Like any other company in the furniture and accessories sector, the company has endured a hard time in the past year. According to Blaszczyk, (2016), IKEA is a multinational company that spans over 5 continents Not only has the company been affected by the current Covid-19 pandemic, but the changes in the global economic environment have also had an impact on the current operations of IKEA. Owing to these factors, this paper aims at analyzing the several sectors involving the company’s external environment. Additionally, the paper aims to look at the five forces of competition. The latter will be analyzed using the Porter’s five forces.
A review of the sectors of the external environment of IKEA shows that the company is affected by several global and regional factors. First, IKEA is affected by the cyclic changes in not only the American market but also the global market. Second, the company is affected by the growth in the furniture and accessories sector. Third, both the macroeconomic and microeconomic trends have a certain impact on the overall operations of the business. Fourth, the company is affected by not only the sustainability policies undertaken by it, but also the physical conditions of the company. Finally, the paper reviews the impacts of the changes in sociocultural trends on the company.
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To analyze the company’s external environment even further, it was important to undertake an external analysis of the company and how external competition impacts the company in the long run. To conduct this type of analysis, this paper chose to utilize the Porters Five Forces as used in Zhao et al., (2016) research paper. The paper analyzed the following factors; threat of new entrants, threat of substitute goods, rivalry among existing firms, bargaining power of buyers and suppliers. The five forces were used to analyze the external environment of the company.
In conclusion, the two levels of analysis provided a basis for this paper to conduct a complete analysis of the external environment of the company. To reach an informed conclusion, the paper will highlight the concept to research, trend or issue, the impact to corporation and/ business, the reason why the company cares and the sources.
References
Blaszczyk, R. L. (2016). Design by IKEA: A Cultural History. Retrieved from: https://doi.org/10.1093/jdh/epw006
Zhao, Z. Y., Zuo, J., Wu, P. H., Yan, H., & Zillante, G. (2016). Competitiveness assessment of the biomass power generation industry in China: A five forces model study. Renewable Energy, 89, 144-153.
