Decision-Making for Managers in IKEA - Case Study Example

Decision Making for Managers in IKEA Student’s Name: Institution: Date: Decision Making for Managers in IKEA IKEA is a retail company which was founded in 1943 in Almhult, Sweden by Ingvar Kamprad. The firm operates in Europe, Asia and North America and employs more than 120,000 workers. The firm’s headquarters are in Leiden, Netherlands and it mainly deals in furniture, home items and other consumer products. The firm is one of the strongest retail brands in the world because its management focuses on continuous product innovation and cost cutting strategies. The firm’s managers rely on management control theories which have made the firm more competitive in markets it operates in (Pride & Ferrell 2010). In effect, this approach has enabled the firm to implement organisational learning strategies which have enabled its employees to acquire new skills. IKEA’s human resource management practices have increased the firm’s competitiveness in the global retail sector. The firm’s internal organisational values help it attract highly qualified workers who are competent in various disciplines. The management has instituted strong cultural control practices that appeal to workers from different cultural backgrounds. Workers are included in decision making processes and they collaborate with managers to come up with positive ideas for organisational improvement. As a result, IKEA’s internal and external processes have become more efficient. Increased quality systems which have been introduced by the management enable workers to focus on delivering high quality output in their duties (Pride & Ferrell 2010). Therefore, workers are more diligent in their duties because they are motivated by their managers to perform well. All workers and their managers understand specific objectives which have been set in the firm. They are also encouraged to set their own goals to make them have a strong inner drive to succeed. The firm offers a positive work environment with a lot of opportunities for career growth, which motivates employees to work harder. Since the firm has operations in different parts of the world, its employees are encouraged to embrace ethnic, cultural and religious diversity. Cross –cultural human resource practices enable managers to understand the backgrounds of different employees working in its retail stores in different locations across the globe (Bhatia 2008). Therefore, IKEA managers understand how to get the best out of employees working under them to enable the firm to attain its objectives in the industry. They are able to allocate time for different activities to suit the lifestyles of the firm’s workers to ensure they register good results. The design chosen for IKEA stores enables customers to view and select products they are interested in quickly. Many of its stores have a one way layout which enables customers to have a good view of the entire floor they are shopping on quickly. There are other detours in the floor plan which allow customers to divert to other showrooms displaying smaller items. Therefore, the firm offers its customers a positive shopping experience whenever they visit any of its retail stores in different parts of the world (Bhatia 2008). Customers are able to shop in a relaxed atmosphere and this makes them have positive attitudes about the firm. The stores are spaced out leaving room for customers to explore different items being sold easily. Managers have chosen a design approach that makes it easy for customers to interact freely with its employees. Many stores are located from far from the city centres due to land constraints. The management have also instituted strong accounting controls that enable stores in different locations to share information about important processes easily. As a result, supply chain systems are efficient and this enables the firm to source and sell its products to customers within a short period of time (Thompson & McHugh 2009). Most stores operate on a 24 hour basis to ensure restocking processes do not interfere with customers’ operations during peak shopping periods. For instance, the firm’s retail outlets in Saudi Arabia are open from 10 am to midnight every day of the week. The firm’s efficient human resource policies make it possible for employees doing night shifts to carry out maintenance work at night. This ensures all items are neatly arranged to enable the firm to handle large numbers of shoppers during the day. There are extra services which the firm provides in its stores which encourage improve customers’ experiences. Every retail outlet has a separate section where parents can drop their children to play as they proceed with their shopping activities. As a result, this allows shoppers to explore different sections in the firm more comfortably without being distracted by their children. This shows that managers care about customers’ interests and have introduced additional service features which make customers value the time they spend while shopping in the store. The firm sells different food items in its restaurants targeting hungry clients who need to eat something after shopping (Verbeke 2009). As a result, customers get to enjoy different types of meals in these restaurants as they relax, before or after their shopping. The firm has managed to integrate different types of services in one location and this has increased the appeal of its brand in the market. IKEA managers’ decision to observe good environmental practices in their operations has helped the firm to raise the profile of its brand in the market. Since 1992, the firm has implemented an effective environmental policy. There is a specific program that is used to train managers on good environmental practices to enable them to transfer these values to employees working under them in different workstations. In the past, the firm sold products which contained components of formaldehyde. This component is toxic and has a negative effect on the health of people who get exposed to it in different environments. As a result, the firm has reduced its usage of these chemical in its products (Verbeke 2009). IKEA has instituted action control theories which guide the manner it conducts operations in different markets it is involved in. In essence, the firm now observes sustainable management practices and this has helped it build a strong reputation in the market. The firm has implemented high standards to ensure its products do not pollute the environment when they are disposed. Its distribution and logistics processes take note of global warming challenges in different environments where its products are sold. It also purchases raw materials from suppliers who demonstrate that they are willing to observe good environmental practices in their operations. This approach helps the firm to reduce harmful practices that are detrimental to the conservation of the environment (Gilmore & Williams 2009). In some countries, the firm tries to reduce its dependence on intensive energy processes which have a negative impact on the environment. Some of the stores open plans make use of natural light during the day to reduce the amount of electric power used. As a result, this approach has helped the firm to optimise its internal processes to make them more responsive to good environmental practices. IKEA has