IKEA Assignment 2 Chamara Amarasinghe ECU10201793

Assignment 02 : IKEA STRATEGY IDENTIFICATION AND IMPLEMENTATION
ECU 10201793 | Chamara Sampath Amarasinghe 1

Executive Summary
The key intention of this report is to conduct a strategic analysis of IKEA’s business strategy,
organisational structure, organisational leadership style, the founders’ leadership style they
follow still and to identify the areas of the organisation where they need to reorganise. As a
market leader in all around the world IKEAs’ market is outsized. Due to that as identified in
the first part of the thesis the external and internal environment is covered by varies forces
that makes IKEAs’ business more complex.
This report has identified the current strategy of IKEA by using the appropriate theories and
models where I have consider about the data available in their web site also. As IKEA is a
very large company which deals with more than 410 million shoppers per year strategic area
that IKEA should improve in order to overcome the challenges they face in the market
currently have been identify using the SWOT and the PESTEL analysis of the previous report.
Being a company which manufacturer and retail furniture in a large scale, IKEA is directly
affect to the world reduction of the forest. Due to these reasons to make the brand image
positive in the customers mind, as a company IKEA has started number of projects to
protect the environment such as reduce the gas emission, using plastic and etc to make
furniture with wood and using public transport whenever they can.
As a company that has a unique concept, well trained employees, a challenging pricing
strategy, when analysing and identifying the IKEAs’ strategy I could identify that all the
factors for the growth of the company is in a positive side.
Nowadays due to the dynamic environment strategic management plays a vital role in the
successfully operating organizations. Further it plays an essential part of the organizations
to achieve their goal successfully. So after identifying and analysing the organisational
structure, system, business strategy and the leadership style, I have presented some
recommendations for the company to improve its operations further.

Table of Contents
1.0 Introduction ............................................................................................................... 5
2.0 Current strategies of IKEA ........................................................................................... 6
2.1 Does the organisation plan to grow? ....................................................................... 6
2.2 What products and services does it plan to produce? ............................................. 6
2.3 What customer and geographic markets does it plan to service? ............................ 6
2.4 What generic strategy does it plan to follow to position itself uniquely against
competitors? ..................................................................................................................... 6
2.5 What position does it plan to hold in the future? .................................................... 6
3.0 Issues of strategy implementation in IKEA .................................................................. 7
3.1 Appropriateness of the structure and systems in IKEA ............................................ 7
3.1.1 Organisational structure .................................................................................. 7
3.1.2 Organisational systems .................................................................................... 7
3.2 Appropriateness of the leadership style in IKEA ...................................................... 7
3.2.1 Levels of leadership ......................................................................................... 8
3.2.2 The qualities of successful leadership .............................................................. 8
3.2.3 Ingvar Kamprad’s leadership style (Appendix 08) ............................................. 8
4.0 Key success factors ................................................................................................... 10
5.0 Recommendation ..................................................................................................... 11
5.1 The positioning of IKEA ......................................................................................... 11
5.2 Strategic implementation ...................................................................................... 11
5.3 Change the organisational structure ..................................................................... 11
5.4 The winning wheel framework (Appendix 09) ....................................................... 12
5.5 Diversification ....................................................................................................... 12

5.6 The paradigm shift ................................................................................................ 12
6.0 Conclusion ................................................................................................................ 13
7.0 References ............................................................................................................... 14
8.0 Appendices ............................................................................................................... 15

1.0 Introduction
The main purposes of this assignment is to analyse and identify the IKEA’s current strategic
choices, identify the barriers and issues for implementing the strategies and recommending
some strategic initiatives and areas for improving the strategy implementation for IKEA.
This report is based on the information about IKEA (Appendix 01) in Helsingborg, Sweden in
2005. According to the information in the case study, IKEA has to face some critical issues
such as re-entering into the Japanese market, intensity of competition, keeping the core
founding values alive and the risk of drifting into the stuck in the middle situation etc.
As a management consultant, I have previously identified the strength, weaknesses,

