Global Organisational Environment Of IKEA

Global Organisational milieu Of IKEAIn this yield, we learned ab verboten the pros and cons of polar types of institutions and the main enamors of the external and essential environs on these organizations. This subject to a fault analyzes the lookout of the organizations study s postulateholders. By using the stakeholder mapping effect/ concern matrix, the comp whatsoever fecal matter identify its major stakeholders, their expectations, and conflicts among the stakeholders. This is very pregnant for finis-making process because if the party preempt go out thoroughly divergent stakeholders expectations conflicts, they can adopt the justly scheme to deal with each stakeholder, and so acquit the profit of the federation.The innovation that I found it is elusive is how to identify the elucidate stakeholders indicator and bear on on the stakeholder mapping. When I did the example together with my classmates, we develop different point of views. More or le ss power and chase of the stakeholder likewise depends on what view the companies atomic number 18 on. I should practice untold from revolutionary(prenominal) big companies in the world to see how they identify the expectation of their stakeholders. I can in any case study from the websites httpwww.stakeholdermap.com show us the important of the stakeholders to the festering of the company, and in any case how to analyze and map the stakeholders power and interest.The article devising Sense of Stakeholder Mapping of Ruth Murray and Peter Simon on 2006 provides us trip al imprint basic important dimensions when considering stakeholders power, interest and attitudePower how lots the stakeholders founder the potentiality to influence in the organizationInterest how much they ar interest in the projects of the organizationAttitude how they leave back (support) or block (resist) to the organizations project.The article also states that if we only consider two out of thr ee above dimensions, it just gifts a partial and less than utile picture1Topic 2 International purlieu Organization and Institutions (Mark)Multinationals is the participation that locates its management headquarter in one country ( kinsfolk country), and ope grade its crinkle in separate several countries (host countries).Through this military issue, we see the good and bad sides of globoseisation. We learned the differences amid the bighearted championship and protectionism. The benefit of free mess is no lasting tariff barriers, so there bequeath be good prices for client because of change magnitude rivals. However, the bad side of free trade is that it will bring to the naughtyest degree a big crevice between rich and worthless, harming the surroundings, and cultural convergence. On this chapter, we also learned more about the benefit of World occupation Organization much(prenominal) as promotes peace, constructive handling of disputes, free trade cuts courts of living, increase choice, raise in take on, and simulates frugal growth. This chapter also includes types and level of integration as fountainhead as the effects of integration much(prenominal) as static effects and dynamic effects.The concept that I found it delicate to interpret is the Krugmans objections. I do not really thoroughly understand what this concept is about. This is mostthing that I need to spend more time to see more from the book or find more information from internet.It is translucent that the world today is becoming more international. Beside round advantages of free trade by worldwideisation, there be calm down a number of criticisms that free trade brought to the worlds frugal. The term free trade actually depends on the interest of powerful nations and corporations. For example, according to Criticisms of Current Forms of Free Trade article, there is the phenomena of mastermind drain. It agency that some rich countries try to attract educated passel from poor countries. Thus, increase bigger gap between rich and poor countries2Topic 3 Analysis of the Environment Understanding the Managerial EnvironmentThe takings, Analysis of the Environment Understanding the Managerial Environment is about discipline the external and internal environment and how they ar collision to the organizations.This session helps us to understand the different dimension of the environment much(prenominal) as complexity, stability, commercialise diversity and hostility. It is very important for the company to understand the effect of the environment particularors to the organization in the future so that they can suck the right strategy to develop the company. We learn different types of the organization environment, and how to analyze the environment by using PESTEL framework (political, frugal, social, technological, environmental, and legal). PESTEL is a useful hammer for pinch the industry situation as a whole it al pite ouss us to have in-depth analysis of the external factors impacting on the organization.This topic is straightforward and was explained very clean in class, so I did not find any concept that difficult in this topicTopic 4 The Macro- economical Environment the parsimony and the Role of GovernmentIn this subject, we indentified the macro-economy and its objectives. Macro-economic Environment is the first step of a strategic analysis it is also referred as an external analysis (PESTEL analysis). It helps us to identify what will affect the growth of our industry as a whole. Four essential measures that be used in the macro-economy atomic number 18 inflation, economic output, unemployment, and balance of payment. This topic also raises the impact of the political sympathies in the economic system. Government has an important role in economy. These objectives include a depleted rate of inflation, a reasonable rate of economic growth, economic crisis grade of unemployment, and a balance of payments in equilibrium or surplus. The disposal uses the pecuniary policy to stabilize the economy by controlling interest rates and the money supply.Topic 5 The macro-economic