IKEA Case Study. Essay Sample

Sweden has been a hotbed of innovation in Europe. Through its numerous technological advances, the country has managed to utilize its available resources to source money for economic development. The 20th century dawned to be a period that triggered many countries to the quest to find oil. Although its neighbor, Norway, was lucky to discover large deposits, Sweden remained to have a deficit in oil consumption in relation to production. This issue has made it difficult to import oil.

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For this reason, the country has struggled to use its resources such as trees, hydropower, and iron. the use of timber would eventually lead to a successful business backed up with a peculiar strategy. A seventeen-year-old young man, Ingvar Kamprad, saw the opportunity and did not hesitate to cease it. He started making ready to assemble furniture, home accessories, and kitchen appliances. The business strategy was different from others, and thus it achieved high market penetration. Through the years, until 2008, the organization has created a reputation of being the largest furniture retailer in the world. He named the company IKEA, from the acronym of his name and the place of birth. As of June 2019, the company is said to have opened up its stores in 52 countries and has over 433 outlets (Morrison ,2016 ). Having these outlets have made the timber and iron utilizing industry to consume 1 percent of the timber in the world (Hildeman, Carlsson ,77). This essay focuses on analyzing the company's peculiarity and its development to effectively use wood and iron to influence the market and become a globally recognized brand.

Confucius once said that in a well-governed country, poverty is something to be ashamed of, but in a country with poor governance, wealth and richness become something to be ashamed of (Kolodko ,293-317). The reason behind the success of the organization in its governing principles. The management system has a critical role and is the skeleton that holds the company is keeping up its reputation. The organization has a unique strategy made strong by the slogan, “product differentiation and cost leadership.” The organization has managed to ultimately reach every customer through franchin=sing its diverse range of products.

Organizational leadership is also unique since the managerial criterion is different from the various organization. The company has the head of the holdings on the leadership role. The devolution of power is then directed to a profit and non-profit group. Below the Stichting INGKA Foundation, there is the INGKA holding BV who heads three different categories, which include IKEA holding, Swed wood, and IKEA od Sweden (Thomsen, 2018).

Source: https://www.scribd.com/doc/60692478/IKEA-Org-Chart IKEA has perfected the art of customer satisfaction. It is said that Ikea is not just a store but an experience. The customers who walk into the stores spend more time than expected since the range of products is high, and diversification has played a critical role in ensuring their stay is elongated. The success of the company in keeping customers in their store made it possible to increase sales. Also, no one can imagine that due to its wide range variety of products, the company has managed to build a museum. It is an outstanding effort that has attracted people from all corners of the globe.

The culture and values of the organization are essential in providing guidelines for the vision of the founder. It is critical to discuss these values since they form the core principles of the organization's success. The company instills a culture that seeks at constantly trying to find better ways of accomplishing tasks and bringing out the best from the talent within. Also, there are eight key values critical to the foundation of the company. They include togetherness (this is the heart of the culture of IKEA since it is through being one that trust develops), cost-conscious, caring for people and planet, renew and improve, simplicity, different with a meaning, lead by example, and give and take responsibility.

The company has intentions to conserve the tapped talent from its employees. Efforts directed to keeping them motivated have proved successful since there is constant innovation and thus progress in the company. Promotional activities have provided a pathway to keep employees motivated. Also, profit share is a major contributor to the motivation success.

Netflix just released a documentary film titled, "Abstract; The art of design." After watching the film, it becomes evident how mastery of the skill can create products that make customers become hungry to acquire. A company can only stay in a market when it always ensures there are innovation and the assimilation of technology. Kodak tried to rely on its past and outdated systems and see where it is currently in the photography industry. IKEA is one organization that has proven to maintain and keep up with innovation, thus making it become the pacesetter in its industry. The reason why the company has been successful in making its customers spend more time in the store is the variety of choices from different design. The art of design is a mastery achievement that has innovation and technology behind it. A product can have several forms which confuse the customer who had a fixed mind when entering the store (Tidd, Bessant, 2018). Also, the accomplishment of these designs can only be attributed to the use of technology. The furniture that could not be made ten years ago can now exist courtesy of the influence of technology. Keeping up with modernization is also key since the use of the social platform is essential in ensuring market recognition.