opportunities and threats for IKEA (Appendix 02) by conducting a strategic analysis of IKEA’s
internal and external environment. With the use of that SWOT analysis, in this report some
new strategic initiatives will be introduced for IKEA to improve (Appendix 03), after
identifying the present strategy and the issues for implementing that strategy.
“Business strategy is the link between environmental demands (including customers’

desire), organizational capabilities and key stakeholders desires.”(Hubbard, 2008)
Where are we now, where do we want to be, how do we get there and how do we ensure
our arrival are the main problems in selecting the strategy. In the first (previous) report the
answer for the first problem was provided by conducting a situational analysis for IKEA and
generating a SWOT. In this report, the other areas also will be covered with the use of
models and frameworks such as Ansoff’s matrix, value chain, strategic clock etc and new
strategic options will be recommended for IKEA as the final outcome.

2.0 Current strategies of IKEA

Strategy is a match between the organisation and its environment. To identify the current
strategies of IKEA, the following five questions should be taken into account.
2.1 Does the organisation plan to grow?

Yes, IKEA is implementing almost all the growth strategies of Ansoff (Appendix 05) and their
vision and mission facilitate the growth (Appendix 01).
2.2 What products and services does it plan to produce?

Products: IKEA produce quality furniture at a lower cost.
Services: IKEA provides retailing service for furniture plus other household products.
The main objective is to provide an unmatchable service and product quality at an

unmatchable price. (Appendix 01)
2.3 What customer and geographic markets does it plan to service?

IKEA is a global organisation and it targets customers in every geographical market in all
over the world (Appendix 01). The type of their presence varies from market to another. In
one market they may operate their own outlets (e.g.: in US) whereas in another they may
appoint agents or they just export (e.g.: in Sri Lanka Don Karolis & Sons Co.).
2.4 What generic strategy does it plan to follow to position itself uniquely
against competitors?
IKEA was following the “cost leadership” as its competitive strategy sometimes back, but to
position itself uniquely against the competition, a hybrid strategy is followed at present
(Appendix 04). IKEA is trying to achieve the “best cost provider” status by lowering the costs
through value leveraging and increasing the value (Appendix 06) through differentiation,
simultaneously.
2.5 What position does it plan to hold in the future?

IKEA is trying to achieve the “best cost provider” or the “value for money” status with the
use of its hybrid competitive strategy. (Appendix 12)

3.0 Issues of strategy implementation in IKEA

To identify the issues of strategy implementation in IKEA, the corporate culture should be
taken in to account. The corporate culture of IKEA consists of the organisational structure,
systems and the leadership styles.
3.1 Appropriateness of the structure and systems in IKEA
3.1.1 Organisational structure

The organisational structure and systems play a vital role when it comes to successful
strategy implementation. The structure of an organisation is the way that its operations and
activities are arranged. Though it’s hard to determine whether the structure comes first or
strategy comes first, according to Alfred Chandler structure follows strategy as changes in
strategy lead to changes in structure.
IKEA has a divisional or product based structure at present (Appendix 07). Though it’ll help
to strategy implementation through efficiency, the effectiveness may be decreased due to
the competition among divisions for the centralised resources. Since providing more
resources for each department is unfeasible at the moment due to the cost reasons, the
current organisational structure can be identified as a drawback for the strategy
implementation in IKEA.
3.1.2 Organisational systems

In most organisations the route causes for many problems are the system deficiencies. IKEA
has to face the same situation as its control systems do not fit with its strategy. The IKEA
strategy encourages innovation while the control system discourages innovation, as control
and innovation are not mutually exclusive. Therefore the control system in IKEA is another
drawback for strategy implementation.
3.2 Appropriateness of the leadership style in IKEA

"Leadership is the art of getting someone else to do something you want done because he
wants to do it." (Eisenhower)
The leadership can be the path to success for an organisation whereas it can be the path to
failure for another. There’s no doubt that the leadership of Ingvar Kamprad was the key
success factor of IKEA, but it should be taken into account that the style of the leadership is
subjected to change when the strategy is changed, to facilitate a successful implementation

of the strategy.
The main leadership activities are direct action, managing people and managing
information, but there’s something special in IKEA, which is the leading by example. As an
example, at IKEA frugality is not limited to the organisation’s red tape. The top management
including the CEO is practising it in the real life to be examples for lower level staff members
to follow. “It helps that frugality is as deeply ingrained in the corporate DNA as the
obsession with design. Managers fly economy, even top brass.”
3.2.1 Levels of leadership