environment. Understanding the Global Environment (Mark)This topic helps us get more k right offledge about globalization and the forces that rally globalization. Globalization is increasing global business activities and multinational companies. Globalization also means rising political and social connection between giving medication and people. Globalization helps to improve communication and sh be information world replete(p). Friedman (2007) supposed that globalization is a knock offing process. In this book named The world is flat, he indicated ten forces that flatten the world as follow collapse of Berlin wall, Netscape familiar offering, work head for the hills software, open source or uploading, outsourcing, off-shoring, supply chain, in-sourcing, in-forming, and the steroids.In other words, globalization is affected by the key drivers namely political, technological, and economic, grocery drivers, and follow and competition drivers as well. For example, outsourcing and off-shoring in China and India help numerous another(prenominal) multinational companies such as Toyota, Sony and others probably reduce production embody because of low secular and labour cost. This results in increasing agonistic advantages. However, it also creates more exceedingly completive mart in the world.In addition to globalizations advantages, there are some plausible disadvantages in global competitive environment. Particularly, globalization makes to increase the gap between rich and poor countries and people as well. Globalization also leads to cultural convergence. Moreover, it is true to confirm that globalization makes office to cause environmental pollution. International expansion of multinational companies has aroused increasingly environmental issues in which they operate. at that placefore, in global competitive environment, business organizations today have to confront with some key challenges such as cross-culture management, competition, sustainability as well as global rules.This chapter is straightforward and well explained in class. Thus, I can easy to follow and understand, and I did not find any concept that is difficult to understand.The article Critical Challenges of Globalization to Vietnam3on CDI website (Center for Development and Integration) states that globalization challenges Vietnam in two waysChallenges to the country competitiveness under globalization, the collect for competiveness is much prouder. Competition is not only about products but also about competing social settlementChallenges to Vietnams labor, migration, and womens right women lick an important role in growing the countrys economic however, womens work and value are less acknowledge than menTopic 6 The global environment Emerging economic in thre e continentsThis topic provides an overview of emerging economies mainly in Asia, the States and Africa and especially BRIC countries (Brazil, Russia, India and China). In addition to this, the author would like to compare the different economic, political and other developings between countries.Chapter 14 Contrasting developments in the Americas shows US economic development and its hegemony in international affairs as well. Moreover, this chapter helps me understand the reasons why the BRIC countries have possibly achieved increasingly importance in the eye of Western economists, investors and politicians. BRIC countries in install to secure their developmentChapter 15 Asias economic potential indicates in-depth analysis the major Asian economies and their historical development. Indeed, this chapter describes major characteristics such as geographical, political, economic and cultural diversity of Asia through major countries such as China, India, and tiger countries (Hong Kon g, S.Korea, Singapore and Taiwan). For example, at the present, there is no interrogation that with high level of education, high saving and investment, modern technology and others, tiger countries completely debate to other countries in the world.Chapter 16 Africas struggle for advance describes a big picture of political, economic and social developments in Africa and major barriers inhibiting Africas development. In particular, African countries have to face some social problems in relation to poor education, housing and sanitation, low standard of living, disease, and poor public health care. Moreover, poor governance and inability of politicians are impossible to moderate stability. Besides, heavy debts have also become an urgent problem to many countries. It is undeniable that poor productivity and strong dependence on other donation has led African nations at the mercy of world food markets. base on this analysis, the author is willing to discuss the potential solutio ns to Africas future development and prosperity.Topic 7 The micro-economic environment market structures and industry analysis (Mark)This topic provide knowledge about different types of market structures and describes the link between market structure and companies behaviours and performance through analysis of Porters five forces. To fix with, there are three kinds of market structures including monopoly (diamond market), oligopoly and perfect competition market. Especially, in term of oligopoly, in outrank to avoid price war and compete by non price methods, many companies choose to collude.In addition to this, this topic also describes industry life cycle. In period of introduction, customers steal products heedless of price because of products uniqueness. It is called fragmented industry where no firm has large market share and each firm share small pieces of big market cake. As freshly competitors enter this industry, prices drop as a result of competition. Companies use experience curve and economic photographic plate to reduce cost faster than competitors. By the time an industry enter maturity, this is a amalgamate industry which dominated by a few larger firms try to differentiate their products from the competition. As an industry moves toward decline, its products growth of sale begins decreasing