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.
IKEAs Global approach focuses on:

Simplicity
Attention to details
Cost consciousness
Responsiveness
Source of IKEAs Global Approach
Personal beliefs and values of its founder
Ingvar Kamprad , about how companies should
treat its customers and employees.
The core of Kampards management approach
are :Entrepreneurial , Frugal, hardworking
values.
All employees need to operate in no-frills, cost-
conscious way.
Every person who works in his global empire
plays a an essential role and has an obligation
to everyone else.
Kampards 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 IKEAs
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
IKEAs 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
IKEAs 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 IKEAs 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
IKEAs 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 IKEAs
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 IKEAs 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
IKEAs 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 companys 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 well-
made 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.