IKEA has been chosen for this paper. IKEA is one of the oldest companies that operate in the furniture industry; it has been operating since 1943 and it is also one of the largest furniture manufactures. The company has more than 12,000 products available to their customers. This paper shall be analyzing the legal, social and economic environment which has the ability to affect the company along with the company’s managerial, operational and financial issues (which is going to include project timelines, critical path and contingency plans, implementation plan contingences, staffing needs and tools, Gantt chart and PERAT chart).
The paper shall also be analyzing the impact of change on the management functions within IKEA. Analyzing the External Environment The marketers of IKEA have a strong need to identify changes that might take place outside the company, why, because they will be able to track down trends and opportunities for the company. In this section legal, social and economic factors related to IKEA will be analyzed. Legal Environment
In the year 2004 IKEA was given the go-ahead to build a store in Stockport, Greater Manchester, UK by the Prime Minister, but then the government decided that IKEA will be allowed to build
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IKEA Social Initiative was introduced in 2005, which invest in social programs all over the world. For example, IKEA provides the British customers with free bus service from the company’s outlet to their homes, when they come to visit IKEA. Economic Environment IKEA pays close attention to the trends in the income and spending patterns of their customers. Therefore IKEA sells its furniture and other products at affordable prices, so that more and more people are able to buy an IKEA product.
For example, MALM (bed frame) costs $199. 00 or MANDAL (wall – mounted headboard) costs $149. 00 which is quite reasonable. (IKEA, 2010) Analyzing the Managerial, Operational and Financial Issues Managerial Issues IKEA has adopted the human resource management practice which in return helps the company to improve its performance. The management of IKEA uses the employee motivation approach known as ‘you need a job right? ’, but form of approach is not very effective and the employees do not feel motivated to perform their best.
Operational Issues IKEA was having a bit of a problem with its distribution expenses, since the recession the company has decided to relocate its warehouse to China this would decrease the rent expense considerably and IKEA will be able to distribute its products easily within the Asian region to countries like Japan and to the Middle East Asia. Whereas the physical factories of IKEA are spread all over the globe, for example, one of the facilities is located in the Port Wentworth, GA, USA.
(IKEA, 2010) Financial Issues Due to the recession the company has been faced with a downfall in sales, why, because the people do not have the money to buy luxury goods. The customers are going to buy furniture which are very affordable and come in the range of their budget; they will not buy furniture based on luxury itself, but out of necessity. Project Management IKEA decided to redesign its product line. IKEA shifted its flow of products from Sweden to countries like China.
IKEA now has 11 product lines, 140 stores, manufacturing facilities and thousands of employees around the globe who are keep track off and manage the system. Even though redesigning the product line was not a possibility, but IKEA decided to go for it and it was considered to be a success. And with this relocated warehouse IKEA will be able to launch itself in the Australian, Asian and Middle-Eastern markets. (Miles & Snow, 2003) Project Timeline