he low-cost advantage that IKEA has; purchasing, designing and distribution waskept centrally controlled. This is because most purchasers are from Småland, whichare well known for their thriftiness.IKEA also faced the shift in its targeted consumers group, as the median age andincome raised; its original targeted market will be shrinking. IKEA overcome this by changing the company’s crazy Swedes image and shift it to quality image. IKEA also expanded into other market such as the office furniture to capture a larger market.
3.Organization capabilities of IKEA-What were the management processes by which IKEA coordinated and controlled its Europe-wide operations? How effective were they?The management process was very much driven by Kamprad and his view of life. Kamprad wants IKEA to move away from status and convention, and this will make employees more at ease. IKEA management also often stressed simplicity and attentionto detail. Kamprad also often mentioned that “Waste of resources is a mortal sinat IKEA”. The root of IKEA spirit is frugality and wants to spread this idea downto all its employees. IKEA management often hires younger, more open recruits asthis not only drives down cost. It also ensures that the employees are not immersed in another cultural so much so that they are unable to adopt IKEA strong and unique culture. With the use of IKEA ambassadors which are trained personallyby Kamprad, they are assigned to key positions to spread the company’s philosophyand values, and also to act as role models.However when it comes to the effectiveness of these processes, not everyone in the company will stand to benefit from it. With the moving away from status and convention, it puts pressure on management to perform as there is no security behind hierarchy or closed doors. The thrifty and spirit of frugality is also hardto maintain when IKEA has a turnover of billions each year, more and more employees are anxious to share the rewards.4.Organization values and Ingvar Kamprad’s vision-What was Ingvar Kamprad’s role in IKEA’s development?As the founder of IKEA, Kamprad and his values very much drive the entire IKEA organization. Even when he is the chairman of IKEA, he was seen often bypassing the normal hierarchy and going down to communicate with the designers and managers that are five or more levels below him. This shows the entire IKEA organization that he is committed to move away from formality and status. Kamprad himself is a very good role model to his employees, in terms such as frugality and whatever he expects from his employees, he is practicing it himself.Kamprad’s vision of “To create a better everyday life for the many people” and business idea “To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people will be able to afford them” still drives IKEA after more than 50 years. Coupled with Kamprad’s ability to forecast consumerneeds, he is able to turn difficulties into advantages and uses it to expand IKEA’s business. Kamprad himself play a significant and an indispensible role in theentire IKEA’s development over the years and what Kamprad’s envision more than 50 years ago is still very much applicable in today’s market. Results can be seen fromIKEA financial standing of an increase in sales of 7.7% to 23.1 billion EURO ascompared to year 20091.
5.Action plan for the future-What challenges lie ahead for IKEA?-Please recommend what course of action Anders Moberg should follow in order to deal with them.The challenges for IKEA would be to constantly keeping the growth of the companyhigh, which is what it has done for the past 50 years while keeping the cost oftheir furniture low. IKEA also faced challenges in terms of demographic differe