Analysis of IKEA and INDITEX
IKEA is a multinational company that designs and sells furnishing products around the world. There are many different factors that influence the work of IKEA in every separate country that the company operates in. This is why it is of the greatest importance for the company to analyze its operational environment, and one of the tools that the company can use is the PESTLE analysis.
Various political factors influence business activities of IKEA group of companies, such as trade restrictions, labor laws, taxes, tariffs, etc. In addition, an attitude of many governments, especially those of European countries, was significantly influenced by the announcement the company made in 2012 when representatives of the company stated that in some furniture was manufactured by political prisoners of East Germany in 1970-1980s (Connolly, 2012). Economic factors influence all company’s operations as well, and the most important among them are consumer spending power that decreased recently due to the global economic crisis, and the macroeconomic situation in the countries of operation. IKEA focuses on selling its furniture in the countries with developed and stable economies that can support the high standards of living. To cut the constantly increasing labor costs, IKEA opened factories in such countries, as China and India (Behal, 2015). Social factors have a great impact on the company’s image, i.e. the company consumes a lot of wood for production, and today the society is against deforestation (Chaudhuri, 2015). However, with rapid urbanization, demand for IKEA products will gradually increase. IKEA, as well as other big companies, uses new technologies, such as social media to reach the target audience, and mobile payments to ensure the better experience of the customers.
INDITEX is another multinational corporation that was established in Spain and today it sells fashion products, mostly clothing, in a great number of countries around the world. INDITEX has to take into account various laws that exist in the countries of operation, and sometimes the company breaks these laws. For example, in 2015, the company was accused of providing poor working conditions in Brazil, and this is not the first time when INDITEX was accused of unfair labor practices (Butler, 2015). The global financial crisis had an impact on INDITEX as well, but Spain, the country of INDITEX headquarters, showed a 280% return on retail shares, and INDITEX was the main factor, as people kept buying company’s products (Stewart, 2016). INDITEX operates on the global fashion market, and this is the reason why social trends have a significant influence on the company’s business activities. The company follows the needs of the people depending on the country of operation, as, for example, customers in different countries prefer certain colors, and INDITEX has to meet the clients’ expectations. As for the technologies that are being rapidly developed nowadays, the company puts many efforts to keep up with this trend, and it plans to expand in curb stores and e-commerce markets in the nearest future (Internet Retailer, 2016).
References
Behal, A. (2015). What's The Hold Up For IKEA Stores In India? [online] Forbes.com. Available at: http://www.forbes.com/sites/abehal/2015/06/22/whats-the-hold-up-for-ikea-stores-in-india/#ae8791e349e8 [Accessed 24 Apr. 2016].
Butler, S. (2015). Zara owner Inditex faces fines in Brazil over poor working conditions claim. [online] the Guardian. Available at: http://www.theguardian.com/fashion/2015/may/12/zara-owner-inditex-fines-brazil-working-conditions-claim [Accessed 24 Apr. 2016].
Chaudhuri, S. (2015). IKEA Gets Deeper Into the Woods. [online] WSJ. Available at: http://www.wsj.com/articles/ikea-gets-deeper-into-the-woods-1438310691 [Accessed 24 Apr. 2016].
Connolly, K. (2012). Ikea says sorry to East German political prisoners forced to make its furniture. [online] the Guardian. Available at: http://www.theguardian.com/business/2012/nov/16/ikea-regrets-forced-labour-germany [Accessed 24 Apr. 2016].
Ikea.com. (n.d.). Our low prices. [online] IKEA. Available at: http://www.ikea.com/ms/en_GB/about_ikea/the_ikea_way/our_business_idea/our_low_prices.html [Accessed 24 Apr. 2016].
Stewart, I. (2016). Investment returns through the financial crisis. [online] Mondaq. Available at: http://blogs.deloitte.co.uk/mondaybriefing/2016/04/investment-returns-through-the-financial-crisis.html?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original [Accessed 24 Apr. 2016].
Internet Retailer. (2016). Zara parent Inditex will focus on e-commerce and curb store expansion. [online] Available at: https://www.internetretailer.com/2016/03/09/zara-parent-inditex-focus-e-commerce-curb-store-expansion [Accessed 24 Apr. 2016].