Through its program, the organization has built food stores and restaurants in its furniture and accessories stores just to provide a platform for customers to sit in awe. The restaurants have also turned out to be an innovative effort in the quest to increase productivity. Billions are now being able to accumulate from the development of these food stores.

There is a philosophy that the company believes in, "IKEA, the healthy way of life." The company is aware of the social impact it has made on its path to accomplish its goals. The organization takes all measures to effectively maintain social responsibility through mitigating all efforts to minimize environmental damage. Since the company used iron and timber as its raw materials, there is an enormous task in maintaining the landmasses affected through the acquisition of these materials. Forest would need to reduce since cutting the trees is inevitable, and also open cast pits have been drilled to keep on producing iron. Efforts to ensure environmental damage has an equivalent compensation have been made, and thus there are active programs.

The various efforts aimed at ensuring humanitarian practices have strengthened the management of the social responsibility of the organization. IKEA has developed IKEA's foundation, which is a charity organization that seeks to eradicate poverty in children. It also sent a half a million blankets to Pakistan during the 2006 earthquake. In 2009, a humanitarian organization, UNICEF, made it public that IKEA is a critical partner.

Since the company is a threat to the forests, the issue of environmental pollution is vital in its existence. As the world seeks to remain green, companies like IKEA pose a threat to the achievement of such a desire. The company controls the supplier's relations with nature, and thus it has the right to terminate the contract with a supplier. Such a scenario is harmful to environmental conservation policies.

IKEA has always remained committed to ensuring there are no raffles within the organization. The company is successful in controlling child labor, and its efforts are fruitful since it has remained strict in its governance. The company has always stood on its CSR political phase, which suggests that it is apolitical and remains neutral.

In conclusion, IKEA is one organization that has put all measures to ensure successful carrying out of business. The company has achieved market penetration through its diversified resources. One main art that it has mastered is customer satisfaction. The efforts to make customers stay in their store for a longer period of time is so fruitful that it has developed a restaurant within the premises. Also, the development of new designs and products has created a scenario where there is a need for a museum. The position of IKEA has made it become a dominant giant in the furniture-based industry. The business culture has promoted its development since the vision and mission of the founder has value. Innovation and technology have made it to continually prove to show progress and, thus, the development of new and better products. No business has an efficiency of 100%: IKEA is an example of such a business since issues such as environmental damage, politics, and scandals occur. Companies should benchmark the business strategy of IKEA and embrace them so as to stay firm in the industry.

Reference

Hildeman, Anders, and Mattias Carlsson. "7 IKEA." Forests and Globalization (2014): 77. https://www.researchgate.net/profile/William_Nikolakis/publication/309117096_Lessons_in_the_design_of_payments_for_environmental_services_Theory_and_experience/links/5b311cea4585150d23d03847/Lessons-in-the-design-of-payments-for-environmental-services-Theory-and-experience.pdf#page=87

Kolodko, Grzegorz W. "The Poor and the Rich." Whither the World: The Political Economy of the Future. Palgrave Macmillan, London, 2014. 293-317. https://link.springer.com/chapter/10.1057/9781137470256_3

Morrison, Janet. Global Business Environment (44-4875-00L). Red Globe Press, 2016. https://books.google.com/books?hl=en&lr=&id=fHfRDwAAQBAJ&oi=fnd&pg=PR5&dq=company+IKEA,+from+the+acronym+of+his+name+and+the+place+of+birth.+As+of+June+2019,+the+company+is+said+to+have+opened+up+its+stores+in+52+countries+and+has+over+433+outlets&ots=T89WlxUP1s&sig=J7LWdd_4xKxtBa5Qjj0pdC-1440

Thomsen, Steen. "Foundation Ownership at IKEA." Available at SSRN 3243347 (2018). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3243347

Tidd, Joe, and John R. Bessant. Managing innovation: integrating technological, market and organizational change. John Wiley & Sons, 2018. https://books.google.com/books?hl=en&lr=&id=S11nDwAAQBAJ&oi=fnd&pg=PA1&dq=The+art+of+design+is+a+mastery+achievement+that+has+innovation+and+technology+behind+it.+A+product+can+several+forms+which+confuse+the+customer+who+had+a+fixed+mind+when+entering+the+store.&ots=dXXu8dH4SC&sig=8YRLH3PRBzIUPKLhbK3RO9wcn5Y