The CEO, board of directors, top management team and significant managers are the four
levels of leadership in IKEA. According to Collins, there are five levels of leadership in an
organisation and the contribution of each level is critical for the successful implementation
of the strategy. (Appendix 10)
3.2.2 The qualities of successful leadership

 Having a strongly held vision
 Communicating that vision
 Converting that vision into reality
3.2.3 Ingvar Kamprad’s leadership style (Appendix 08)

 Leadership by example
 Highly task oriented
 He considers wasting resources as a moral sin
 More towards democratic leadership
 Always goes for the economy class in flights
 Writes both sides of the paper

 He doesn’t have his own office room and he always stands out among other corporate
executives
 Always think from both the employee and customer perspective before spending money
 He always tries to go for the best deal possible when purchasing products and services
for the business as well as for his personal use
 He also abided to the rules and regulations of his own company
 His vision is one with no limits and he always dreams for more

4.0 Key success factors

 Continues development of contemporary new designs
Continuous innovation is a key success factor for IKEA because innovation plays a vital role
when it comes to differentiation as well as cost reduction. Therefore superior innovation is
the number one key success factor for IKEA.
 The hybrid strategy
IKEA’s hybrid strategy is the second important key to success. Though there’s a risk of
drifting into the stuck in the middle situation, successful implementation of the hybrid
strategy will allow IKEA to minimise the threats of new entrants as well as the threat of
other rivals in the industry.
 Continuous reduction in costs and prices
IKEA’s value leveraging technique is another key success factor. Lowering prices across its
entire offering by an average of 2% - 3% each year, while having the best designers and the
latest technology, is something that their competitors can’t copy easily.
 Flat packed furniture
Though many people criticize this as a weakness, still it’s one of the main key success factors
of IKEA. Because, though anyone can design flat packed furniture nobody can do it like IKEA.
Since IKEA is having the best designers with them, they can design that furniture in a user
friendly way than any manufacturer.
 In store architecture
The IKEA store architecture is another key success factor for IKEA as it helps them to double
their sales. The ambience of the outlets also helps IKEA to add value to their products and
differentiate them from the competitors.
 Technology
IKEA use the technology to the maximum level to minimise the cost of their products.
Though having latest technology can be copied by the competitors, it’ll be a key success
factor as it helps to slash the costs of production.

5.0 Recommendation
5.1 The positioning of IKEA

The current positioning of IKEA is the low price furniture, but since its generic strategy is to
achieve the best cost provider status through the hybrid strategy, the positioning should be
changed from low price furniture to value for money furniture.
5.2 Strategic implementation

With the use of triple loop learning model (Appendix 13) IKEA can adapt the recipe, Strategy
development, strategy implementation and corporate performance by identifying the
preferences of its customers, level of motivation of employees, financial stability of the
organisation and the effectiveness and efficiency in operations.
Since the timber is the only major weakness that IKEA has, it’ll be recommended to make
use of its biggest strength, the creative designing team to overcome the issue.
It’ll be recommended to provide the customers video recorded instructions with the
product and upload those instructions to social networking sites. Through that IKEA can
reduce the cost of advertising, printing and can increase the customer satisfaction by
identifying and satisfying their needs before the competitors. As the threats in the
ecological environment have the potential of becoming serious issues, it is advisable to use
the strength of the designing team to come up with suitable, feasible and acceptable
solutions beforehand.
It’ll be recommended to have backup plans if the company drifted into the suck in the
middle situation due to the hybrid strategy. But, do not try to change the strategy as it’s one
of the major sources of IKEA’s competitive advantages.
5.3 Change the organisational structure

The current divisional structure is a drawback for IKEA when looking at its disadvantages.
Therefore it’s recommended to implement the network structure instead of divisional
structure. Mckinsey’s 7s model (Appendix 11) will be useful when changing the
organisational structure, because all the other 6s in Mckinsey’s 7s model should be changed
along with the structure.

