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Ikea External Environment Analysis

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External Environmental

External Environment refers to the elements that happen outside the business which can’t be controlled by the business. These elements will impact the internal functions of the business and its strategies to adjust itself to the evolving environmental.

a) Political/Legal
Political environment includes Government funding, policies, grants and initiatives where as legal environment includes the rules, regulations, legislations, regulatory business and trading policies. Every country has different political and legal factors IKEA operates around the world and have to follow different political and legal factors in the different country. E.g. IKEA has to adopt a complete new policy to make business working in China. (“IKEA’s …show more content…

Many countries around the world have changed or modified their county policies for international companies to boost their own economy (“Pan”, 2007). Among all the developing countries china was one of the fastest and strongest economy and IKEA took that advantage and opened the first store in Shanghai. But IKEA 's policy of do-it-yourself did not work due to social differences in different countries (Anonymous, 2009). IKEA changed it policies and used the cheap labor available in China and provided its product with a free delivery and fully assembled product. After the changes in their own policy IKEA became successful in China and is now planning to open 2 more store and bringing their total to 10 in …show more content…

This advantage can mainly be attributed to its resources and capabilities namely human resources, brand and IKEA concept.
Ingvar Kamprad the founder of IKEA though retired is still a cheerleader for the practices/concepts that define IKEA culture. Cutting prices is one of the competitive advantages IKEA has over its competitors and this is another message that comes across loud and clear among IKEA operations. IKEA aims to lower prices across its entire offering by an average of 2 percent to 3 percent each year.
Targeting middle class customers who shares buying habits and providing similar shopping experience the world over has made IKEA a unique shopping experience. More than 7200 products ranging from kitchen cabinets to candles and textiles; making store visit more of an outing than a chore; seducing the customers with one touch after another within the shop; offering other services like restaurant, kids area and the like; flat-packed nearly all big items to save shipping cost and allow shoppers to haul their own stuff and many more, makes IKEA concept of its own kind and as a results boost its image

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