Unit 5 International Business Learning aims C and D of the BTEC Business Level 3 met the criteria for distinction. This assignment is extremely well organised, with clear subheadings and pertinent photographs. You may be certain that you'll receive Distinction if you use this Assignment as your mod...
P5: Examine the environment in which businesses operate
Introduction
In this report, I will examine the environment in which IKEA operates, with external factors
involving the stages that occur. PESTLE is an analytical method for evaluating how external
influences may affect organizations. The acronym stands for business-related political,
economic, social, technological, legal issues and environment. It is crucial to make clear that
while businesses have little or no control over the factors included in the PESTLE framework,
they can nevertheless devise plans to get rid of them or at least lessen their negative
consequences. The IKEA PESTLE study can reveal chances to boost their competitive edge on
several scales.
Political
https://www.theguardian.com/business/2021/dec/29/ikea-hoists-its-prices-
and-blames-covid-supply-pressures
This type of external factor might have affected IKEA for many reasons, including government
regulations, industrial activities and business policies. The article discusses OFT sanctions for
,price-fixing (Office of Fair Trading). Price fixing is prohibited because it violates the supply and
demand rules. Usually utilized to having an advantage over rivals and generating more revenue
on behalf of its clients. If employed, price fixing can hurt consumers by imposing prices that are
higher than usual. Ikea acknowledged that the company had increased prices across several
regions and pricing points. "Since the epidemic began, Ikea has successfully absorbed the large
cost hikes experienced throughout the supply chain while maintaining pricing as low and
constant as we can," a spokesperson said. We have now been forced to raise our pricing, like
many other shops, to lessen the effect on our company. It might benefit IKEA because it will
enable them to separate themselves from their rivals and eventually boost their profitability.
However, they issued a price increase warning earlier this year, citing causes like delays in
importing raw materials from Asia to Europe. Many significant order delays have affected the
whole furniture sector, which estimates that delays have cost up to £45 million in orders. The
closure of factories in Vietnam, congested ports, and increased shipping delays were to blame
for a profit warning. Price fixing is unlawful and should not be used, hence the adverse effect
will be a significant fine imposed by the OFT.
Sweden is one of the major markets for home improvement goods, and the government has
taken a few initiatives to support the industry. The recently proposed measure eliminates the
advertising tax, with companies' operating costs would go down as a result. The Swedish home
remodeling industry can also gain from Sweden's membership in the European Union, a shared
market where commodities, labour, and capital can move freely. As a result, the industry would
have easier access to a skilled workforce and more efficient goods transportation. Furthermore,
52% of Sweden's exports go to countries in the EU, which is advantageous for the businesses as
it allows them to make substantial profits. Moreover, India is also one of the fastest-growing
markets for home furnishings, and the Indian government has permitted international
businesses to open single-brand retail locations and own 100% of them without requiring any
prior government approval. IKEA may use a considerable portion of their technology and
people resources to manage complicated operational tasks due to skills shortages and
regulatory complexity. This not only leads to the creation of inferior incremental solutions that
produce inefficiencies, but it also prevents the delivery of a long-term, sustainable solution.
, Economical
https://www.bbc.co.uk/news/business-58331168
According to this article, the BHS collapse caused the closure of 83% of department stores in
the UK during the previous five years. Numerous department stores, including IKEA’s
competitors: Wayfair, Walmart and Amazon, were impacted by this. This large number of stores
being lost can have both positive and negative effects. For instance, it might be advantageous
for IKEA because there will not be as many department stores to compete with, which would
mean less competition overall. As a result of having fewer competitors than they did previously,
they will be able to draw in more clients and generate more revenue. However, this could also
be a drawback for IKEA as more people start shopping online and department shops start to
close more quickly because of the increased online shopping. This is since it requires less time
and money, which will negatively affect the firm and its future. A current example of a global
economic crisis is the Covid-19 epidemic. The infection must be contained for the lockdown and
shutdown to take place. However, it has a very negative impact on the enterprises and
economic circumstances of any nation. What the world might look like following the pandemic
is the current question, with economists anticipating a lengthy global economic downturn.
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