1) Briefly explain the 2 major aspects of the strategic

management process.
The 2 major aspects of strategic management process are
strategy formulation and strategy implementation.
STRATEGY FORMULATION is the process of creating a
strategy; it involves taking information from analysis or
organizations environment and existing stategies as well as
identifying resources the business has to formulate a new plan
that can help to attain orgs goals and objectives.
STRATEGY IMPLEMENTATION is the process of allocating
resouces and putting the stategies into action. The stategies
must be acted on to achieve the desired result. If the business
strategy implemented doesnt achieve the required results, a
new stategy must be formulated.
2) Explain the strengths and weaknesses of IKEA and
their influence on its business growth.
IKEA uses SWOT analysis, a strategic planning tool to help
reach its objective. In order to improve its performance, IKEA
has to assess its internal aspects. Strengths and weaknesses
are the internal factors where strength is positive factor and
weakness is negative factor of the business. This means that
they are within the control of the business. They may refer to
aspects of marketing, finance, manufacturing or organisation.
A business can create opportunities and counter threats by
making the most out of its strengths and addressing its
weaknesses.
IKEAs strengths include a having a strong global brand.
This could help in their business growth by attracting key
consumer groups. It also promises the same quality and range
worldwide which help increase consumer confidence.
Having a strong concept allows IKEA to offer a wide range of
well designed, fuctional products at low prices. On top of that,
adopting a democratic design by reaching an ideal blance
between function, quality, design and price contributes to
IKEAs brand image in tandem with their vision to create a
better everyday life for many people.
The aforementioned strengths contribute to IKEA in being able
to attract and retain their customers.
IKEA uses renewable materials that includes as much
recycleable materials as possible. With these environmentally

friendy products, the end products consumer can confidentally

label as green.
IKEA believes in building long-term partnerships. By
committing to buying large volumes over a number of years
from the same supplier, IKEA can negotiate lower prices. This
also benefits the suppliers because they enjoy the greater
security of having guaranteed orders.
Economies of scale allow bulk buying at cheaper per unit costs.
IKEAs weaknesses are controlling the standards and quality of its
global business. Some countrieswhere IKEA products are made do
not implement the legislation to control working condition. This could
represent a weak link in IKEAs supply chain, affecting consumer views
of IKEAs products.
Another weakness is the need for low cost products to be balanced
agaisnt producting good quality. IKEA also needs to differentiate
itself and its products from competitiors. IKEA believes there is no
compromise between being able to offer good quality products and low
prices.
IKEA needs to keep good communication with its consumers and other
stakeholders about its environmental activities. The scale of the
business makes this a difficult task. IKEA produces publications in print
and online (for example 'People and the Environment') and carries out
major TV and radio campaigns to enable the business to communicate
with different target audiences.

3) Explain the opportunies and threats of IKEA and their

influence on its business growth.
External factors refer to the opportunities and threats of the business
venture. External factors are affected by the environment, economic
situation, social changes or technological advances, such as the
internet. It cannot be controlled by the manager of the business.
IKEA can use their strengths to take advantage of the opportunities
that arise. IKEA believes that its environmentally focused business
conduct will result in good returns even in a price system market and
IKEA is developing solutions for customer in order to support them
recycling/ reusing the products.
Oppo that IKEA is getting through the environmentally free business
are there is greener products demand in the business and are able to
fulfill the low price product demand. IKEA works towards these

opportunities by providing tips and ideas on sustainable home life

on their website to convince and assist customers.
IKEA also aim for zero landfill waste, reduce wastewater treatment
and programmes to reduce its use of water. This helps IKEA to practice
sustainable use of resources.
IKEA also wants to cut carbon footprint by reducing transport and
packaging. This allows it to reduce energy use and adopt a green
transport initiative.
Opportunities also allow IKEA to show social responsibilities by
supporting charities such as the World Wildlife Fund, UNICEF and
Save the children.
IKEA turns its threats into opportunities in order to grow their business.
Social trend- IKEA is building online help to guide customers to
a more sustainable life. Here it can focus on home improvement
in the slowing housing market. It supports customers with tips
and ideas on its website to reduce their impact on the
environment. This will also save them money.
Market forces- IKEA is large enough to enjoy economies of
scale. This lowers average costs in the long run through, for
example, better use of technology or employing specialized
managers. Economies of scale also give a business a
competitive edge if cost savings are then passed on to
customers in the form of lower prices. This puts up high barriers
to entry for smaller companies entering the market.
Economics factors- IKEA's low prices create appeal amongst
its customers in tough financial times. It is vital to keep prices as
low as possible when the retail sector is depressed. IKEA's
pricing strategy targets consumers with limited financial
resources. Its products will also appeal to those with higher
budget through good quality and design. The company must
ensure that it is always recognised as having the lowest prices
on the market in the future. Communication plays an important
role here.