thusly, firms will convert their facilities to alternate uses or sell them to another firm.Moreover, Michael Porter, the author of competitive strategy, has highlighted evidently affect of the level of competition to the level of the specific business unit. Hence, it will help me obtain insight about the organizations competitive environment such as the dominant forces in the industry including affright of entry, power of buyers and suppliers, substitutes, and competitive rivalry, and the factors influencing on these forces.However, Porters five forces have a plenty of shortcoming. For instance, the present is effective in static situation. It assumes that the companies interest and profit always come first. Moreover, the business environment is competitive, hostile and predictable. More importantly, it ignores one of the most satisfying factors called human resource.In addition to Porters five forces, in oligopoly market, Game system is considered as a branch of mathematics often used by economics that analyzes situations in which players must make decisions and then induces and then receive payoffs. It is applied for members of an oligopoly because they always face to a prisoners dilemma which is a blue in which the gains from cooperation are larger than the rewards from pursuing self-interestTASK 2 IKEA REPORTI. Introduction1. HistoryIKEA is a home-furnishing retailer founded by Ingvar Kamprad in 1943. The Swedish company that sells and functions flat pack piece of furniture, appliances and home accessories through its stores some the world at affordable price. Since then, IKEA has grown up rapidly and now it b ecomes the largest furniture retailer in the world. Its mission is to offer a broad(a) trope of home furnishing items of good design and function, excellent attribute and durability, at prices so low that the majority of people can afford to buy them (IKEA, 2010).2. VisionIKEAs business idea To support this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. And its vision is to create a die each day life for the many people (IKEA, 2010). To bring a better everyday life, IKEA are committed to provide well-designed, good theatrical role and long-lasting home furniture and keeps the low price for many people. care low price is a ass of IKEA however, it does not mean that low price but not at any price. IKEA wants sustainability as a part of its business. In fact, it believes that taking about social and environmental accountancyability of its customers, suppliers is a authoritative for running good business. IKEA made decision for contribution to create a good world by providing products, service which are beneficial effect on people and environment.3. Product range there are a wide range of products which inspired and developed establish on the essential customers needs of home furnishing. In general, IKEAs product is a combination with three main characteristics good design, function and low price. That means all IKEAs designers design goods with well designed and functional home furnishing easy for everybody that at low price.4. StoreIn 2010, there are 316 IKEA stores in 38 countries, and most of them in europium, North America, Australia and Asia (Swedish Furniture, 2011). IKEA store format is a single-story, large blue buildings with yellow company name. The large numbers stores of IKEA are located suburban because of land cost and traffic access. IKEAs stores open for colossal hours, normally, 24 hours per day. IKEA always instig ates customer to visit its store in order to look inside, touch, try everything, even if walk away empty handed. By this way, IKEA hopes that after leaving its store, customer will have a well(p) of fresh ideas for their own home.II. Stakeholders mappingEmployeesIKEA does not have its own factories they give orders to different factories in low cost countries. Hence, it is acknowledged that majority of employees shut up has low power and interest to the company.Global clubhouse / Local corporationEnvironmental issue such as friendly, reduced packaging is be promoted by the Government and is concerned by community. However, it may impacts negatively on IKEAs social responsibility and total cost. Thus, local community has high power and low interest to IKEA.CustomersThe power of the buyers is moderately low because majority of customers are consumers. The company targets the customer who is looking for value and is willing to do a critical bit of work serving them, transporting the items home and assembling the furniture for a better price. The typical IKEA customer is young low to midpoint income family.CompetitorsIKEA operates in a super competitive industry, characterized by other low priced furniture producers such as Galiform of England and retailers such as Wal-Mart of the United States. Domestically, IKEA faces the threat of potential entrants as the dominant firm, holding 25% of the market in its native Sweden for example, there is a very real possibility that others will enter the market to challenge IKEA directly. Hence, competitors have low power and high interest to IKEA.SuppliersIKEA does not only create competition among suppliers but also treats them as long-term business partners. As IKEA offers nearly the same products in its stores all over the world, they can order very high volumes and therefore get cheap prices. Moreover, its suppliers are usually located in inexpensive nations, with close proximity to raw-materials and reliable acc ess to distribution channels. These suppliers produce highly standardized products intended for the global market, which size provides the firm with the opportunity take the advantage of economies of scale factors.In fact, IKEA is using its size when dealing with subcontractors in two ways. The first is to put pressure on the subcontractors to become more and more efficient. Secondly, IKEA can use its size to get good discounts from the suppliers. This is through with(p) by placing itself as a large customer to the supplier, to get some power in price negotiations.Local governmentLocal