Environmental analysis is an integral part of understanding how the organization operates within the organization, industry, and macroeconomic environment. For this analysis the relevant organization will be IKEA. “The IKEA Group is one of the world's largest privately held companies, engaged in the retail sale of home furnishings and other flat-pack household items. With more than 150 large stores in more than 30 countries and a mail order division, IKEA sells a range of furniture produced by more than 2,000 suppliers in more than 55 countries. The company is headquartered in Helsingborg, Sweden." (DataMonitor, 2007). IKEA's major competitors in the U.S. retail industry are: Furniture Brands International Inc, Office Depot Inc, Sauder Woodworking Co., Stanley Furniture Company, Inc., and Staples, Inc. This paper will identify the key macroeconomic variables that influence IKEA and the retail sector. as a whole. To better understand the effects of these variables on the sector, two specific variables will be further developed. Once we understand how the industry is affected by these variables, the challenges and opportunities for IKEA, which operates in the retail sector, will be identified. The key macroeconomic variables influencing the retail sector are: economic output, productivity, unemployment/employment, inflation, budget balances and finance. Economic output is used in terms of short-term business fluctuations and long-term growth. The Oxford English Dictionary defines economic production as “relating 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 Maryland. 2007. Retrieved January 25, 2008, from http://www.dllr.state.md.us/lmi/laus/seasonal2007.htm.McConnell, C. & Brue, S. 2004. Economics: Principles, Problems, and Policies. McGraw-Hill Companies. 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.US Department of Labor Bureau of Labor Statistics. 2007. Retrieved January 23, 2008, from http://www.stats.bls.gov...