Business Environment Name Student number Course Date Company Background and Business Environment of IKEA and Coca-Cola IKEA IKEA is named partly after its owner, Ingvar Kamprad and partly on the areas of his childhood home, Elmtaryd, Agunnaryd. It was founded in Sweden and commenced operations in 1943, selling Scandinavian design home furnishings and goods, based upon the notion of cheap but stylish design philosophy…
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IKEA has more than 1,500 suppliers spread around 50 plus countries, and it uses online and mail order selling tactics. The company’s success lies in resourcing the right manufacturer for a precise product. The suppliers and designers pose a threat of customizing some of IKEA’s products to sell them for a better price in the market due to IKEA’s cost-cutting strategies and low profit margins. The company, however, has been enjoying steady growth in sales each year due to its store expansion and continuous price cut strategies, despite a maximum of 10% operating profit in home furnishings (Jones, 2008). Coca-Cola Coca-Cola is one of the world’s top notch organisations offering refreshing soft-drinks in the non-alcoholic beverage category. Four of the world’s top five brands in soft-drinks belong to The Coca-Cola Company (TCCC). These brands are Coca-Cola, Diet Coke, Fanta and Sprite. It also licenses a number of other brands and drinks for sale, amounting up to 3,500 in more than 200 countries. More than one billion carbonated drinks produced by TCCC are consumed each day. The formula for Coke was invented in 1886, primarily for the purpose of medicinal usage, by pharmacist John Pemberton of Atlanta (Hoovers, 2012) To analyze the business environment and variations in the market, we need to use the PESTLE method. PESTLE is short form for Political, Economic, Sociological, Technological, Legal and Environmental, all of which determine the ever fluctuating market (Morrison, 2007). PESTLE Analysis of IKEA and Coca-Cola Political Political analysis studies the existing and possible effects of political pressures. IKEA is an organisation that is successful in both international and domestic business. It is a Swedish based company that has set world-wide brand recognition, and has gained popularity by retailing Scandinavian design furniture with flat packaging and “do-it-yourself” trend (Analysis on IKEA, 2010). Government plays a vital part in the operation of manufacturing Coca-Cola as it is a non-alcoholic beverage falling under FDA. If the company does not meet the regulation requirements laid out by the government, then the government has the authority to impose fines on such companies. The changes in laws and regulations may also affect the organisation’s entry in another country. In order to enter the emerging and developing countries, the company needs to study its political conditions and changes, with respect to the government and internal markets, as it affects the penetration ability of the company. Both Coca-Cola and IKEA endlessly watch and observe the regulations and policies laid out by the government (Analysis on Coca Cola, 2009). Economic Economic analysis studies consist of both the national and local economy, and its impact on the world. This also comprises of the inflation rates and issues related to recession. In order to own customer loyalty, different strategies are being adopted by IKEA, keeping in view the current trends and economic changes. IKEA also adopted other styles in its furniture product category, such as dinnerware and rugs, in order to compete with the changing economic conditions and boost market performance. The company needs to analyze key issues involved in the economic conditions and every aspect of business, in order to spawn high performance (Analysis on IKEA
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