Ikea i1y23

Ch3:IKEA Case Study Prof : Samer Dahiyat By: Mohammad Al-dehnee Moh. Ali Ghaith Jaghbeer Eyad aljaber Rami Khushman

Agenda

 Case Summary  Questions and analysis

Brief about IKEA  The largest Furniture company in the world.  In 2001 ,Sales soared to 35$ billion  Over 25% of the global furniture market

Mission and competitive advantage  IKEA believes that it is poised for massive growth in the coming decade since it can meet the needs and wants of average customers of well-designed and well-made contemporary furniture and affordable price at an affordable price.

What qualifies IKEA to do so ?  The way it expands globally and operates its global store empire.  IKEA’s Global approach focuses on:    

Simplicity Attention to details Cost consciousness Responsiveness

Source of IKEA’s Global Approach  Personal beliefs and values of its founder Ingvar Kamprad , about how companies should treat its customers and employees.  The core of Kampard’s management approach are :Entrepreneurial , Frugal, hardworking values.  All employees need to operate in no-frills, costconscious way.  Every person who works in his global empire plays a an essential role and has an obligation to everyone else.

Kampard’s approach in practice  All Employees fly coach class on business trips Stay in inexpensive hotels Keep travelling expenses to a minimum  IKEA stores operate on the simplest rules and procedures possible, with employees cooperate to solve problems and get the job done.

 Employees realize the global approach of IKEA as soon as they are recruited.  Employees start learning about the IKEA’s global corporate culture by performing jobs anywhere within the company in the fastest way possible after being trained very well. The thing which will allow them to internalize IKEA’s global values and norms, which center on the importance the company attaches to their taking the initiative and responsibility for solving problems and for focusing on the customers.

 Employees rotated between departments and stores  Rapid promotions based on enthusiasm and togetherness they have brought into IKEA’s global culture.  Most of their managers rose from the firm itself.  “Breaking the bureaucracy weeks” in which managers are required to work in stores and warehouses for a week each year to make sure they and all employees stay committed to IKEA’s global values.

 All Employees wear informal clothes to work at IKEA.  No marks of status such as executive dinning rooms or private parking places.  Employees believe that if they buy into IKEA’s work values, behave in a way that keep its growing global operations streamlined and efficient and focus on being one step ahead of potential problems, they will share in its success.

 Promotions  Training  Above the average pay  Generous store bonus system  Personal well-being People will feel values  Used to build and strengthen IKEA’s global approach.  When they open a new store , IKEA sends their managers to establish the global approach.

Questions and Analysis Q1: List the various way in which IKEA has managed the global environment?

 Having the job done through using the simplest and the easiest procedures , practices and rules in their operation.  Cutting costs by not allowing business class flights, expensive hotels and minimizing other related travel expenses.  Employees take their way from the bottom of the work chain up to the top. This will give them the chance to experience every department in IKEA’s stores. This, will allow employees to take responsibility , ownership , and initiative for sorting out problems .

 Most of the managers have made there way from the bottom to the current managerial position.  When IKEA establishes new locations , they send group of their managers to train the employees on their values and operations. US center for example.  Employees rotation between departments  IKEA makes sure all employees stays committed to their values. For example “ breaking the bureaucracy week”  Personal well-being , promotions, above the average pay ..etc.

Q2:How would you explain the rationale behind the success of IKEA’s approach to managing its environment?  Strong analysis of business environment by paying attention to customer needs and wants at affordable basis. So IKEA tried to stabilize and enrich its environment by targeting the largest pool of customers while making sure to keep them loyal by trying to provide them with best prices. Based on the above , IKEA has managed to build great reputation in addition to the social values it provided through affordable furniture.  Working conditions that motivates employees and allow them to adapt to the organization culture very quickly coupled with in-house managerial promotions should lower the internal transaction costs due to training and other information exchange tasks.

 Since the company’s Approach is aiming to have an organized structure by studying and analyzing the forces they face and might face in their business expansion globally and how they company manage the different forces such as Demographic and cultural forces when they decided to expand globally and how the succeeded and specially in the US Markets and also being up-to-date with the technological forces and bringing new ideas and innovation that keep their Products at the top with their competitors and meeting their customers wishes and needs globally and not in a certain country.  Their Approach for Cost reduction that comes from experience curve effects and location economies with high quality, well-designed, and wellmade contemporary products at the low-price and to save money to IKEA itself and their customers, the company buys items in bulks, ships and stores them unassembled using flat packages and customer has to assemble many items together on his own at home.  IKEA has globally expanded and enlarge and protect its domain in the global market by having different centers around the world.  IKEA keeps caring for its shareholder and especially for its managers and workforce by giving very good paid salaries, promotions, wages, bonuses and stable employment especially for those who demonstrate enthusiasm and customer orientations and care and getting them trained and this can been see how most of IKEA managers rose from its ranks.