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Unit 1 Business Environment Sample Assignment – IKEA
Business environment refers to the surroundings and the business internal and external factors which affects the business. The business environment consists of the various factors which affects and provides the business alterations accordingly. The business environment includes the various external and internal factors which affects the business decisions and the operations of the business. These factors involve the employees, customers, stakeholders, government, supply, demand, laws and other which affect the decisions of the business.
In this assignment the organizational structure of the different companies and the impacts are described. The business environment sample assignment – IKEA assignment aims to provide the understanding of the different business environments and the impact of these business environment on the business decisions and operations.
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b) The chosen organization for this assignment is the IKEA. The IKEA is the UK Company and is the furniture retail brand of the UK. The company is the popular brand and very well known about its quality products and services. The company provides the quality of furniture and the accessories including the office furniture, home furniture with unique and innovative designs to provide the attractive products to the customers. The company has its headquarters in Delft, Netherlands. IKEA dose not only deals in the furniture but also expanded its business in the houses and apartments and also owns mega stores.
The organizational structure of the company is divided into two main heads namely owning shops and factories and the franchising operations. The structure of the organization is complicated and not easily understandable. The objective of the company is to increase the profits of the company by providing the quality products to the customers and to gain the maximum customer satisfaction as well as gain the ranking position in the corporate world.The organizational functions of the company includes the different functions described below including the explanation of their connection with the company’s objectives and the structure Information technology, Communication, Purchasing, Distribution, Product development and Sales. The organizational structure includes the franchising and the owned stores which includes these functions of the organization (Jonsson, et.al, 2013).
Interrelationship refers to the dependency and the relying upon the other functions. The interrelationship provides the dependent organizational functions and operations to achieve the organizational goals and objectives of the company. These operations have the interdependency on each other for better achievement of the organization goals and objectives. The organizations functions have the relationship between each other and also provide the chain of responsibility and chain of command.
As it is mentioned above that the IKEA is the retail company for and the unique designer furniture. The organization has different functions of human resource, finance, marketing, sales, and IT. These different functions are to be managed in a manner to achieve the maximum results and maximum benefit. Here are some of the advantages of the interrelationships of the organizational functions:
- It provides the efficiency and the effectiveness in the work done as the employees are assigned the work which is to be provided according to the speciality and skills of the employees.
- The management gets the expertise in the different functions and also gets the benefit of completing the different functions together as it provides the interrelationships of the organizational functions.
- The employees also get to improve the skills as they also get the knowledge about the different functions of the organization by working on the different functions of the organization.
- The interrelated functions provide the easy understanding of the different functions of the organization (Tarnovskaya, et.al, 2011).
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IKEA is the furniture retail company dealing in the world class furniture with unique and the classic designs of the furniture and attracting the customers from all over the world. There are many external factors which affects the functions of the business. The macro environmental factors are the uncontrollable factors which impact the organizational functions of the organization. These macro environmental factors impact the functions of the organization positively and negatively. The various macro environmental factors of the company are described below:
- Political factors- The political factors are those which involves the political implications on the functions of the organization. It is the government policy which affects the organizational functions by providing the legislation or the acts. The positive impact of the political factors on the business functions of IKEA are that they provide the restrictions on the unfair trade practices and control the activities of the organization (Bernard, et.al, 2015). The negative impact of the political factors are that they interfere in the business activities which provides the barriers to freely practice the business functions.
- Economic factors- The economic factors are those including the demand and the supply of the economy which affects the organizational functions and the different economic changes in the economy. The positive impact that the economic factors of the has on the business functions of IKEA are that they continuously shows the economic changes and demand and supply changes which helps to identify the needs and functions according to the needs whereas the negative impact of these factors on the organization is that it provides inflation and deflation which influence in the activity of the organization (Beladi, et.al, 2016).
- Social factors- Social factors are those which involves the lifestyle, wealth and the religion of the people of the society and their culture which affects the business functions and the marketing strategy of the company. Social factor has the positive impact on the business functions that the culture of the society and the religion accept changes and the innovation which improves the functions of the organization. The negative impact of the social factors of the organization are that it brings the restrictions for the company to work and operate according to the religion and the culture of the different society so as to get the benefit of the sales and in attracting the customers.
- Technological factors- These are the factors related with the change in the technology and the techniques of doing the work in an organization. The new technology impacts the organization in a manner to provide training to employees. The positive impact of the technological factor is that it provides the company or the organization to run with the new technology and compete with the competitors more effectively whereas the negative impact of the technological factors is that it provides the continuous changes in the technology which disturbs the organizational functions and operations and affects the overall business of the organization. The human resources are also trained as well to work on the new techniques (Caiazza, 2014).
- Environmental factors- Environmental factors involves the biological changes in the environment as well as affects the organizational functions. These are the environmental changes such as seasons, disasters, pollution which has the impact on the organizational functions. The positive influence of the environmental factors on the IKEA is that it helps in preparing the risk preventive actions so as to meet the miss happening of the environment and also provides the company to work according to the environmental factors. The negative impact of the environmental factor on the organizational factors is that it takes the long process to cope up with the effect of environmental factors which provides delay in achieving the organizational objectives and in achieving the completion of the functions on time.
