IKEA also want to be unique, there products have an exclusive style, and they want to stand out from the rest, many people associate Sweden with a fresh, healthy way of life. This Swedish lifestyle is reflected in the IKEA product range. The freshness of the open air is reflected in the colours and materials used and the sense of space they create: blond woods, natural textiles and untreated surfaces. In a climate that is cold and dark for much of the year, these light, bright living spaces create the sensation of summer sunshine indoors all year round. From these points we can see that IKEA, is modern, flourishing, evolving and successful business.
Task 2)
Economy is a measure of the regions success in terms of employment , the average wages earned by workers, the number of businesses starting up compared with the number closing down and the level of house prices and the number of new houses being built. Favourable changes in these measurements suggest a healthy economy, benefiting both workers and businesses, leaving businesses likely to expand and succeed as a business. Whereas if confidence is low it could have the opposite effect forcing businesses to close down, or move elsewhere. In the local area the economy is pretty healthy, employment is high and the success rate of businesses is very good, the vast majority of new businesses manage to reach a year, which allows them to reach breakeven, and concentrate on making profits. Ikea’s large success rate is shown with the grand total of 231 IKEA stores in 33 countries/ territories. The IKEA Group itself owns 206 stores in 23 countries (updated March 2006).
Since Ikea is a large store, almost like a warehouse its stores a lot of its products on site, so its crucial that it sells them, so the fact that the economy is in a good state, people are purchasing homes in that area, which is good for Ikea as home furbishing and equipment is mainly what they stock. Also it means people have spare money and more likely to spend more in places like Ikea.The economy in the surrounding area is good it encourages more businesses to open up, which creates more competition especially if they sell similar items, so that is why large businesses use adverts and offers to keep attracting customers to their shop.
The map shows the location of the north London branch in Brent Park. From this you can see there is easy access to it both via motorway or the underground making it much more accessible for people in and around London, it has a large space and there is no one directly competing with IKEA in the local area of Brent Park.
Competition can be seen as a bad thing, but in Ikea’s case as it can afford to have TV adverts and promote itself to everyone it’s a greater advantage, ironically IKEA have a history of controversial TV advertising, which is exactly what they want “IKEA advertising in the UK is intended to raise awareness of the IKEA brand and drive traffic to the stores.” Furthermore as its positioned next to a busy motorway its attracts those with cars which allows them to carry more, and also its not that close to any other near by stores, which means its more convenient for people locally to visit. As the economy locally is good it means people have more money to spend on basic and luxury items, which Ikea sells.
The advert seen to the left, caused a lot of controversy at the time, shaving with IKEA’s potato peeler, they had a long line of commercials, with the same idea behind it, it got people talking about IKEA, creating publicity, which has proved to be very useful for IKEA.
Ikea in Brent park as mentioned is situated by the motor way, this means when purchasing/renting the building its cheaper as its on the out skirts, furthermore in this case it is very close to a tube station which allows people without cars to access their local branch of Ikea which is usually not possible. Additionally IKEA are considering allowing UK customers to order online since its been a success in Home country Sweden and also Germany as this means IKEA will appeal to an even greater amount of consumers including those without a car or those who physically are not able to go to IKEA.
Task 3)
The meaning of social and ethical values express a person’s sense of right and wrong and encapsulate their beliefs and concerns. For example, some people feel it is ethnically wrong to test products on animals and refuse to buy products that are developed in this way. This means businesses must observe shifts in the characteristics and habits of the population, and reflect changes in their lifestyles.
In the local area there has not been to many social changes, but people are now expecting more, shops opening on Sunday, higher standards of food, many of these changes have helped Ikea, for example the increase of transport. Since IKEA is based by a motorway going there can be a problem for some people so the increasing amount of buses and expanding of routes means more people can get to IKEA. Also a large proportion of families locally are increasing. For instance properties in the area are highly sought after, with one bedroom apartments reaching in excess of £150,000, and a planned increase of bus service in the area to cater for the rise of local families and houses.
