Topics: Inflation, Unemployment, Economics Pages: 2 (424 words) Published: August 25, 2013
PESTEL analysis (See appendices Ⅲ)
The External environment can be defined by the following terms. * Political environment
* Economical environment
* Socio-cultural environment
* Technological environment
* Environmental environment
* Legal environment
Hong Kong has adopted the policy of free trade, so basically no trade barriers stack. Goods out of Hong Kong are not subject to tariffs. Import licensing and export visa procedure is simple, most of the products are not required to be able to import and export permit. Require a visa or to declare the event situation, only in order to fulfill international commitments according to the different obligations, or for the protection of public health, safety or security reasons. 2.222 Economic

Economic growth: recession in Hong Kong affect IKEA’s sales. Interest rate: IKEA can benefit from the decrease of interest rate by borrowing money cheap now. Inflation: Increasing inflation will reduce consumer’s disposable income and thereby decrease IKEA’s profit. Unemployment: Hong Kong’s Unemployment rate has been rising during these months which decrease consumers’ spending power in IKEA, but provide the company with more choices of cheaper labour. 2.223 Socio-cultural

Family, values and attitudes and education determine the socio-cultural environment of the country. IKEA would have to work according to the trend and satisfy customer's demand due to change in generation choices. 2.224 Technological

IKEA is making a trial on the new technology called RFID (Radio Frequency Identification Device). As one of IKEA’s fundamental innovation is the concept of self-service, RFID could give several benefits to IKEA because it can support self-service. Not only can customers get away from the queue by using RFID equipped cash desk, but also sharing accurate availability information through Electronic Price Labels. The adoption of new technologies in Hong...
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