Environmental Analysis of IKEA Essay

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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 ,…show more content…
Employment and unemployment are crucial when understanding the labor force within the macro economy and the retail industry environment. Inflation is significant to the economic system and occurs when the balance within the system has been swayed or when there is an “increase beyond proper limits; esp. of prices, the issue of paper money or an undue increase in the quantity of money in relation to the goods available for purchase; or an inordinate rise in prices” (ibid). Budget balance and finance are important keys as well. Much like the macro economy, this requires balance, so to the retail business needs balance in order to function. Two of the macroeconomic variables which greatly affect the retail industry are unemployment and inflation. The unemployment rate is “the percentage of the labor force unemployed:
Unemployment rate =unemployed/labor force X 100
(McConnell & Brue, 2004). The unemployment rate is important to the economy because it is one of the main indicators as to the strength or weakness of the economy. Generally, the stronger the economy there is lower unemployment, meaning there are more jobs available. According to McConnell and Brue, there are three types of unemployment. These are frictional unemployment which is a description of workers waiting in between

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