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    IKEA Case Study 1

    Uploaded by

    Simon Ranger
    IKEA has several organizational design elements that contribute to its success, including formalized policies and procedures, a unique shopping experience and product offerings, and an emphasis on sustainability and cost-consciousness. IKEA approaches innovation through consistent new product design and customization, lowering prices annually, expanding stores globally, and using foldable designs to reduce transportation costs. IKEA's culture, called "IKEA's way", prioritizes innovative, affordable, and high-quality furniture products. Some challenges IKEA faces include managing its large global supply chain, quality control across locations, logistics and delivery policies, meeting local tastes, and increasing competition and raw material prices.

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    IKEA Case Study 1

    Uploaded by

    Simon Ranger
    85 views5 pages
    IKEA has several organizational design elements that contribute to its success, including formalized policies and procedures, a unique shopping experience and product offerings, and an emphasis on sustainability and cost-consciousness. IKEA approaches innovation through consistent new product design and customization, lowering prices annually, expanding stores globally, and using foldable designs to reduce transportation costs. IKEA's culture, called "IKEA's way", prioritizes innovative, affordable, and high-quality furniture products. Some challenges IKEA faces include managing its large global supply chain, quality control across locations, logistics and delivery policies, meeting local tastes, and increasing competition and raw material prices.

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    IKEA has several organizational design elements that contribute to its success, including formalized policies and procedures, a unique shopping experience and product offerings, and an emphasis on sustainability and cost-consciousness. IKEA approaches innovation through consistent new product design and customization, lowering prices annually, expanding stores globally, and using foldable designs to reduce transportation costs. IKEA's culture, called "IKEA's way", prioritizes innovative, affordable, and high-quality furniture products. Some challenges IKEA faces include managing its large global supply chain, quality control across locations, logistics and delivery policies, meeting local tastes, and increasing competition and raw material prices.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    85 views5 pages

    IKEA Case Study 1

    Uploaded by

    Simon Ranger
    IKEA has several organizational design elements that contribute to its success, including formalized policies and procedures, a unique shopping experience and product offerings, and an emphasis on sustainability and cost-consciousness. IKEA approaches innovation through consistent new product design and customization, lowering prices annually, expanding stores globally, and using foldable designs to reduce transportation costs. IKEA's culture, called "IKEA's way", prioritizes innovative, affordable, and high-quality furniture products. Some challenges IKEA faces include managing its large global supply chain, quality control across locations, logistics and delivery policies, meeting local tastes, and increasing competition and raw material prices.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    At a glance
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    The key takeaways are that IKEA utilizes various organizational design elements like formalization, unique shopping methods and product styles to succeed. It also embraces technology, sustainability and aims to keep products affordable.

    IKEA's organizational design elements include formalized policies and procedures, unique product styles and shopping methods, complex internal structures and embracing of technology.

    IKEA approaches innovation through consistent new product design and customization, lowering prices annually, opening new stores, adopting green technology and keeping transportation costs low.

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    IKEA Case Study #1

    Student’s Name

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    Course Code: Course Name

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    IKEA Case Study #1

    Question 1: What are IKEA’s organizational design elements?

    For IKEA to register success in its ventures, it must utilize its various design elements

    both jointly and independently. IKEA’s formalization design element is one that elucidates its

    efforts to create as well as utilize written policies, including procedures and rules. The

    organization acts with integrity and accountability by adhering to internal procedures and

    policies as published on the company website as a public document to demonstrate their

    commitment. The various procedures and policies encompass environmental guidelines, safety

    guidelines, and child labor laws. The company has a unique shopping method and type of

    furnishings as its specialty. The company has a reputation of offering its clientele a modern

    furnishings style. They have large furnishings exhibitions and warehouse-style showrooms

    where they display their captivating creativity. They also sell the merchandize from the

    showrooms, which also double up as customer pick-up points. However, IKEA does not offer

    free delivery services, tasking the customers to cater for the transportation of the items. It is

    noteworthy that IKEA’s services are not customer-centric, enabling the consumer to save money

    compared to offering them a full-service shopping environment.