Social changes will affect the business quite a bit over time, for instance with the increasing amount of cafeteria’s, takeaway stores and food shops opening so Ikea have had to cater for that in opening their own mini restaurant where people can purchase hot or cold food and other snacks. This makes a trip to Ikea like a day out, more then just visiting your local store. Also since London has become more cosmopolitan, they have introduced foreign food as well as British, and its speciality of Swedish food to cater for their needs, this has had a good affect as it generates more income, and the store appeals to more people. Furthermore the items they have to sell have to be modernised, as technology increases so does peoples expectations of the product they purchase.
Furthermore IKEA in Brent Park has decided to give something back to the community. IKEA Brent Park runs a Community Policy focused on children, over a hundred schools benefit from IKEA goods that cannot be sold, also closer links have been made between the store, three schools and a community centre from the local community area. This shows that IKEA can make the difference for these organisations and the response has been welcoming and enthusiastic, which has helped make IKEA popular nationwide and even more so locally in the community.
IKEA Brent Park stands out for the successful internal approach in relation to Community Involvement, two examples of this positive internal attitude are following, the store, in connection with Convent of Jesus and Mary language college, gave eight French students the opportunity to gain work experience through a one-week placement. Also the store gave three people from Brent Mencap (people with learning disabilities) the opportunity to work in different areas of the store.
The feed back from the co-workers and the community were great for IKEA. Co-workers have had the opportunity to work alongside people from different cultures, different speaking countries and people with learning disabilities and have been most supportive of the store and embraced the opportunities. Marvin Francis, Community Manager IKEA Brent Park has been the spearhead for IKEA in giving something back to the local community. So we can see IKEA reflecting and benefiting from social and ethical changes, by selling the latest products, Sunday opening and improved transport links, IKEA have progressed.
Task 4)
There are many complicated legal issues businesses have to face. Laws are passed to protect the rights of people. In the business world, there is a range of laws intended to protect transactions between businesses and customers. These laws apply whether a business’s customers are members of the public or other businesses. For example, there is legislation to ensure that customers have a legal right to receive the goods they have paid for. Legislation also protects dealings between the owners of a business and its employees. For example, there are employment laws that make it illegal for the owner of a business to discriminate against some of the business’s employees.
IKEA have regulations to make sure there products are safe, especially for younger children. After several of there products caused severe injuries or death to children, mainly from beds and cots. This has led to the product, being withdrawn and possible legal action taken against IKEA. “Ikea yesterday withdrew one of its beds from sale after a 21-month-old girl died when she became trapped between the frame and her bedroom wall.” IKEA must strive to avoid such terrible incidents and the resulting bad publicity.
Personal ones for Ikea are that their Timber must come from responsibly managed forests, emissions must be reduced, and healthy foods in Ikea all show Ikea as being environmentally aware and a caring responsible company, this is good for IKEA as it gives them a good name making them a popular choice for customers.
Laws are put in place to ensure fairness and that everything is up to standard, so for a business like IKEA it would be second nature to abide by them. Otherwise the punishment can result in court action. For such a large business this news would be in the press nationwide, giving them a bad name and putting customers off their services, press are always looking for ways to put down large businesses, so its important for a company like IKEA to retain there good name by making sure all laws and guidelines are stuck to. Laws and self-regulatory codes of practice impact on the ability of a business to achieve its aims and objectives. They act as constraints on the activities of the business. In Ikea’s case it will have to make sure the food it serves is up to standards and cooked properly, and that the products they sell are as they should be and not damaged. There are also health and safety laws, which make companies responsible for the welfare of their customers and staff.
Task 5)
Competitive market determines how active a certain area in business is, so a market which is competitive e.g. supermarkets would be known as being a competitive market, as there are several businesses involved in this area selling similar products. All competing with others to attract more customers to their stores than the other supermarkets. This can be done by offering the customer better quality of food or more variety or by reducing prices and having sales.
