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IKEA Company (Case Study 1)

IKEA Company Synopsis

IKEA is a global company that deals in furniture and is based in Swedish. It was initially created

to make modern home furniture affordable to its customers (Vahlne et al. 57). As outlined on

their website, their primary purpose is to assist as many people as possible to live a good life.

The company's first store was opened in 1958, been located in Almhult in Sweden (Ericsson 45).

The company's name was formed by integrating the founders' Ingvar initials, followed by the

firm and the village's initials.

Over six decades now, the company has witnessed a positive graph in its growth with it,

adding a restaurant to its locations and children's IKEA. It is built on various values that the

company always strives to achieve, including environmental, economic, social, and

communication-based values (Li 76). The company has several competitors in the U.S., such as

Ashley Furniture Industries; in the U.K., there is the Howden Joinery Group Plc, among others.

The two competitors have been established to be a lot pricier than the IKEA company, making it

compete favorably (Vahlne et al. 58). It has many locations; for example, it has about 345 stores

in approximately 42 countries, of which 248 of them are in Europe, and 50 of them are situated
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in North America. Its work environment and culture have been fast-paced with the incorporation

of more than 139 employees about how big their stores are.

The company organizes regular weekly meetings where the executives interact with the

employees, helping it understand both the company and its needs. The company's growth and

stability rely on the founder's strategy to avoid engaging in the stock market but establish the

IKEA franchise system (Ericsson 78). This paper is a case study of the organizational structure

of IKEA, evaluating its values and culture, and its operational environment.

IKEA Organizational Structure

The company has a unique organizational structure. For instance, most of the international

companies work under the IKEA trademarks. It has franchisees that operate independently from

the IKEA group (Li 84). Most of the franchisees have been established and owned by the

INGKA Group (Vahlne et al. 60). The INGKA Group and Inter IKEA have the same founder but

operating under different management and owners since 1980.

The Inter IKEA Group incorporates various companies, and it formulates the strategic

direction for the entire business and links all the other franchisees. For example, the group

comprises three significant businesses, Inter IKEA Systems B.V., which is noted to be a global

furniture retailer's franchisor. It also deals with franchise agreements. The IKEA Industry is

concerned with manufacturing home furnishing products and usually produces, on average, 10-

12% of the total output (Ericsson 83). The other business is the IKEA Range and Supply, which

produces and supplies items for the furnishing chain and home improvement (Vahlne et al. 61).

The current structure of the company is organized in a franchise system.

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IKEA’s Organizational Culture and Values

The company has been established to have a robust set of values that build its culture when put

into action. IKEA's values are realized to have been shaped when the company had harsh living

conditions in Sweden. The company is currently trying very much to develop strategies and new

methods of getting things done within the organization to realize its best. Its fundamental values

include togetherness (Li 98). This value at the company culture's vital heart, believing that

trusting each other builds a strong organization (Vahlne et al. 62). Cost consciousness is also

emphasized in IKEA. In this aspect, the company holds that they should make more from less

while not compromising quality as people should afford a functional and beautiful home.

The company also focuses on simplicity. They have established a straightforward, simple,

and down to earth method of being part of their Smalandic heritage. This shows that the

company embraces staying close to reality, and they are pragmatic, informal, and take

bureaucracy as their biggest enemy (Ericsson 102). The company also embraces giving and

taking responsibility as part of its values. IKEA believes in empowering people. The aspect of

giving and taking responsibility is to enhance the development and growth of individuals. This

value entails trusting each other, forward-looking, and being positive to inspire everybody

towards development.

Employee Motivation in IKEA Company

Motivation can be viewed as a set of power or force that serves to initiate, make, and direct

people to achieve the organizations set goals and objectives (Vahlne et al. 63). The company

believes that the virtue of all employees desiring to learn serves as their motivating factor. The

company openness in its job vacancy disclosure of information promotes employees to measure
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and think their ability to the place and manage their career development. Besides, IKEA also

uses the right working conditions as an approach to motivate its workers. They offer a relaxed

and comfortable physical working environment (Ericsson 106). The company does not

encourage its employees to be engaged with intensive work, believing that it will contribute to

them being less productive because of being less efficient. IKEA employs Maslow's Hierarchy of

Needs Theory to motivate its employees (Li 102). This theory explains how a company can

identify its workers' needs like safety, esteem, and self-actualization, among others, to promote

its workers' welfare.

IKEA’s Social Responsibility

The company's efforts towards social responsibility are led by Pia Cook, the organization's Chief

Sustainability Officer (Morsing et al. 395). The companies' concern towards CSR entails

educating an empowering employee, supporting local communities, and addressing minorities'

issues and gender equality (Li 102). Through its international furniture retailer servers, the

company also serves to combat increased energy consumption and obtain energy from other

affordable and alternative sources.

