PESTLE analysis is a tool for analysing the macroeconomic environment.

It serves to study the

economic systems of a company as a whole. To start a business, an analysis of the resources and the
market is essential. By PESTLE analysis, a company can study its environment to see its strengths and
weaknesses. PESTLE stands for the 6 marketing factors that influence the course of a company:
political, economic, social, technological, legal and environmental. The applicability of the factors
may vary depending on the industry or market analysed. Consumer companies place greater
emphasis on social factors, but the raw materials industry will do a larger analysis of environmental
factors and policies. Not only do companies wishing to begin their inclusion in the market perform
PESTLE analysis, but it is also used in companies that are already in operation to discover their
strengths and weaknesses along with other methods of analysis.

The Swedish furniture store IKEA has influenced the culture of interior architecture throughout
Europe for many years now. More and more people assemble their furniture on their own - even if a
screw might be missing. Ikea has a strong business concept and a powerful business culture. Every
part of Ikea’s business concept from flat pack furniture to the playroom to the customer restaurant
with $1 hot dog has been time tested for success. The IKEA concept contradicts the cause-and-effect
law: high quality at a higher price. It offers very good quality furniture at affordable prices for the
large mass of the population that attracts customers motivated by the modern and original design.
Thus, IKEA develops projects that aim to: protect the environment, help poor children and create
renewable energies.

Due to the globalization trend, IKEA is a success both nationally and internationally. The Swedish
furniture seller has found the Scandinavian style to be useful, along with the feature of being able to
be assembled alone, which has become popular around the world. The political factors in the PESTLE
analysis focus on government intervention in the economy. Among the political factors, we must
analyse taxes, labour laws, environmental laws, tariffs, and political stability. In first world countries,
political factors are usually stable. But if a company is analysing its entry into a market in third world
countries, it will have to take into account the political stability of that country before starting its
activity. In analysing these factors, it must also be taken into account whether the government
provides part of the services on the market it wants to enter or if its legislation can directly affect the
company. The government decisions that have the greatest impact are those based on the health,
education, and infrastructure of a country. Changing short-term governance is also a factor to be
considered when analysing the popularity surveys of different future governments, as well as their
electoral programs. The political stability of the country is the main component of the political factors
that affect businesses. For example, part of the IKEA’s suppliers in East German back in the '80s
forced political prisoners to produce merchandise that was sold to the retailer. The company’s
connection with accused suppliers, in the middle of political unsteadiness of the country, negatively
affected the image of the corporation.

Within the economic factors for the analysis of the business environment, there can be made a small
division, between the permanent economic factors, the temporary ones at the national level and the
temporary ones at the international level. The permanent economic factors are the level of economic
development of the region, the growth rate of the population, the level of wages and the availability
of raw materials. These factors are usually stable over time and their changes are minimal over time.
Within the temporary factors at the national level, it is necessary to focus on the balance of
payments situation and the interest rates on the market. In the case of temporary factors at the
international level, IKEA must take into account the competition between companies from other
regions and the level of market protectionism. The global economic situation is also a factor to be
considered, as the possibility of possible crises can affect the economy of another country if it is an
interdependent country. The inflation rate is an important factor affecting businesses’ profit. For
example, the high inflation rate in the United Kingdom changed the consumer’s behaviour and
generated a shortage of recourses caused by the destabilizing market leading to a negative effect on
IKEA by dramatically decreasing its profit in the UK. To generate high business performance, IKEA
should be careful in analysing and considering the key issues involved in every aspect of the business
and respond accordingly.

IKEA has obliged accordingly in the social environment by creating jobs and creating opportunities for
employees, and employees are entitled to various benefits, such as health and pension insurance.
The company also promises to provide high-quality furniture that folds on the original concept -
stylish furniture at low prices, so that everyone can afford it. The social environment refers to
population growth, age distribution, emphasis on the safety of the customers and employers. That is
why IKEA is offering competitive medical and prescription plans, retirement plans called "Tack" (the
Swedish word for "thank you"), co-worker discounts and meal deals and generous parental and paid-
time-off packages, creating a safe and beneficial environment for its employers.

For marketing specialists, new technologies are important for the following reasons: they create new
ways to meet the needs of consumers, they can identify and satisfy latent needs, they can help to
discover new consumers, they can change the nature of the competition and they change the models
of the demand. IKEA has used quality technology and queuing systems, excellent programming,
localization and marketing models and staff. It seeks to become more productive and establish
employee preferences. The system made it possible for IKEA to ensure the right number of staff in a
particular place. The company's opinion in optimizing everything from the supply chain is also an
optimization of the workforce to create an efficient environment and to keep customers happy. The
return to a domestic economy led many people to become independent producers of modern goods
and less of traditional goods. Under these conditions, the market for passenger transport, the mobile
office market, the catering products market will decrease dramatically.
The legal environment concerns: avoiding misleading the buyer, controlling the way of sale and
information provided to buyers about products, product quality. The legal compliance of the IKEA
Company is strictly implemented with the relevant and applicable laws regarding the environment,
social environment and working conditions. The company also programmed the most important
requirements to have lists of laws and regulations, respectively procedures. Consumer protection
legislation aims to prevent the company from profiting from them.

Concerning environmental factors, such as air, noise, and water, inspections are implemented to
ensure that the company implements vital decisions for the environment. These inspections are part
of legal documentation, and the environmental authorities, as well as the business operations,
maintain the necessary competences. Commitment to a greener world is a permanent one, which is
why IKEA stores collect recycling bulbs, batteries, catalogues, cardboard boxes, even pencils used by
visitors to write down the details of the products they are interested in.

Ikea has expertise in designing, engineering and manufacturing furniture developed over the last
seventy years. It’s also a business with huge growth prospects in countries like China and India with
many stores yet to be built. Currently, the chain has 338 stores in 43 countries, mostly in Europe, and
the rest in the United States, Canada, Asia, and Australia. Add in the need to improve the quality of
products while maintaining low prices and the huge potential of improving online and catalogue
shopping with better home delivery and assembly services and Ikea will be a leading company for a
very long time. It is hugely successful today, with amazing growth prospects for the future in many
different ways.