IKEA sells a variety of objects, varying from household items to garden furniture and have a mini restaurant. The actual items its selling are sold elsewhere by other companies. Also the items it sells are necessities, something people in general will have to purchase, so there is always a demand for the type of products it sells. So it is a very competitive market other stores competing with IKEA are MFI, John Lewis, Heals, along with Furniture Village and other Furniture stores. So all companies selling items similar are fighting each other to give the best deal to the customer. IKEA have a highly unique style of furniture and products, a lot of their goods can only be purchased from them, IKEA's success in the retail industry can be attributed to its vast experience, product differentiation, and cost leadership. IKEA is doing differentiation and cost leadership. Differentiated because their products are different compared to the conventional ones already in the market. They defy the norms in terms of furniture style. They go with furniture with simple design, and they are a cost leader in terms of the price of their products. It is also shown by their company being cost conscious in everything that they do. Clearly this has paid off for IKEA as their different taste in furniture is undoubtedly popular worldwide.
IKEA is fairly isolated compared to other of its competing stores, the local branch is based on the outskirts of London, while most of its competitors are in central London, and people visit of its location due to its practicality. It covers a wide catchments area of north London. Due to this it possibly means that it doesn’t face as big a competition as those all really close to each other in central London. Other branches in UK are based in major cities such as Manchester and Liverpool, this is because these area’s are highly populated therefore meaning a higher amount of potential customers.
I feel this helps the business achieve, due to it not competing so much as other companies it means its more stable and is able to generate more revenue, furthermore its also seems to be modernising itself to the publics needs, etc by having a restaurant on site. IKEA has its own niche in the market, and is seen as different in its brand.
Task 6)
Business ethics is slightly similar to legal issues, but instead it doesn’t have to be done by law, it’s a code of behaviour considered morally correct. Business ethics can provide normal guidelines for the conduct of business affairs. This is based on some assertion of what is right and what is wrong. An ethical decision means doing something which is morally right; it is not a matter of making calculating costs and profit. This has been highlighted recently, in relation to whole industries (such as cigarettes) and to businesses which use cheap labour in less developed countries. A good ethical position is likely to appeal to many customers, as they are attracted to deal with such companies.
A typical code for a business like IKEA may have the following ethical values.
- Personal Integrity- In dealings with suppliers and in handling the firm’s resources. IKEA deal with over 1,800 suppliers for their products so it’s crucial they maintain a good relationship with them by meeting in the middle and coming out with a deal respectable for both IKEA and the supplier.
- Corporate Integrity- Such as forbidding collusion with competitors and forbidding predatory pricing. IKEA avoid doing this, they are widely known for there cheap prices, which puts them streets ahead of competitors, doing predatory pricing would only steer customers away from there store, leaving them with a bad image.
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Environmental Responsibility- Highlighting a duty to minimise pollution emissions and maximise recycling, I.E using recyclable packaging. IKEA are extensively known for looking after the environment “At IKEA, we shall always strive to minimise damaging effects to the environment, which may result as a consequence of our activities." IKEA do this by only using wood from well-managed forests that have received recognised forest management certification, IKEA also have phased out the use of PVC, as a precaution given some reports of its harmful side effects.
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Social Responsibility – To provide products of genuine value that are promoted with honesty and dignity. Our business idea is "To offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them." This shows IKEA are loyal to their customers and do try to price their products as cheaply as possible, by looking at there website and from personal experience it’s clear that IKEA do offer a lot to there customers for highly competitive prices.
Other ethics Ikea have is to make sure all their Timber comes from maintained and looked after forests, that their staff and customers are looked after and also to check their food is properly cooked and of the highest standard.
These ethics help the business in reaching its objectives, when people see that a business doesn’t just sell a product, but also care about where its coming from and create ethical standards, its proven that they are more likely to purchase from them. Customers appreciate it when the products they receive have been created with care, and will often be willing to pay that bit more for it. Also by having ethical beliefs you create a name and image for yourself, with is good publicity generating more interest and customers over the long run. IKEA are seen as a very ethical responsible company, fitting in with their modern, caring and environmentally aware image.