    In addition to the above, IKEA has a unique hierarchy coupled with a complex internal

    structure. Since IKEA is a company administered by a private foundation, owning a group that

    managers IKEA stores’ operations, its founder virtually lacks the company’s technical

    ownership. IKEA is also reputable for embracing technology in all its operations. It simplifies

    and streamlines operations and processes to enable it offer solutions in tandem with its goal. The

    company is also environmentally-friendly because it leverages on innovation to provide

    sustainable home furnishing offerings that give it a competitive edge over its close business
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    rivals. Besides, IKEA also imparts an eco-friendly cultural way of life by offering tips and

    recommendations to clients on the same. IKEA also strives to employ cultures that promote

    simplicity, respect, togetherness, and cost-conscious. The company also appreciates the opinions

    and feedback of all individuals. Overall, the organization aims to maintain the affordability of its

    products while investing in and encouraging sustainability in their products and the environment.

    Question 2: How does IKEA approach innovation?

    IKEA is an organization innovation in various ways. One of the primary methods that

    IKEA employs in its innovation quest is to design and create new furnishing products

    consistently and affordably. Another approach to innovation is the utilization of customization to

    specific products to enhance their performance in niche-specific markets. The company also

    strives to adhere to its policy of lowering its furnishing prices annually by between 2 and 3

    percent to ensure its products remain affordable to customers. In addition to the above, IKEA

    remains committed to opening new stores worldwide and maintaining a ‘green’ reputation by

    adopting environmentally-friendly technology to create its products. Lastly, IKEA keeps the

    transportation costs of its furnishings products very low because they employ foldable designs in

    the majority of its products, enabling clients to assemble them at home.

    Question 3: Describe IKEA’s culture

    IKEA has an interesting culture christened ‘IKEA’s way.’ As a definition, IKEA’s way

    implies that the company offers furnishings products that meet three criteria. The first criterion is

    that of innovativeness. Secondly, the products designed and produced under the IKEA brand is

    affordable to customers. Lastly, all IKEA furnishings products have top-notch quality, which
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    ensures customer satisfaction. ‘IKEA’s way’ been instrumental to the company’s success in the

    past few years.

    Question 4: What challenges does IKEA face?

    IKEA faces several challenges. Firstly, since IKEA is a large-scale corporation, it faces

    expansionary problems. The first major problem is handling the large number of suppliers.

    Managing and controlling the huge number of suppliers worldwide can be painstaking for the

    management. Secondly, it faces quality control problems with products manufactured in different

    places worldwide. For instance, the durability of products can differ depending on the location of

    its manufacture. Thirdly, IKEA faces logistical and transportation challenges because of delivery

    policies imposed by different countries, making it difficult to deliver products to different

    locations. Also, the research and development (R&D) teams sometimes experience the challenge

    of prioritizing local tastes and preferences. Lastly, IKEA experiences the challenge of

    continually lowering product prices because of the increase in the price of raw materials,

    resorting to raising prices instead. Besides, the increase in the number of competitors with

    similar business models is another challenge IKEA grapples with daily. Increased competition

    means loss of business because of competition for customers.


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    References

    Baraldi, E. (2008). Strategy in industrial networks: Experiences from IKEA. California

    Management Review, 50(4), 99–126.

    IKEA culture and values. (n.d.). Retrieved September 12, 2021, from

    https://about.ikea.comhttps://about.ikea.com//en/About-us/IKEA-culture-and-values

    Jonsson, P., Rudberg, M., & Holmberg, S. (2013). Centralised supply chain planning at IKEA.

    Supply Chain Management: An International Journal.

    Lindqvist, U. (2009). The cultural archive of the IKEA store. Space and Culture, 12(1), 43–62.

    Sustainability at IKEA. (n.d.). Retrieved September 12, 2021, from

    https://about.ikea.comhttps://about.ikea.com//en/Sustainability

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