Marketing in the Operational Context: the Case of Ikea

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MARKETING IN THE OPERATIONAL CONTEXT: THE CASE OF IKEA

I. Introduction

In the recent years, the operations of many businesses have become global in nature. The internationalization of businesses phenomenon paved the way for various organizations to conveniently expand in other nations. By penetrating the international marketplace, organizations are able to acquire greater market in which to sell their products or provide business. One of the largest companies that has become global today is IKEA. As Swedish-based company, IKEA is a home furnishing retailer specialist. It started selling nylon stocks, picture frames, pens, table runners, wallets, jewelries and watches. Eventually, they included furniture in their product range. It was in Norway where the first store of IKEA, which is outside of the country, opened. After this, IKEA already expanded to other countries.

The purpose of this paper is to look into the marketing aspect of IKEA and the overall furniture or home furnishing retail industry. This is in the light of its operational context. More specifically, this paper will conduct a macro-environmental analysis so as to highlight the changes that are occurring. The market for the furniture and home furnishing retail industry will also be described in this paper. Moreover, the customers for IKEA will be analyzed. Based on the different forms of analyses which will be conducted, the researcher will be able to examine the company of IKEA more deeply. Hence, a SWOT analysis will be conducted so as to highlight the key issues and opportunities for change. It will then examine how these changes will affect the marketing and operations strategy of IKEA. And based on the analyses, this paper will make recommendations as to how to approach the marketing strategy of IKEA.

II. Macro Environmental Analysis for IKEA

It was in 1943 when IKEA was founded by Ingvar Kamprad. The first IKEA store opened in Almhult, Sweden in 1958. Also, the first IKEA store outside of Sweden was established in Norway. Currently, there are over 220 stores of IKEA around the world and is operating in 33 territories or countries. This number is still expected to increase as there is already a line-up of store openings. With the rapid changes that are happening in the global marketplace, it is necessary to examine the macro environment where IKEA exists. In this way, one can better prepare for the future ahead. There are many macro environmental factors that affect the conduct of business of an organization, specifically on the decisions made by the managers.

Through the PESTLE model, the different macro environmental factors are classified into political, economic, social, technological, legal and environmental. On the figure below, it presents the macro environmental analysis for IKEA, using the PESTLE model.

Table 1: PESTLE Analysis for IKEA

| | | | |PESTLE |IKEA’s MACRO ENVIRONMENT | | | | | | |Political |Political stability of host countries, intellectual property protection, pricing | | | |regulations | | | | | | |Economic |Global economic recession, currency rates, higher interest rates, national income | | | |differences, labor costs, economic stability, government intervention | | | |...
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