IKEA’s Learning Environment/Knowledge Sharing

It has been established that the company does not have a particular program for enhancing

learning. However, knowledge sharing in IKEA is part of its routine (Ericsson, 130). The Human

resource policy postulates that, like an IKEA employee, you should be willing to share your

experiences and knowledge with all the other co-workers (Morsing et al. 396). It is part of the

mission of the founder Ingvar Kamprad to be cost-efficient as part of the concept.

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Corporate knowledge is shared within the organization via training done to employees by

experienced IKEA people and its intranet and manuals. Intranet use is highly useful at the

corporate level and more so by the management team (Li 120). Teamwork and action learning

based on open communication is essential despite being supported by documented information

accessible in the intranet. Sharing of knowledge in the company is integrated into aspects

revolving around career paths, and workers are rewarded and promoted concerning their ability

to share knowledge.

Conclusion

The above discussion indicates the foundation of the IKEA company's success and its

outstanding company brand (Morsing et al. 399). The organizational structure defines the flow of

power and how disseminating information occurs in the company (Ericsson 145). Well-

structured values and culture represent a company's success as it shows how the company is

focused on achieving its goals (Vahlne et al. 64). Indeed, employee motivation and team building

are currently becoming a concern for many organizations. They are the determinants of the

organization's success, and IKEA is making it central to its functions.

Case study 2

IKEA technological practices

In the last couple of years, IKEA company has been facing many issues within its organization.

Among the recognized ones is its inability to provide a supportive technological practice for the

whole structure internationally in the company's spread supply chain. There are various issues

related to lack of transparency in the company's organizational setup, for example, price gauging,

as witnessed with stores in Canada (Morsing et al. 400). It is an issue that remains to limit the
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company's growth as it is yet to realize its global technological support for the proper functioning

of the company (Ericsson 156). The company has been identified from research to employ many

kinds of technological supports within its organizational functionalities. However, it yet needs to

upgrade its technology due to the current advancements.

Through PESTEL analysis, the company is in the trends ad that has been well structured within

its complex website. Furthermore, the company lacks adding technological tools that are

advanced to its SEO, primarily on functionalities. As Griffiths & Stuart (2010) claimed, the

company needs to develop new domains of actively networking, which are social-based, to

realize maximum consumers personally.

IKEA’s innovative qualities and indicators for change

The company is well known for its commitment to using modern architectural designs in its

products and continuous cost control, operational details, and product development (Morsing et

al. 402). It has been established as one of the largest business companies in the aspect of

innovation. It integrates innovation within its philosophy, consistently looking for new methods

to come up with and improve its service propositions (Vahlne et al. 67). The company excels in

three essential innovation areas that lead to change initiation for the company's growth.

Communication is a critical area that IKEA invests in (Ericsson 171). It successfully

communicates its innovation strategy to customers and employees. The innovation efforts are

made with its core strength in mind of providing appealing products to the customers and at a

low price while at the same time upholding the quality of the product.

The company also excels in management aspects of innovation. It has a well-defined

governance structure and organization to manage innovation. Despite that innovation existing in
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the entire organization, its founder drives the whole innovation culture. All the changes in

innovation usually result from the top management. The company has a well-structured value

system used to manage and support innovation. IKEA also succeeds in disclosing its new ideas

and strategies for innovation openly (Morsing et al. 403). For instance, the ideas flow from top

management to internal innovation experts, hence acting as potential change chances.

IKEA’s Issues Relating to Power, Conflict, Control and Politics

There are very factors within the organization that has resulted in relationship tensions. Domestic

battles are existing between the Swedish retailers over IKEA products (Lehner et al. 5030). The

company has initially been established to engage in political issues to build itself (Vahlne et al.

70). After observing its ethical notions, it has initiated legal regulations within its technical

facilities to ensure consistency with technical laws, among others (Ericsson 183). Power has

been a point of concern within the IKEA company. Still, the adopted leadership model has

effectively used a leadership style that ensures that the organization's management is through the

people, minimizing the chances of leadership struggles (Morsing et al. 406). There is control of

management issues that arise due to conflicts of interest in the company through a well-

organized structure. All these strategies stand to be accounted for the success of the company.
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Works Cited

Ericsson, Adam. "Organizational Culture and Employee Loyalty: The Case of IKEA." (2018).

Lehner, Matthias, et al. "Circular Economy in Home Textiles: Motivations of IKEA Consumers

in Sweden." Sustainability 12.12 (2020): 5030.

Li, Yanning. "Business Insight: Leadership and Human Resource Management Analysis for

IKEA."

Morsing, Mette, and Anne Roepstorff. "CSR as corporate political activity: Observations on

IKEA’s CSR identity–image dynamics." Journal of Business Ethics 128.2 (2015): 395-

409.

Vahlne, Jan-Erik, and Anna Jonsson. "Ambidexterity as a dynamic capability in the globalization

of the multinational business enterprise (MBE): Case studies of A.B. Volvo and IKEA."

International Business Review 26.1 (2017): 57-70.