5.4 The winning wheel framework (Appendix 09)

When it comes to strategy implementation, IKEA should follow the elements in the winning
wheel framework such as balanced everything, adapt rapidly etc for a better and productive
implementation of the strategy.
5.5 Diversification
IKEA can diversified through backward integration and try to produce timber for themselves.
It’ll help them to reduce their raw material costs further as well as to get rid of the bottle
neck in timber supply.
5.6 The paradigm shift

If the loop 2 (Appendix 13) which is the strategy development is unsatisfactory, IKEA will
have to abandon the old recipe and adopt a new one. This paradigm shift should be based
on the cultural web elements (Appendix 14). The new paradigm will be based on the taken
for granted assumptions of IKEA.

6.0 Conclusion
The main purposes of this assignment is to analyse and identify the IKEA’s current strategic
choices, identify the barriers and issues for implementing the strategies and recommending
some strategic initiatives and areas for improving the strategy implementation for IKEA.
To identify the current strategy the five questions were taken into account. After identifying
the current strategy, the issues for implementation of the strategy were identified through
analysing the IKEA’s organisational structure and leadership styles. Some recommendations
were proposed after identifying the key success factors for IKEA, which will be useful for
improving the IKEA’s strategy implementation.

7.0 References
(n.d.). Retrieved September 26, 2010, from Profex:
http://www.profex.co.uk/images/pdf%20files/Foundation/44BOP04Specimen.pdf
About us. (n.d.). Retrieved 08 07, 2010, from www.ikea.com:

http://www.ikea.com/aboutus/
Eisenhower, D. D. (n.d.). What is leadership? Retrieved September 25, 2010, from Mind
Tools: http://www.mindtools.com/pages/article/newLDR_41.htm
Hubbard, G., Rice,J., & Beamish, P. (2008). Strategic Management: Thinking, Analysis, Action
(3rd ed.). NSW: Perason Education Australia.
Welcome to The Times 100. (n.d.). Retrieved 08 11, 2010, from www.thetimes100.co.uk:
http://www.thetimes100.co.uk/case-study--swot-analysis-sustainable-business-planning--
110-368-2.php
Suuronen, H. Z. (n.d.). Leader of the future. Retrieved September 27, 2010, from Henric
Suuronen: http://www.henricsuuronen.com/portfolio/leaderfuture.pdf
Zakomurnaya, E. (2007, April 03). Ingvar Kamprad, Founder, IKEA. Retrieved September 27,
2010, from Good 2 Work: http://www.good2work.com/article/3391

8.0 Appendices
Appendix 01 – About IKEA
IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was
founded in 1943. Today it is the world's largest furniture retailer, recognised for its
Scandinavian style. The majority of IKEA's furniture is flat-pack, ready to be assembled by
the consumer. This allows a reduction in costs and packaging. IKEA carries a range of 9,500
products, including home furniture and accessories. This wide range is available in all IKEA
stores and customers can order much of the range online through IKEA’s website. There are
18 stores in the UK to date, the first of which opened in Warrington in 1987. (Welcome to
The Times 100)
Vision: The IKEA vision is to create a better everyday life for the many people. (About us)
Mission: Offering a wide range of well-designed, functional home furnishing products at

prices so low that as many people as possible will be able to afford them. (About us)

Appendix 02 – SWOT Analysis
Strengths
 The IKEA culture itself is strength for IKEA as it supports the IKEA’s competitive position.
The culture and the method of packing the furniture (flat packed) are huge strengths
which helps the company to reduce their operational costs (value leveraging).
 The IKEA brand itself is strength for IKEA. It’s a world renowned brand for low price
quality furniture. “Awareness of our brand is much bigger than the size of our company”
– CEO, Anders Dahlvig.
 When IKEA was leveraging value, all the costs were reduced except the designing cost.
IKEA increased the cost of designing rather than reducing it. Today IKEA has the best
designing team; they are the dominant factor of IKEA’s success.
 Successfully implementing the hybrid strategy without drifting into a stuck in the middle
situation has created an unique strength for IKEA which can’t be easily imitated by the
competitors
 IKEA’s price reduction strategy is strength for the company as the competitors cannot
beat the price of IKEA since it’s slashing off 2 – 3 percent from overall prices in every
year.
Weaknesses
 The main row material, timber is the bottle neck in IKEA’s operations. Even the high
timber prices are also a huge issue for IKEA.
 Niche market – the minimalist design doesn’t appeal to everyone.
 Product and style selection is limited.
Opportunities
 Low inflation rate will be an opportunity for IKEA as it’ll maintain constant prices for raw
materials.
 Holding hands with EU will create opportunities for IKEA, as it allows the company to
buy raw materials and labour from members of EU without any extra tax.

