Ikea Perspectives and Activities in Arabs Countries - Report Example

IKEA STRATEGY IN ARABS COUNTRIES of the of the PEST Analyses of Arab Countries Political factor Arab countries have a stable political environment which attracts many investors to establish their business in these countries. Political rules and regulations play an important in improving the banking system of the country. The government of UAE is constantly changing and improving its policies for enhancing the growth of the countries. The government of UAE has put less effort on establishing democracy in these countries. Government policies of these countries have a tight control on media and the functions of different business. Strong government rules and regulation control the business process of this country. Each country of UAE has its own government rules, regulations and institutions. Supreme council of these countries is involved in developing policies and electing different members in the government. Government plays a vital role in the growth and development of the country. It has contributed a lot in creating many business opportunities for the country. Economical factors Countries of UAE are experiencing a good economical condition. The countries have been able to generate huge wealth by its different business. The income level of the people in these countries is high. Foreign direct investment in UAE is also high. Globalization has a huge impact in the economic growth of these countries. The country is encouraging its thousands of workers to improve the economic condition of these countries. UAE is the member of WTO, IMF and World Bank for past seven years. The government of these countries depends highly on its export for generating revenue. The main income of these counties comes from oil and exporting gas. Huge amount of money is spent in developing the infrastructure of Arab countries. This influences the growth and development of private sector industry in these countries. Tax plays a vital role in generating money in the economy of UAE. But the countries face many debt issues in the past few years. Social factors People of UAE are experiencing a high standard of living. The societies of these countries are very developed. Western culture creates a strong impact in the social development of these countries. It helps the country to improve its financial condition. Society of UAE is characterized with the existence of many cultures (Neil, 2010). Many foreigners come to UAE and earn their livelihood by working here. But education level is low in Arab countries. These countries experience a low literacy rate which hampers the social development of these nations. For globalization these countries are slowly improving its education level and literacy rate. But presently for low literacy rate the Arab countries faces the problem of unskilled labor. Many strong social rules are present in the society of UAE which sometimes act as a barer in the growth and development of these countries. Technological UAE has experienced a strong technological growth after globalization. The country uses many modern and advanced technologies for its growth. The technology of telecommunication is very strong in UAE. For this reason the country is able to attract many IT companies and investors. The young people of this country are very knowledgeable about various technologies. Internet plays a major role in technological advancement of these countries. A large number of people uses internet for their daily purpose. It helps them to become use to with technological advancements. Businesses of private sector are encouraged by this. They get various facilities for technological advancements. But as the countries have poor educational level so it faces some problems in growth and development of various technologies. SWOT Political factors Strengths Political environment attracts many investors Government policies encourage business. Government rules improved the banking sector of UAE Weakness Democratic power is very low. Tight control on business functions and media. Opportunities Huge growth opportunities to business. Financial stability of this country will help the business to generate more revenue Threats Government interference in business can create negative impacts. Strong government control can prevent many business activities. Economic factors Strengths Strong economic condition High income level of people Wealthy country Weakness UAE have some debt issues The country mainly depends on its revenue. Opportunities Business establishment is easy for UAE’s strong economic condition. Revenue generation is easy Threats Debt issues of UAE can cause problem in future investment of the companies. Social factors Strengths People of UAE has high standard of living. Many cultures are present in its society Weakness Low literacy rate Low education level leads to the rise of unemployment. Opportunities People of different cultures are present which helps the business in various ways Threats Strong social rules damage the society and its different activities. Technological factors Strengths Strong technological development Internet is used in a large scale Telecommunication is very strong Weakness Poor education level threatens implementation of advanced technology. Opportunities Attracts many investors. Helps in business growth Threats Technological development of other countries creates strong pressure on UAE. For establishing IKEA’s Business in Arab countries, the company needs to build strategies considering social, political, economic and technological factors of UAE. Major strength lies in the country’s economic and financial condition. Economic strengths attract many foreign investors to develop their business in this country. Therefore, IKEA will be benefited by this factor. It will make its pricing strategy in such a way so that the company will be able to generate maximum revenue from the people of UAE. The people residing in UAE have a huge income so their spending capacity is also high. The major threat IKEA will face in its business is getting skilled labor for its business (Proctor, 2014). This is because education level of the country is very low for which there is a scarcity of efficient employees. The cultural diversity of UAE will benefit IKEA by implement different types of business strategies which will enhance the advantages of cultural diversity. For establishing its business IKEA will experience many opportunities for different factors present in UAE’s business environment. The company needs to implement strategies for utilizing those opportunities effectively. Balance between globalization and national responsiveness Globalization has contributed a lot in the growth and development of Arab countries. The country has made many improvement and advancement for various impacts of globalization. Many foreign investors are coming to UAE for to establish their trade. This is one of the important results of globalizations. Influence of Western culture has have strongly impacted the many national issues and factors of UAE. For establishing IKEA’s business in UAE, the company needs to maintain a balance between globalization and national responsiveness. It will help the company to facilitate its business growth in Arab countries (Mcfarlin and Sweeney, 2008). IKEA deals in furniture business. It has established its business in many parts of the world. There are many strong competitors of this brand which creates impacts in the business process of IKEA. The company needs to understand national or local responsiveness of UAE. It will help the firm to establish strategies which will enhance its business process in this country. There are many strong rules and regulation present in the Arab countries which control and guide the business development process of the country (Henry, 2011). For globalization many people from different countries have come to UAE who play a vital role in changing the society and culture of this country. But as majority of Arabian people believe in their social norms and culture so IKEA needs to implement such strategies which do not hamper any national issue and factor of the UAE. By understanding local responsiveness the company will be able to estimate the needs and preference of UAE’s people. Furniture industry of this country faces a strong competition. There are many other strong players present in this industry of Arab countries. Globalization has influenced them to improve their trade and business growth. Therefore by using different benefits of globalization the IKEA will be able to establish a strong position in the market of UAE. The government of this country has a strong control over the business process. Many laws and regulations are present in this country which acts as barriers in implementing global policies for the company. So IKEA must customize its business policies and strategies according to the rules and regulations of the country. For enhancing its value chain activities the firm needs to coordinate its business activities efficiently in its different stores in Arab countries for getting various advantages. IKEA by developing its business in local and national level of UAE will help the company to generate more revenue in its business process. Balancing national responsiveness properly the company will be able to establish a strong position in UAE market which will help the firm to increase its business efficiency in a global level (Cole, 2003). IKEA can balance globalization by hiring employees from different culture. It will help the company to understand and enrich its business process. Implementing these strategies will facilitate the company to understand national responsiveness alone with globalizing its business practice. References Cole, G.A. (2003). Strategic management. Singapore: Cengage Learning EMEA. Henry, A. (2011). Understanding strategic management. New York: Oxford University Press. Mcfarlin, D. B., and Sweeney, P. D. (2008). International management. New Delhi: Dreamtech Press. Neil, B. O. (2010). Acting as a business: strategies for success. New York : Random House LLC. Proctor, T. (2014). Strategic marketing: an introduction. New York: Routledge. Read More