IKEA: Business Analysis

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PEST Analysis
In PEST analysis, we will look into what will be affect by the business environment. It includes political environment, economical environment, social environment and technological environment. So let’s start with political environment. Political environment may mean some kind of regulation or legal issue made by the government. Fair-trade and minimum wage will be a good example. For IKEA, we can see any significant impact from the political environment. The next one will be the economical environment. During the economic recession, most people don’t want to spend too much. Customers will think twice before they pay for the product. IKEA have the advantage that the price is very reasonable for the general public. They can do so because their products are mainly made in China. So we think that there are positive impacts for IKEA during the low economy. Then, we will look into the social factors. Nowadays, people concern more the environmental friend issue. People think that is the responsibility of an organization. IKEA have been very environment friendly since long time ago. When you buy something from them, you can’t see any fancy packaging. So we do believe the social factors will bring us positive impact. The last one will be the technological environment. Technology has become more advanced. It is easier for IKEA to promote their product on the internet. It can let more people to know about IKEA’s product. For example, IKEA has put the catalog on the web so the customer can know the dimension of the product. So IKEA do have benefits from the advanced technology.

Five Competitive Forces of Competition
The first force is the rivals. IKEA is the leader in the market. There are only a few rivals can compete with them. They are Pricerite and DSC (Direct Sales Center). However, they don’t have the advantage of IKEA. The advantage is that, IKEA have a large showroom that can let them demonstrate how we can decorate our home. That is why...
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