Economic Conditions

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If there are new competitors close to Ikea, Ikea will then have to carry out changes to their business to maintain their customer levels. If former customers of Ikea choose to shop at new competitors instead of Ikea, Ikea could produce special offers on certain products, for example buy one get one free or even lower prices or sales. If prices are lower this will attract former customers of Ikea to go back to their store a purchase their product.

Ikea could also advertise their products in leaflets, on the radio and on the television. If more customers know about the store and what they sell, they are more likely to go to the store and purchase products. If customers are more likely to purchase products then the competitors will be out of business. If most of Ikeas customers are going to their competitors it may be because of the quality of products. If Ikea improve the quality of their products or produce better products then their customers may return.

If customer services aren’t good then their customers may go to their competitors. If Ikea wants their customers back they should train their staff so their customer services are back up to scratch. Even though the training will cost a lot it will make more money in the long run if customers come back. Ikeas customers may go to their competitors because of more expensive delivery charges. If Ikea charge less money for their delivery charges their former customers would then purchase products at their store. This will mean less profit for Ikea but more customers.

If Ikeas competitors are really good at selling just one product that Ikea also sells they may have to withdraw that product. For example Ikea used to produce laminate flooring but their competitor B;Q also sold it but produced better quality flooring, because of this Ikea was loosing money so they withdrew it from sales. Ikea could also provide an online service; this will ensure most customers will shop online with them then a competitor. To keep a track on competitors and Ikeas customers, Ikea should monitor their customer levels and profit margin to see if there is a drop in sales

Economic Conditions

If interest rates go up or down this will affect the functioning of Ikea and they must do a few changes to alter what the change of interest rates did. If interest rates go up customers will then have less disposable money to spend at Ikea. To help more customers be able to afford their products Ikea could do many things. For example Ikea could lower prices on some products for example kitchen products. Ikea could also introduce a buy now pay latter policy with those who can not afford to buy the product now. Ikea itself is not affected with interest rates because they have their own bank so does not pay interest rates.

If exchange rates go up or down this will affect the functioning of Ikea and they must do a few changes to alter what the change of exchange rates did. If exchange rates go down products will then be more expensive to buy abroad. Since Ikea must send a majority of their profit to Sweden, and Sweden’s currency is the Krona Ikeas around the world must change their currency to the Krona. If exchange rates are high the pounds value will be worth less in Krona. To get as much money as possible Ikea must wait until exchange rates go down so the pounds value is worth more when changed into Krona.

If income rates go up or down it will affect the functioning of Ikea and they must do a few changes to alter the affect of the income tax rising or decrease. If income taxes rise, customers will then have less money to spend on products such as a new kitchen. If this does accrue Ikea may need to decrease their products on certain products or could introduce a buy now pay later offer to customers who are affected by the raise of interest rates. On the other hand Ikea could higher prices or even cut sales if interest rates fall. This will mean more profit for Ikea, so will have more money to distribute else where.

Cooperation Tax does not affect Ikea if they do fall or rise because they are a charitable organisation. The rise or fall of unemployment may cause Ikea to do a few changes which will make the effect of unemployment to their advantage. Low levels of unemployment and good occupation is a good thing for Ikea because if more customers have a steady high paid job they will more likely to purchase such things a new kitchen. If this occurs Ikea could rise prices or produce more expensive products to sell.

Nevertheless high levels of unemployment or not good occupation situations is a bad thing for Ikea because if more of Ikeas customers have no jobs or bad occupations will mean customers they will have less money to spend on products , so will spend the money they do have of necessities like food. For this reason Ikea may need to introduce lower prices, sales or introduce a buy now pay later policy or Ikea could introduce the same kind of products but use cheaper materials so it will cost less to manufacture and will be less to buy.

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