Pest Analysis Of IKEA

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3.0 External analysis

3.1 PEST Analysis
Political Factors:
The increase in globalization and protectionism is not only a challenge but an opportunity as well for the management of IKEA. The challenges that are being faced are competing against undisclosed forces and sourcing the top quality products from all over the world. The organization has a probability to enter the emerging markets through partnerships and joint ventures in order to explore these new markets. But at the same time, the company has to deal with the protectionist policies of countries in which it runs its business because of the risk that the host countries might impose high tariffs on imported goods.

Economic factors:
The purchasing costs of IKEA is increasing in
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This includes building trust via good communication with customers, co-workers, key opinion formers and the press. The central part of creating IKEAs’ image is to become sustainable.

Bargaining power of customers
The company offers a wide range of products in low prices that are reachable to all he individuals who lie among upper, middle or lower middle class. This factor has increased the numbers of customers creating a strong customer base of the company. Therefore, bargaining power of customers is moderate to low.
4.0 Recommendations
In order to maintain an untarnished position in the market, the company should consider the following recommendations that are provided after analyzing the company’s performance and effect of external environment:

• IKEA needs to underline a pull marketing strategy in order to gain high market share in different countries by launching a campaign that endorses furniture as a fashion statement.
• Asia has the largest customer base with a population exceeding three billion people, and hence is considered as an emerging market. IKEA needs to establish several stores in these countries to aid its customers have an easy access to their stores without any extra time

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