5N1610: List All Four Elements Of A PEST Analysis: Business Administration Skills, BCFE, Ireland

Section A – Case study 

Q1. List all four elements of a PEST analysis.

Q2. Give 2 examples of Environmental factors that a company like IKEA should include in a PEST analysis

Q3. Referring to the case study below compile a brief SWOT analysis of IKEA

SWOT analysis and sustainable business planning

IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was founded in 1943. Today it is the world’s largest furniture retailer, recognized for its Scandinavian style. The majority of IKEA’s furniture is flat-pack, ready to be assembled by the consumer. This allows a reduction in costs and packaging. IKEA carries a range of 9,500 products, including home furniture and accessories. This wide range is available in all IKEA stores and customers can order much of the range online through IKEA’s website.

There are 18 stores in the UK to date, the first of which opened in Warrington in 1987. In July 2009 IKEA opened a store in Dublin too – its first in Ireland. IKEA stores include restaurants and cafés serving typical Swedish food. They also have small food shops selling Swedish groceries, everything from the famous meatballs to jam. Stores are located worldwide. In August 2008 the IKEA group had 253 stores in 24 countries, with a further 32 stores owned and run by franchisees. It welcomed a total of 565 million visitors to the stores during the year and further 450 million visits were made to the IKEA website. IKEA sales reached 21.2 billion Euros in 2008 showing an increase of 7%. The biggest sales countries are Germany, USA, France, UK and Sweden. In 2008 IKEA opened 21 new stores in 11 countries and expects to open around 20 more in 2009 as part of its strategy for growth.

Low prices are one of the cornerstones of the IKEA concept and help to make customers want to buy from IKEA. This low price strategy is coupled with a wide range of well-designed, functional products. IKEA’s products cater to every lifestyle and life stage of its customers, who come from all age groups and types of households. This is vital in times when the retail sector is depressed, as it increases IKEA’s potential market.

Since it was founded IKEA has always had concern for people and the environment. The IKEA vision ‘to create a better everyday life for the many people’ puts this concern at the heart of the business. IKEA has responded to the public’s rising concern for sustainability in its choice of product range, suppliers, stores and communication. It has also spotted business potential in providing sustainable solutions. IKEA’s concern for people and the environment encourages it to make better use of both raw materials and energy. This keeps costs down and helps the company to reach its green targets and have an overall positive impact on the environment

Section B – Sources of Finance

1) Name four potential sources of finance available to your business. Then explain one potential drawback (or disadvantage) for each option.

2) Considering at all the options available for raising finance for your business, explain 2 advantages to getting a loan.

Section C – Company Formation 

1) Give 2 advantages and 2 disadvantages of setting up a
business as a partnership.

2) If your business fails, what difference does it make if you have unlimited liability or limited liability?

3) Your business needs to hire five new coffee baristas. Name and describe 2 different methods you could use for finding candidates for the jobs.

4) Name 2 types of business insurance that your company should have, briefly explaining why you chose each one.

Section D – Management Functions

1) As Owner/manager of the coffee shop identify 4 daily functions of management that you will carry out.

2) Give two reasons why the management control of stock will be important for the success of your business.

3) In your monthly Cash Flow Statement, you have a section for Inflow (money coming into the business) and Outflow (money leaving the business). Give two examples of what could appear under Inflow and two examples of what could appear under Outflow.

4) In the context of your company’s hierarchy, explain the term Span of Control.

5) Name and describe 2 appropriate Quality Awards that your coffee business could apply for.