 Developments in machinery will be an opportunity as the improved machinery can

increase the productivity and reduce the unnecessary costs.
 Since IKEA is having its own web site where the customers can do online shopping, the
preferences over online shopping activities will be an opportunity. It will also help IKEA
to reduce the cost of outlet maintenance.
 Emergence of social networking sites such as face book and YouTube will create
opportunities, as it’ll help IKEA to cut down its advertising expenditure.
 Low level of bargaining power of customers and suppliers will be an opportunity as IKEA
can retain them at a lesser cost.
Threats
 High taxation can create threats for IKEA as it can increases the overall cost which
conversely affect the furniture prices.
 Preferences over paperless processes can create a threat for IKEA, as the company is
giving the catalogues and furniture building instructions in printed form.
 Deforestation will be a huge threat for IKEA as its main source of raw materials is timber.
 Higher level of industry rivalry can be a threat for IKEA as they might have to sacrifice
their profit margins to beat the competition.

Appendix 03 – TOWS Matrix
Figure 3.1
Internal factors Strengths (S) Weakness (W)
 Hybrid strategy  Poor timber supply
 Latest technology  Targeting only value

conscious buyers
 The brand name
 Limited options for
External factors  Designing team customers
Opportunities (O)
 Low inflation
 Holding hands with EU

Use the technology to cater Use the relationship with
 Emergence of social the need of online shopping the EU to increase the
and social networking. timber supply.
networking
 Preferences over online

shopping
Threats (T)
 High taxation
Identify new materials that
Use the designing team to
 Preferences over develop new styles that
can replace the timber to
overcome the poor timber
paperless processes consume lesser timber to
supply and the
face the deforestation.
deforestation issue.
 Deforestation
 Increasing competition

Appendix 04 – Porter’s Generic Strategies
Competitive Advantage
Low Cost Differentiation
Cost Leadership Differentiation

Broad
IKEA
Competitive Best Cost
Scope Provider
Narrow Differentiation
Cost Focus
Focus
Figure 4.1
Cost Leadership:
The product will be manufactured at a cheaper cost than the competitors. Only one firm can
be the lowest cost provider in an industry.
Differentiation:
The product is different from the competitors’ products. Product quality, brand name,
product innovation etc help organisations to differentiate themselves from the competition.
Cost Focus:
Cost based competitive strategy for small or niche market.
Differentiation Focus:
Differentiating the products for a small or a niche market.
Best Cost:
Combination of low cost and differentiation, but not lowest cost or highest differentiation.

Appendix 05 – Ansoff’s Growth Matrix

Market
Figure 5.1
Existing New
Existing Market Market

Penetration Development
Product
New Product
Diversification
Development
Market Penetration:
 IKEA is running sales promotions to penetrate the market and customers are pretty
much attracted to those.
 Many facilities are provided in IKEA stores to make shopping at IKEA a leisure activity
and through that the company is expecting more sales from the customers.
 Cross trading also allows IKEA to penetrate the market by getting more from the existing
customers.
Market Development:
 IKEA is continuously expanding to new geographical markets and there are 226 stores in
Europe, Asia, Australia and US, 19 are set to open in next year; 2006.
Product Development:
 IKEA is continuously developing new products cheaper and cheaper to cater the needs
of their customers.
Diversification:
 IKEA has diversified from the retailer status to the manufacturer (backward integration).

