External and Internal Factors Analysis Summary for IKEA

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INTRODUCTION

IKEA is a privately-owned largest Swedish furniture retailer in the world. It was founded by Ingvar Kamprad in 1943 and it is owned by a Dutch-registered foundation controlled by the Kamprad family. The company distributes its products through its retail outlets and has more than 250 stores in 35 countries. Its presence is mostly in Europe, United States, Canada, Asia and Australia. (Wikipedia) Ikea's USP is offering good quality product at low prices so the majority of the people can afford them. Its revenues are more than 17bn Euros in 2006 up from 15bn Euro in 2005. (Ikea)

According to the classes.bus.oregonostate.edu and other sources, some of the highlights of Ikea are:

- In 1943, IKEA was founded by Ingvar Kamprad and it's based in Sweden
- The stores exteriors are painted bright blue and yellow, Sweden's national colors.
- Now IKEA specializes in fashionable furniture and home accessories at low prices.
- In 1951, the first IKEA furniture catalog is published
- In 1985, the first IKEA store opened in the USA
- IKEA has more than 76,000 employees in 250 stores in 35 countries

MISSION Statement of Ikea

"Ikea's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them (IKEA 1994)."

Internal and External Environmental Analysis

The understanding of these elements is the prima facie requirement in the strategic planning and management process and is closely analyzed in the environmental scanning process of an organization. These factors are very important in establishing the corporate level strategies of an organization. Thus let us discuss the EFAS and IFAS analysis of IKEA in detail.

External Factors Analysis Summary

"The remote environment comprises factors that originate beyond, and usually irrespective of, any single firm's operating situation: (1) economic, (2) social, (3) political, (4) technological, and (5) ecological factors." (Pearce, 2004, p.79) Here we will analyze the affect of societal forces and to see what trends are like to affect the Ikea in a brief manner:

Globalization

Globalization presents a new series of challenges for organizations in that not only does the execution of core competencies become more challenging as well as amplified in importance, but also in that cross-cultural communication and the interaction of disparate values and beliefs further complicate organizational operations. Globalization means operating in the world economy as a single economy. Globalization is a compulsion now. A convergence of expectations is happening globally. And as barriers fall further, technology advances rapidly, customers talk more to each other on the back of a robust telecom network, the ranks of the Universal Customers will only swell. Thus it will bring good growth for Ikea due to liberalization in many parts of globe. In future there will be huge growth in emerging economies such as China, India, Brazil and other countries.

For example let us take the case of India: Favourable demographic and psychographic changes relating to India's consumer class, international exposure, availability of quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands, international shopping experiences and the increased availability of retail real estate space.

Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, Sears (Kmart), etc stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned / wholly managed sourcing & buying offices shall further make India an attractive retail opportunity for the global players.

Societal Trend

Trend of Furniture retail stores increasing: It is of very much importance to retail giant. The factors like lifestyle changes age distribution of population, life expectancies etc. Thus right now the demographics are ...