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Strategic Management Case Study Ikea

1534 Words7 Pages

Khamis Al Hashmi, BB835, TMA01, Question 1

Companies and organizations are nowadays functioning in a very competitive and a volatile environment, having by which each have to be distinctive in terms of the managerial strategies used, as well as, the operational activities that make them effectively competitive to operate in the global market (Kraja & Osmani, 2015). In the case of Ikea which is one of the top furniture stores globally that was found by Ingvar Kamprad in the Netherlands, is one of the important organizations that need to regularly update their strategies in analyzing the external environment of the company to maintain their competitive advantage (Ikea, 2014). Usually the term external environment does not refer only to one type, …show more content…

The term hypercompetitive environment can be defined as the type of an environment which is highly volatile and strongly competitive, making it difficult for organizations to maintain a competitive advantage for a long period, and also having an easy market to enter (Bogner & Barr, 2000). Therefore, this unpredictable environment increases the risks of businesses in the market since competitors are disrupting the markets and breaking the boundaries of entry, as well as, breaking the classic competitive environment (Rifkin, 1996). Moreover, the aggressiveness of competitors have shorten the period of building a competitive advantage in the market, also the rapid technological changes and economical changes makes it insecure for businesses not to be completely familiar with the external changes in the environment (Volberda, …show more content…

Starting with one of the very popular tools the PESTLE analysis. This analysis can be used as a strategic analysis to measure the factors of Ikea’s external environment. The theory concentrates on measuring firstly the political factors which are related to the government policies, tax, employment regulations, trade regulations and the political stability of the country and its effects on the performance of a business (Cadle, Paul & Turner, 2010). Secondly, economic factors analysis supports understanding the changes in exchange rates, taxes, inflation status and the interest rates that again could affect the financials of Ikea. Moreover, the social factors assist in understanding the demographics of the population, lifestyle preferences and ethics. Followed by the technological factors such as the rapid technology updates and systems. And the legal factors that combines issues related to customers, employment laws, taxation and more. Lastly, the environmental factors such as sustainability, reducing pollution and going green (Gupta,

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