Macro-environment changes impacting IKEA

Question

What are some macro-environment factors that will impact IKEA?

Answer

One macro-environment factor that will have an impact on Ikea and its industry is the current state of the global economy. Currently, the global economy is suffering from uncertain growth in developed and developing markets. GDP growth rates are fluctuating and are not consistently growing or decreasing. The impact of this means that real wage levels have not increased substantially; this will have a negative effect on consumption. If there is weak consumer confidence as a result of a lack of increase in real wage growth, then this is likely to have a negative impact on Ikea’s sales figures. Changes in the global exchange rate can also impact Ikea and its industry. This is because Ikea has globally spread operations and deal with many different currencies. For example, as a result of the Brexit vote the pound weakened against the euro. Due to this change it now means it is more expensive for Ikea to import products into the UK from countries using the euro. Ikea will have to decide whether to pass these costs on to UK consumers or absorb the increased costs themselves. Another macro-environment factor to consider is the impact of the refugee crisis affecting Europe. Over 1 million refugees have entered Europe over the last two years from conflict affected areas (e.g. Syria), and Sweden has received one of the highest numbers of refugees (per capita) in Europe. This could actually be of benefit to Ikea as they are headquartered in Sweden. This is because there will be an increase in people in the labour market, and it will also make the labour pool more diverse. Ikea may be able to tap into this increased labour market and recruit skilled individuals to help grow their business.

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