PESTEL is a strategic analytical tool used to assess the impact of external factors on businesses. The acronym stands for political, economic, social, technological, environmental and legal factors affecting businesses. It is important to clarify that businesses have little and no influence over factors within PESTEL framework; however they can develop strategies to eliminate or at least to minimize negative effects of these factors. IKEA PESTEL analysis can shed a light into opportunities to strengthen competitive advantage of the business in various fronts. Political Factors in IKEA PESTEL Analysis IKEA revenue is subject to political situation in the market and a wide range of political factors such as government attitude towards the brand and political stability. Other political factors that can affect IKEA’s business include the level of bureaucracy, degree of corruption, home market lobbying and import restrictions in markets where the global furniture retailer operates. Use of Prison Labour in East Germany The company has been involved in a series of issues on political grounds. In 2012, IKEA had to admit that the company used prison labour in East Germany in 1970s and 1980s to produce its products. It has to be specified that the use of prison labour took place at manufacturing sites of IKEA suppliers, not the sites managed by the retail giant itself. An independent report by Ernst and Young concluded that while IKEA had a policy of visiting production facilities to control working processes, access to East German suppliers had been restricted. Although IKEA offered formal public apology to those affected, the incident caused a significant political controversy around the globe.[1] Moreover, allegations that IKEA founder Ingvar Kamprad was an active recruiter for Swedish Nazi group has sparked controversy with negative effects on the brand image.[2] Symbolic Role of Doll Lufsig Another…IKEA PESTEL Analysis: An Analysis of Impacts of External Factors
Sunday, August 14, 2022
Research Methodology
PESTEL is a strategic analytical tool used to assess the impact of external factors on businesses. The acronym stands for political, economic, social, technological, environmental and legal factors affecting businesses. It is important to clarify that businesses have little and no influence over factors within PESTEL framework; however they can develop strategies to eliminate or at least to minimize negative effects of these factors. IKEA PESTEL analysis can shed a light into opportunities to strengthen competitive advantage of the business in various fronts. Political Factors in IKEA PESTEL Analysis IKEA revenue is subject to political situation in the market and a wide range of political factors such as government attitude towards the brand and political stability. Other political factors that can affect IKEA’s business include the level of bureaucracy, degree of corruption, home market lobbying and import restrictions in markets where the global furniture retailer operates. Use of Prison Labour in East Germany The company has been involved in a series of issues on political grounds. In 2012, IKEA had to admit that the company used prison labour in East Germany in 1970s and 1980s to produce its products. It has to be specified that the use of prison labour took place at manufacturing sites of IKEA suppliers, not the sites managed by the retail giant itself. An independent report by Ernst and Young concluded that while IKEA had a policy of visiting production facilities to control working processes, access to East German suppliers had been restricted. Although IKEA offered formal public apology to those affected, the incident caused a significant political controversy around the globe.[1] Moreover, allegations that IKEA founder Ingvar Kamprad was an active recruiter for Swedish Nazi group has sparked controversy with negative effects on the brand image.[2] Symbolic Role of Doll Lufsig Another…
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