerware, lightings as well as the rugs. On the other hand, there have been limitations in terms of business progress with the economy playing a great role in the company’s market performance. This led to a degeneration of business links due to the absence of strategic direction. However, the company evaluates the necessity of having to analyze the components that might negatively impact on the key issues.
The company observes the usage of transportation resources that is increased by a 30% margin for the business partners as well as the company itself. Another aspect involved in their warehouse is the creation of more space which is effectively utilized for other initiatives. These purposes are the display on new products and storage components. The new concept in packaging has made it easier for customers to handle the products in the storage centers. It is also important to note that the shop ready status of the product has enabled an easier replenish of the warehouse.
4.3 Social:
The society has been a major beneficiary of IKEA Company. For instance, the Company has employed 118,000 employees hence creating employment opportunities. Employees are as well entitled to several and different benefits like the pensions and insurance. New ideas are still in the offing as the company maintains that it is in the process of continually producing higher quality of products in terms of furniture’s that sticks to their original methodology of the production of high quality and stylish furniture that reflects on low pricing.
4.4 Technological:
Usage of high quality technology and system has been deployed by IKEA in the promotion of shorter queues and proper scheduling (Pederson et al 2008). The concept of emerging technology has also seen a good tracking and trading patterns in the company. On the other hand, IKEA aims at being highly producing as well as establishing employee preference. Technological inclination has boosted the company’s ability to control the working population. This is done through right positioning of the staff in the right place and time ands this matches the unique trading partners in all the IKEA affiliated stores. The supply chain department is also undertaking to optimize and manage the working force with an aim of creating an efficient store environment that keeps the customers happy.
4.5 Legal:
In compliance with the legal requirements, IKEA is strictly implementing the relevant and applicable laws as well as regulations. The derivatives are geared towards the preservation of the environment, working and social conditions. The Company aims to implore demanding requirements that are specific to maintaining the lists of laws and regulations as well as the proce...