- Legal factors- Legal factors are the different laws and the tax laws which are provided on the business functions such as sales, manufacturing, purchasing. These functions get affected by the legal factors. The positive impact of the legal factors on the functions of the organization are that it provides the prevention from the excessive corruption and the unfair inflow and the outflow of the cash and business trading. But the negative impact of the legal factors on the business functions are that it enhances the cost of production to the IKEA and also changes in laws on regular basis provides the changes in the functions and the operations of the business (Qu&Cai, 2011).
The internal analysis of the organization are that which are examined and the analysis of the internal factors which affect the business. The internal factors are those which are controllable and internal factors of the organization includes the element of strength, weakness, opportunities and threats of the organization to improve the business operation. The internal analysis are done to improve and focus on the weakness and the strengths of the companies. In this further the SWOT analysis of the company IKEA are discussed.
- Strength-Strength refers to thefactors which can provide the positive aspects to the company which provides the company different approaches and the methods to improve its functions. Strength of the company which increases the ability of competing more effectively than the competitors and to gain the competitive advantage. The strength of the company IKEA are:
- It uses enormous innovation in its products.
- The company has the brand image by which it is better knowledge among the customers.
- It works on the integrated supply chain.
- Various products are offered by the company.
- Weakness-Weakness are the aspects of the company which are lacking behind and has the space of improving in them so as to achieve the efficiency and effectiveness. Some of the weakness of the IKEA company are:
- The quality of the company has been observed decreasing and low which break the chain of the customers to the company.
- The products are produced by the company are the standard products indulge with the high prices (OANA & MARIOARA, 2014).
- Opportunities-The opportunities of the company are the aspects which includes the advantage with it and which can be gained by the company with a proper analysis. the opportunities that the IKEA has are:
- It is expanding its business line.
- It is introducing the business to new markets of the developed countries.
- It is covering the grocery market.
- Threats-Threats are the aspects which can be included in the internal and the external factors of the business. It affects the business and its operations. The threats to the IKEA are:
- Facing the huge competition.
- The income of the customers are decreasing (OANA & MARIOARA, 2014).
The IKEA is the company which is growing its business to the different countries and the markets which is improving the stability level of the company and increasing the company position in the markets. The IKEA has some of the positive aspects or the strengths which helps the company to move forward in the competitive world and grab the customers as well as increasing the sale. The company provides the class and the quality products which increases its ability to attract the maximum customers. The innovation strategy of the company also increases the ability of the company to meet the maximum satisfaction among the customers. The company deals in diversified product range which helps the company to gain the competitive advantage and to improve the brand image of the company. The company also uses the integrated supply chain which helps the company to meet the customer’s requirement on time with increasing efficiency in the operations of the company.
On the other hand company also has some weaknesses or the weak aspects which provides the companies the area to improve its business functions and operations. The company is providing the low quality of products than before which is leading in decreasing the customer satisfaction and the customers of the company are not showing the loyalty (Noh, et.al, 2011). The company also providing the products and services on higher prices which are providing the company less demand for the products and the competitors are gaining the advantage of this aspect. For increasing the profitability and the continuity of the business the organization needs to focus on the weaknesses and try to improve the ability of the company to increase profits of the company.
The effective organization maintains the balance of profits as well as the customer satisfaction with the help of providing the varieties of products and services of the companies to the customers on time. The IKEA is the company which is leading in providing the customers satisfaction by its products and in offering the quality products to the customers. The innovation and the uniqueness of the company’s products are the features of the company which grab the maximum customers. But every organization and its operations and functions are affected by the company by the internal and the external factors of the company. The company IKEA has also affected by the internal and the external factors and the operation and the functions of the business also gets influenced by these factors of the company. These impacts of the organization also affects the decision of the organization. The IKEA is the company having the great market value but the decisions of the company are also affected with the internal and the external factors of the company. The political issues affects the company and provides the restrictions on the operations of the company which provides the organization with the decisions of the organization. The economic factors of the company provides the company with the changes of the economics and the demand and supply of the company are also affected (Arnold, et.al, 2013). The inflation and deflation affects the decisions of the company. The social factors of the company also affects the decisions in a manner to consider the religion and the culture of the society and promotion and marketing activities are considered according to these factors. The impact of the technology makes the decision changing strategy for the company as new technology needs to be learnt and provided assistance to the employees are to be given to the employees so as to achieve the efficiency of the company. The environmental changes affects the organizational decisions as the continuous changes and the unexpected disaster of the organization also have the uncertainty which the organization consider and take preventive decisions accordingly. Legal environment of the organization provides the decision to the company so as to change the operations and the activities of the organization according to the legal obligations of the company (Arnold, et.al, 2013).
From the above report conclusion can be drawn that the organizational or business environment affects the functioning of the organization and the organization also needs to consider the external and the internal factors of the environment to increase the capability and the profitability of the organization. The IKEA is the company dealing in the world class furniture and in increasing the customer satisfaction by providing the quality services and the products to its customers. There are certain strengths and the weaknesses of the company which can affect the business. The strength of the company if focused properly than it can become the opportunities for the company and get the maximum results out of it. The weakness of the company should be improved and if not improved than can provide the threat to the company and can be a huge loss to the organization.
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