Appendix 06 – Value Chain Analysis
INFRASTRUCTURE
HRM
TECHNOLOGY DEVELOPMENT
Profits
PROCUREMENT
Inbound Operations Outbound Marketing Services

Logistics Logistics & Sales
Figure 6.1
Inbound logistics  Storing them in the warehouse

 Transportation of Timber to the  Updating the inventories
factory
 Storing timber Marketing and sales
 Quality check  Labelling and positioning the furniture
in the outlets.
Operations  Pricing the furniture
 Machining timber  Advertising and sales promotional
 Assembling activities
 Painting and polishing  Hybrid strategy
 Quality checking
 Flat packing with installation Services
instructions  Giving installation instructions
 Changing and repairing faulted items
Outbound logistics  Handling customer complains
 Transporting the flat packed furniture
to outlets.

Appendix 07 – Structure and Systems

IKEA’s organisational structure
Figure 7.1
IKEA
Org. Size
Maturity
Stage
Shakeout
Stage Declining
Stage
Growth
Stage
Introductory
Stage
Org. Life
Simple Functional Divisional SBU Matrix
structure structure structure structure structure
IKEA is in the Shakeout stage, which is just before the maturity and it has a divisional or
product base structure.
Figure 7.2
Source: http://stevenclark.com.au/wp-content/uploads/2008/06/d.gif
Advantages of divisional structure:

 Clear managerial accountability for each division as a profit/investment unit
 Encourages sensitivity to region/product-specific demands and opportunities
 Efficiencies and economies of scale available from centralised functions
 Co-ordination available from centralised strategic planning and control

Disadvantages of divisional structure:

 Potential fragmentation of overall objectives and markets
 Potential conflict between central management generalists and divisional specialists
 Potential competition between divisions for centrally allocated resources
 Units may not be large enough to support managerial overheads
(Profex)
Mintzberg’s six structural components
Figure 7.3
Systems
Different types of systems in an organisation:
 Operating systems
 Information systems
 Control systems
 Financial & budgeting systems
 Decision making systems
 Reward systems

Appendix 08 – Leadership style of Ingvar Kamprad

Ingvar Kamprad uses the leading by example method. Kamprad has made it clear that
continuous cost cutting in all business areas and activities is a top priority. To underline the
importance of this activity and setting out an example for the staff Mr. Kamprad is known to
always fly economy class and also despite his considerable wealth drive around in a very old
Volvo car. As a result of this all IKEA managers are known to be very cots conscious which in
turn cascades to all levels throughout the organization. By setting an example Kamprad is
able to save millions in travel costs and unnecessary expenses. (Suuronen)
Kamprad's vision has always been the driving force of the IKEA's success. He believes that
the company exists not just to improve people's lives, but to improve the people
themselves. The core of the IKEA idea is "democratic design": the trinity of attractive form,
inexpensive production, and high function. That idea, combined with what Kamprad calls
"the underdog's obsession with always doing the opposite of what others were doing,"
propelled him along a path of constant innovation and experimentation.
"We are a concept company," used to say Ingvar Kamprad. IKEA's concept is articulated in a
document drafted by him in 1976: "a furniture dealer's testament." It outlines a set of nine
commandments including perpetuation of the "IKEA spirit" of enthusiasm, thrift,
responsibility, humbleness, and simplicity; and "always asking why we are doing this or that
. . . refusing to accept a pattern simply because it is well established."
Striving for being as egalitarian as his brand, Kamprad insists on flying economy class, taking
the subway to work, driving a 15-year-old Volvo and encouraging IKEA employees to write
on both sides of a paper. He also asserts that his home is furnished mostly with IKEA
products. Kamprad also has been known to visit IKEA for a cheap meal and to buy Christmas
presents in the post-Christmas sales.
Kamprad has been extremely shrewd in creating IKEA's organizational structure. In 1982 he
established an intricate system of foundations, trusts, and holding companies to avoid high
taxes and ensure that IKEA could not be broken up by family fighting. Rather than face the
prospect of watching his life's work destroyed by a succession battle among his three sons,
Kamprad split the company in three, restricting his children's ability to change his vision

fundamentally. He has repeatedly resisted pressure to take the company public, feeling that
it would slow its decision-making processes that have allowed its phenomenal growth.
(Zakomurnaya, 2007)
Concern for
People Participative Team based
leadership style leadership style
Ingvar Kamprad
Directive
leadership style
Concern for
Figure 8.1 Task
Appendix 09 – Winning Wheel
Figure 9.1

