Environmental analysis is an integral part of understanding how the organization operates within the organization itself, in the industry and in the macroeconomic environment. For this analysis, the relevant organization will be IKEA. “The IKEA Group is one of the world's largest privately held companies, specializing in the retail sale of flat-packed home furniture and other household goods. Operating more than 150 department stores in more than 30 countries and having a mail order division, IKEA sells a range of furniture manufactured by more than 2,000 suppliers in more than 55 countries. The company is headquartered in Helsingborg, Sweden. (DataMonitor, 2007). IKEA's main competitors in the United States are: Furniture Brands International Inc, Office Depot Inc, Sauder Woodworking Co., Stanley Furniture Company, Inc. and Staples, Inc. This paper will identify the main macroeconomic variables that affect IKEA and the industry of retail. in its entirety. To better understand the effects of these variables on the industry, two specific variables will be developed in more detail. Once it is understood how the industry is affected by these variables, challenges and opportunities will be identified for IKEA, which operates in the retail industry. The main macroeconomic variables that affect the retail sector are: economic production, productivity, unemployment/employment, inflation, budget balances and finances. Economic output is used in terms of short-term business fluctuations and long-term growth. The Oxford English Dictionary defines economic production as “related to economic science; relating to the development and regulation of the material resources of a community or nation" and "that which is produced in an industry or process" (OED Online, 2007)...... middle of document.. ....y /50189377?single=1&query_type=word&queryword=productivity&first=1&max_to_show=10MarketLine.2007. Retrieved January 25, 2008, from http://library.marketlineinfo.com.ezproxy.apollolibrary.com/library/DisplayContent.aspx?R=6878C795-4BCB-4C85-A319-6F33C508FD80&N=4294839321Department of Labor, Licensing and Regulation of Maryland. 2007. Retrieved January 25, 2008, from http://www.dllr.state.md.us/lmi/laus/seasonal2007.htm.McConnell, C. & Brue, S. 2004. Economics: Principles, Issues, and Policies. McGraw-Hill Enterprises. Retrieved January 24, 2008, from www.ecampus.phoenix.edu/content/eBookLibrary/content/Print.aspxU.S. Department of Labor. 2007. Retrieved January 25, 2008, from http://www.viewswire.com/index.asp?layout.U.S. Department of Labor, Bureau of Labor Statistics. 2007. Retrieved January 23, 2008 from http://www.stats.bls.gov...