Environmental Analysis of IKEA

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Environmental analysis is integral to understanding how the organization operates within the organization itself, with in the industry and within the macroeconomic environment. For this analysis the subject organization will be IKEA. “IKEA Group is one of the world’s largest privately owned companies, engaged in the retail of flat-packed home furniture and other house wares. Operating over 150 large-scale stores in over 30 countries, and with a mail order division, IKEA sells a range of furniture, which is made by over 2,000 suppliers in more than 55 countries. The company is headquartered in Helsingborg, Sweden”. (DataMonitor, 2007). IKEA major retail competition in the US are: Furniture Brands International Inc , Office Depot Inc , Sauder Woodworking Co., Stanley Furniture Company, Inc. , and Staples, Inc. This paper will identify the key macroeconomic variables which affect IKEA and the retail industry as a whole. To better understand the effects of such variables upon the industry, two specific variables will be developed further. Once an understanding of how the industry is affected by these variables, the challenges and opportunities will be identified for IKEA, which operates in the retail industry.

The key macroeconomic variable which affect the retail industry are: Economic output, productivity, unemployment/employment, inflation, and budget balances and finance. Economic output is used in terms of short run business fluctuations and long term growth. The Oxford English dictionary defines economic output as “relating to the science of economics; relating to the development and regulation of the material resources of a community or nation” and “that which is produced in an industry or process” (OED Online, 2007)...

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