government has high power and low interest to many companies. The reason is that changes of laws, mandatens and policies influence the production, total cost and sale of IKEAs products.ShareholdersThis free radical can also be considered high power potentially. This is more important in recent geezerhood where shareholder activity has increased significantly in the board way of life, and managemen t of firms has been scrutinised much more and even given threats if certain actions favoured by the shareholders were not pursued.ManagersManagers play an important role in controlling business activities and improving IKEAs global competitiveness by promoting timely, decision-making for operational matters. In other words, they possess high power and interest from the company.III. PEST analysisThe Pest analysis alikel looks at political economic, social, technology changes which are likely to affect on the business (Robert, 2004). These varieties of external environment factors in 2010 which IKEA faces arePolitical changesGovernments regulation and policy change Generally, there were sorts of challenges and discovers, which IKEA faced in 2010. For opportunities These host countries changed policies to encourage foreigner companies invest in the country such as simplification procedure papers, exported tariff -exempt,. By contrast, the countries also tied up protectionism and subs idies for its products in order to compete to foreigner products for instants, launching policy of rising merchandise tariff. economic factorsEconomic growthAlthough global economy recovered slowly, it helped IKEA has boosted its market share because of its low-price goods which can compete to expensive retailers in 2010. IKEA group still opened continue to expanse their stores in other countries and increasing sales in emerging economic market-Asia where leading the global economy recovery in 2010.InflationIt is a true that inflation rising which let price of all commodities blush remarkably in 2010 such as raw materials which led increasing IKEA inputs purchasing cost. In addition to this, kindle price also rose rapidly in 2010 which impacted on IKEAs transportation cost. All of this, affected on IKEA business performance as well as customer purchasing needs. Furthermore, increasing price concerned that IKEA has less competitive advantage in the furniture market.CompetitionIK EA is a Sweden giant furnishing company which has strong brand, therefore, there are few competitors running in the market. However, IKEA should not underestimate its competitors. The company should launch innovative and eco-design products at low price for meet a wide range of customers needs. kindly factorsLifestyleBecoming a global company that means IKEA faces challenges as different culture, language barrier, and taste. Thus, before opening new stores, it should have concrete plans of research market. IKEA has expanded its stores in emerging market like China, India, and Pakistan which society is distinct compared to Western countries. Generally, Asian is savers who do not spend too much money on purchasing. They are willing to buy durable and high-quality products in conventional retailers which are expensive rather than low-price ones like IKEA, a report of self assembly.Population growth rateThis factor plays a role for IKEAs development as well as helps IKEA make decision for opening new stores in these sections. These largest populations countries as China and India, people have huge needs for buying low-price products of IKEA. Thus, expanding new stores in the markets bring benefits for IKEA such as increasing business sale, number of subcontractors and so on.TechnologyNormally, technology plays an important role for almost companys success especially a global company. For IKEA, it used quality technology to implement better communication operate and software modules that communicate to a home base, delivery service and change online via the Internet. Technology helps company to increase production and employees productivity, improve its business performance, and gain competitive advantage.IV. Market position and partitionMarket position at that place is no doubt that IKEA is a well- known furniture company in the world. In spite of world economic recession in 2010, IKEA has been growing up and has a leading market position in the future. at t hat place are some evidences demonstrating for statement above total sale rose by 7.7 % to 1.1 billion Europe (FY 2010 report) compared to 2009. In fiscal year 2010, Ikea group opened 12 stores in 8 countries. epitome 1 yearbook Sale, Billion Euros(Source http//issuu.com/interbrand/docs/bgb_report_us_version?viewMode=presentationmode=embed)According to Branding consultancy Inter-brands Best Global Brands 2010( Top degree Celsius brands) released on the fifteenth September 2010, the Sweden giant furniture- IKEA was ranked at twenty-eighth place the most valuable brand with brand value is 12,487 ( dollar bill million) and changing branding value is 4% higher than last year.Figure 1 Best Global ranks 2010(Source http//www.interbrand.com)Market segmentationMarket segmentation IKEA uses motley mixes of segmentation bases including geographic segmentation, demographic segmentation.Geographic segmentation IKEA stores are located around the world, however, most stores of them based in a t Europe where get the highest sales ( 79%), meanwhile Asia and North America account for 6(%), 15%, respectively.Figure 2 Ikea, sales per region(Source welcome_inside_2010, IKEA report 2010)demographic segmentationAccording to IKEA, it wants to bring a better life to many people. This means that its customers are people all over the world who are low and middle- income. In addition to this, IKEAs customer target is focus in young people and family who are appealed by stores decoration as well as can take time working together IKEA to design their products.V. SWOTSwot is an acronym of strengths, weaknesses, opportunities and threats which is a useful tool for helping organization to analyze current situation of the