Appendix 10 – Collins’ five levels of leadership
Figure 10.1
Source: http://blogs.southworks.net/vfugante/files/2008/09/image16.png
Appendix 11 – Mckinsey’s 7s model
Figure 11.1
Source: http://www.valuebasedmanagement.net/methods_7S.html

Appendix 12 – Bowman’s Strategy Clock
IKEA
Figure 12.1
Source: http://www.marketingteacher.com/image/content/bowmans_lesson.gif

Appendix 13 – Triple Loop Learning
Paradigm Development Corporate

Implementation
(Recipe) of strategy performance
Efficiency
improvement
Single loop
Effectiveness improvement
Double loop
Overall Change (Change the recipe)
Triple loop
Figure 13.1

Appendix 14 – Cultural Web
Source: http://www.mindtools.com/media/Diagrams/CulturalWeb.gif

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Assignment 02 : IKEA STRATEGY IDENTIFICATION AND IMPLEMENTATION

ECU 10201793 | Chamara Sampath Amarasinghe 1

ECU 10201793 | Chamara Sampath Amarasinghe 2

1.0 Introduction ............................................................................................................... 5

2.0 Current strategies of IKEA ........................................................................................... 6

2.1 Does the organisation plan to grow? ....................................................................... 6

2.2 What products and services does it plan to produce? ............................................. 6

2.5 What position does it plan to hold in the future? .................................................... 6

3.0 Issues of strategy implementation in IKEA .................................................................. 7

3.1 Appropriateness of the structure and systems in IKEA ............................................ 7

3.1.1 Organisational structure .................................................................................. 7

3.1.2 Organisational systems .................................................................................... 7

3.2 Appropriateness of the leadership style in IKEA ...................................................... 7

3.2.1 Levels of leadership ......................................................................................... 8

3.2.2 The qualities of successful leadership .............................................................. 8

3.2.3 Ingvar Kamprad’s leadership style (Appendix 08) ............................................. 8

4.0 Key success factors ................................................................................................... 10

5.0 Recommendation ..................................................................................................... 11

5.1 The positioning of IKEA ......................................................................................... 11

5.2 Strategic implementation ...................................................................................... 11

5.3 Change the organisational structure ..................................................................... 11

5.4 The winning wheel framework (Appendix 09) ....................................................... 12

5.5 Diversification ....................................................................................................... 12

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5.6 The paradigm shift ................................................................................................ 12

6.0 Conclusion ................................................................................................................ 13

7.0 References ............................................................................................................... 14

8.0 Appendices ............................................................................................................... 15

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As a management consultant, I have previously identified the strength, weaknesses,

“Business strategy is the link between environmental demands (including customers’

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2.0 Current strategies of IKEA

2.1 Does the organisation plan to grow?

2.2 What products and services does it plan to produce?

The main objective is to provide an unmatchable service and product quality at an

2.3 What customer and geographic markets does it plan to service?

2.5 What position does it plan to hold in the future?

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3.0 Issues of strategy implementation in IKEA

3.1 Appropriateness of the structure and systems in IKEA

3.1.1 Organisational structure

3.1.2 Organisational systems

3.2 Appropriateness of the leadership style in IKEA

subjected to change when the strategy is changed, to facilitate a successful implementation

3.2.1 Levels of leadership

3.2.2 The qualities of successful leadership

 Communicating that vision

 Converting that vision into reality

3.2.3 Ingvar Kamprad’s leadership style (Appendix 08)

 Highly task oriented

 He considers wasting resources as a moral sin

 More towards democratic leadership

 Always goes for the economy class in flights

 Writes both sides of the paper

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 He also abided to the rules and regulations of his own company

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4.0 Key success factors

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5.1 The positioning of IKEA

5.2 Strategic implementation

5.3 Change the organisational structure