Question

What are the main PESTEL forces globally for IKEA?

Answer 1

Solution

PESTEL analysis is a methodology used to evaluate the manner in which the external factors impact an organization.

The following are the factors considered in PESTEL analysis :

1.Political

2.Economical

3.Social

4.Technological

5.Environmental

6.Legal

1.Political - IKEA should accustom itself in any country so that the country's political policies do not effect it's business.For example,political and trade ties between different countries are very important in shaping up the local market in which IKEA is operating.

2.Economical - IKEA prices it's products according to the local markets. In countries like India,the consumers are very price sensitive,so in order to stay competitive,IKEA followes a conservative strategy in pricing.

3.Social - The social and cultural values are different across the countries.For Example:In countries like Saudi Arabia,women are not shown on catalogues (or) any marketing material.In India,restaurant menu will not contain items made of Beef as it is banned in many states across India.Also it's product offering would be according to the tastes and preferences of the local consumers.

4.Technological - It can increase it's adoption to usage of technology.Example: Instead of providing paper tapes to every customer,it can set up digital places / boards in-store to measure different things (or) provide virtual areas when we get the exact measurement by placing the products in front of the screens.

5.Environmental - IKEA has cared about being eco-friendly.In some countries (specially developing ones) it also invested in some renewable energy projects.IKEA is trying to be carbon-free by making use of 100% renewable energy generated from roof-top solar panels / wind equipment installed in its store sites.

It also offers and sells things like bags made of Jute inorder to carry the to be purchased / purchased products in the store.

6.Legal - IKEA operates in many countries across the globe.The legal requirements are different in different countries.For example,the labour laws are different in different countries.IKEA being a Swedish company has to adopt to the local laws in which ever country it wants to operate.Initially it faced some problems in some countries in complying with the local laws and some law suits were filed.It also faced some lawsuits in some countries where customers were not happy with the quality of the products offered by IKEA.In some countries like the United States,any company mostly offers 30-day money back guarantee but in countries like India they do mot.So IKEA needs to accustom itself to these changes across different markets.

Hope this solution helps!! Please give a thumbs up rating for this solution!! Feel free to comment in case of any further clarification in the solution !!