organization in order to solve its problems and take advantage to reach its objectives. force and weakness are internal environment such as management, operation, finance meanwhile, opportunity and threat are external environment like economy, society, environment and te chnology (Andrew, page 7).StrengthsThat is any resource advantage and capability of organization which gives competitive advantages in the market. Strengths are organization capabilities such as human resource, management, financial status, service, manufacturing and so on. Strength considers as a basic quality element for evaluating companys success.There are some IKEAs strengths belowWide range productIKEA is famous for its wide range of affordable and good-quality products which can meet almost customers needs. Furthermore, IKEA has restaurant, cafeteria, and children- playing room in the each IKEAs store in order to help their customer feel comfortable when shopping here.Less competitionIKEAs business model is quite unique, besides, IKEAs range product is wide that means it meets multi target markets. This leads to IKEA has little direct competition.Global brandIKEA Company has strong brand reputation which appeals key customers. That also means it provides the same quality and a range of products.Advanced- technology and new materialsIKEA continues to introduce and apply new-technology as well as materials in its furniture industry in order to reduce cost and weight of its products for customers as well as eco-friendly environment.Low price strategyBecause of IKEAs business ideas is offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. That is a antecedence strategy of IKEA which make the company as a well-known brand. iron out vision and strong conceptIKEA wants to create a better every day life for the many people by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.Supplier-long-term partnershipSupplier plays an important role for IKEA Company. To uphold good-product quality as well low-priced, it creates long-term partnership with supplier. By this , IKEA can buy large volume with negotiable price over many years.Flag-pack furnitureFlag-pack furniture is becoming popular since it was launched by IKEA Company. The most crucial reason that makes flat-pack furniture popular is because of its saving-cost such as transportation and storehouse cost. In addition to this, flat-pack furniture is easy to carry for both customers and suppliers, fit at home just following company instructions besmirch shipping damage, increasing inventory capability.WeaknessesThey are internal factors which make company cannot reach its success as well as its full of potential compared to others. Weaknesses can be controlled and eliminated. Each enterprise has to know its weaknesses in order to improve and manage its.IKEAs weaknesses including deficiency of customer serviceLow-cost is the cornerstone of IKEA which may not attract customers who are used to go handed-down furniture shopping. This lets the customers who feel that IKEA Company does not ca re about them. Furthermore, scale of company- a global company also makes it difficult to communicate with its customers. Lack of customer service will effect on IKEAs brand.Global companyAs a global company, IKEA has encountered problems to control, operate and maintain its stores standard as well as quality of products through the stores chain in various regions.Difficult to balance between low cost and high qualityThere is a said that, quality and price accomplish together. The fact that, it is easy to produce good- quality product for high price, but IKEA makes different ways. If it is too focus on cost-saving, it will effect negatively on products safety as well as user. Cost needs to be balanced against quality.OpportunitiesThey are chances in economy which helps businesses to gain competitiveness advantage, advantageousness and increasing production. In addition, opportunity arises suddenly, even if, these may arise from competitors, government policy, technology, thus organ ization should be careful and catch the chances whenever they arises.IKEAs opportunities includeurban sprawlIKEAs stores are located at outskirt of centers, because of land cost and traffic access. Nowadays, there is increasing number of people living in metropolitan areas to move far away center which places that are unlikable to IKEAs stores. In addition to this, most of them are young, educated and rich. IKEAs strategy meets new trends. change magnitude demand of low-price productsBecause of being effected by depressed global economy, citizens have trend for purchasing goods at low-price for saving their money. In order to meet rising customers demand as well as increasing its sales, the company may design new products, reviewing manufacturing process, materials or labour. This is a chance which IKEA should exploit.Selling onlineSelling online is one of opportunities of IKEA. Online shopping makes a revolution to traditional shopping. For global company- IKEA, its online retaile rs have expanded all markets globally. Its customers in every region can shop just a click mouse and then waiting for goods delivered. This helps IKEA increasing sales, profits, and brand recognition.Expansion into emerging marketThere are numerous countries of Asia which are potential markets for IKEA in the coming years. Meanwhile, the demand of citizens living in emerging markets focus on buying good-quality at low-price which is the IKEAs concept.ThreatsThreats are used to external factors in environment which effect negatively for profitability, operation enterprise as well as growing new rivalries. Actually, if company is aware of external threats, it can plan to solve the problems. Threats of IKEA derived fromIncreasing rivalsThere is growing competitors entering low-cost furniture market which impact on IKEA Company such as Wal-mart, Ashley furniture, Howden. These competitors can copy low-cost value model. Therefore, IKEA needs to improve its product qualities to compete wi th other rivalries.Economic crisisBusinesse