Key Drivers of Change
The key drivers of change are heavily dependent on the industry in which the organization operates. The first key factor for IKEA is geopolitical conflicts, particularly the Russian-Ukrainian war, which raised oil prices to an unprecedented high level. Rising prices for raw materials lead to higher prices for products, which can make them unattractive to buyers. In addition, the military conflict seriously complicates the supply chain, especially in the countries of Eastern Europe. A key socio-cultural factor for IKEI is the cultural and racial differences between consumers of the organization’s products. Advertising campaigns aimed at Western buyers may be unacceptable to Eastern people, which can lead to a loss of reputation. The third key factor that coordinates IKEA’s activities is the environmental concern. The furniture corporation must be especially careful to ensure that production is environmentally friendly.
Possible Scenarios
Action scenarios are needed for an organization to deal with the uncertainty of the key factors that affect its performance. The first key factor is the unstable geopolitical environment, which will promote the development of new efficient supply chains or may even destroy business in some countries. An adequate strategy for IKEA would be to reduce activities in countries embroiled in military conflicts. Despite severe financial costs, the company will keep the goods and funds for a possible future resumption of trade. An alternative strategy with a less predictable outcome would be establishing alternative supply chains. The strategy is associated with the risk of high financial costs and damage to the goods.
The second key factor relates to the difference in socio-cultural perceptions in western and eastern countries. The only possible scenario may be adapting advertising campaigns and assortment to a specific country of operation. An alternative scenario involves transferring activities under franchise management to comply with local norms and customs. However, in this case, the company risks losing control over its franchise branches in distant countries.
The last key factor is connected with concern for the environment. If IKEA continues to pursue its sustainable production policy, it will majorly contribute to the fight against pollution. However, sustainable means of production are much less profitable. IKEA may be unable to keep up with claims of a zero-emissions policy due to higher raw material prices. In this case, IKEA risks losing customers and can ruin its reputation.