Integrative Case 3.0



Integrative Case 3.0

IKEA's Organizational design elements

The founder of IKEA, Ingvar Kamprad values the hard work, vision and goals of people behind organizational success. He believed in the abilities and talents of people. He was heavily inspired by the true spirit and free will of people of Sweden that is visible in the success of IKEA. He adapted the same traits and laid the base of his organization. These traits and approaches gradually became crucial elements of organization design of IKEA. Kamprad had a vision and mission of serving others and fulfilling the basic needs of humankind. This approach is visible in his business conduct and functions till today. He began operating his business at the age of 17 in 1943. Initially IKEA has been using a regional milk delivery system as a source of distribution. However, with the passage of time, Kamprad designed a model of vertical assimilation. It was aimed at uniting variety of suppliers under Ikea's brand name. It helped IKEA in making plans and coordinating long run projects, making schedules, and monitoring distribution activities (Anonymous, 2011).

The organizational structure was further modified in 1964 by the introduction of the very first warehouse that eliminated the additional step of product distribution. Initially Ikea used to apply a flat box approach in product distribution process, but this approach was modernized to sale of unassembled furniture items. The company had an edge in terms of the distribution process as it owned a unique corporate supplier relationship at a lower cost. The company achieved this success by approaching various Scandinavian manufacturers to ensure long term production runs.

This factor helped the company in setting an example for the rest of the business world that long term success is achievable without owning factories. The company outsources major portion of the manufacturing process. It makes usual contracts with suppliers for short term only. It facilitates ikea to adjust the supply as per the demand of consumers in the market. Ikea has bargaining power over suppliers, and suppliers offer lower cost in order to compete with each other.

The company possesses indirect control over suppliers. The company has around 1300 suppliers in 53 countries. The company gradually expanded its operations as the needs of people in Scandinavian countries grew with respect to housing and furniture. The company began to construct readymade floors and delivered directly to sites. These factors contributed in the frame of Ikea, and it began to be recognized by the slogans of lower prices and ease. The founder of Ikea created a lifestyle model to attract the attention of customers and affect their habits and preferences strongly. Kamprad valued his employees and referred to them as co-workers and emphasized upon the strength of togetherness and unity at work.

The organizational structure of the company was heavily dependent upon the core values of the Ikea, and it had not much space for cultural and corporate change. Kamprad even after retirement is a senior adviser to board members. The organizational structure of Ikea is ...