implemented strong policies that guard against the use of formaldehyde in its products. Formaldehyde is used to bind components of furniture which the firm sells to its customers. The chemical is also used in textiles and adhesives. The firm has implemented good working practices to reduce the level of exposure by its workers to these toxic substances. As a result, this has helped the firm to safeguard the health and safety of its employees. The firm is also phasing out the use of some products which have long term negative effects on the environment (Shea & Solomon 2013). The use of PVC as a packaging material in furniture, lamp materials and other textiles is being replaced with other materials which are biodegradable. The firm has is also phasing out the use of acidic lacquers in favour of ultraviolet and water based alternatives. This approach has ensured products which are sold by the firm in the market have fewer components of harmful materials. Managers’ decision to begin recycling of different products in the firm has served it well in the market. As a result, the firm produces chairs and other furniture from recycled plastic waste. The firm has also produced a wide range of innovative products in the market which are less costly to produce. It sells air inflatable furniture to its customers which have reduced costs incurred in purchasing framing and stuffing materials. In effect, this has helped the firm to increase the appeal of its products in the market. The company actively encourages its clients to bring back different forms of waste to boost recycling efforts (Shea & Solomon 2013). The firm’s stores in Sweden have their own recycling plants which ensure all plastic items are reused to minimise their harmful impacts on the surrounding environment. As a result, the firm has been able to keep its operating costs low and this has increased its competitiveness in the market. The firm has strong relationships with its customers. Managers have implemented policies which encourage customers to get involved in different efforts that are meant to improve the quality of the firm’s operations in the market. The firm’s stores in Switzerland allow customers to return old furniture which is replaced with new furniture at an additional cost. This helps customers to save costs to ensure they do not dispose off products that can be reproduced to come up with new products. As a result, this enables the firm to reduce high costs incurred from purchasing new inputs for production (Mühlbacher, Leihs & Dahringer 2012). This has also enabled the firm to maintain strong customer loyalty in its products in the market. Customers are willing to make return visits to the firm to purchase different products that serve their needs effectively. As a result, the firm has been able to strengthen the value of its services in different markets it operates in. The company’s internal production processes are structured to satisfy different consumer needs in the market. As a result, the firm’s major decisions conform to prevailing customer attitudes and general market trends. Managers are more innovative in their approaches because they are able to influence workers under them to produce highly innovative products which are able to perform effectively in the market. In effect, the firm sells products in different markets which are able to serve consumers’ lifestyle needs adequately. The market orientation approach which has been adopted by the firm has made it become more competitive in the industry (Wagener 2008). This has helped the firm to restructure important processes within the value chain to improve the manner in which its products are sold to its customers. As a result, the firm has strong relationships with its suppliers who deliver different types of raw materials on time. Products which are sold by the firm offer a lot of convenience to customers. The firm products can be easily disassembled and repackaged in destinations they are being transported to. Therefore, consumers are able to package different components of the same product separately which are afterwards joined together after they have been delivered to their specific destinations. This approach helps the firm to improve the quality of service it offers to its customers. The firm has its own catalogue containing different products which are sold in its stores (Slater, Narver & McLachlan 2004). This catalogue helps the firm to document photos of various products it sells in the market to its customers. This reduces marketing costs which are incurred because many customers value information which is published through the catalogue. The firm’s catalogues are published in different languages and customers who are not able to access the print version can easily get the online version. The management also observes strong administrative control practices which have enabled the firm to institute effective planning methods in all its operations. As a result, the firm has been able to review its long term strategies to ensure they are responsive to the needs and expectations of customers in different locations. Customers are not charged any amount for the card which allows them to get discounts when they shop in the firm’s stores in several countries. Customers who own the card are also able to enjoy additional services in the firm’s restaurants for free. They are able to order for tea or coffee during weekdays at any IKEA restaurant. The firm is also involved in corporate social responsibility practices in different countries to uplift the welfare of poor communities (Baumann 2012). During the tsunami disaster, the firm’s Australian branch provided relief supplies to victims in Thailand, Vietnam and the Philippines who were severely affected by the disaster. The firm also contributed some items to help victims of the Pakistani earthquake which occurred in 2006. The firm has also been involved in various social initiatives meant to uplift the welfare of people living in different societies. The firm collaborates with UNICEF and Save the Children organisations by offering funds for different charitable activities. The firm contributes one euro to these organisations for every toy sold during the festive season. The firm has also offered to donate solar powered lamps in conjunction with UNICEF to poor communities which do not have access to electricity. As a result, this has improved the reputation of the firm in different markets it operates in (Baumann 2012). Managers have also been involved in the firm’s expansion plans to new markets. As a result, this has increased the appeal of the firm across the globe. In conclusion, IKEA’s management have managed to institute strong corporate practices which have strengthened the firm’s brand globally. Therefore, more consumers are willing to explore the firm’s stores to purchase different products that serve their needs. References Baumann, S 2012, IKEA and the psychology of shopping, Grin Verlag, Berlin. Bhatia, SC 2008, Retail Management, Atlantic Publishers, London. Gilmore, S & Williams, S 2009, Human resource management, Oxford University Press, Oxford. Mühlbacher, H, Leihs, H & Dahringer , L 2006, International marketing: a global perspective , Cengage Learning, Mason. Pride, WM & Ferrell, OC 2010, Marketing express, Cengage Learning, Mason. Shea, GP & Solomon, CA 2013, Leading successful change: 8 keys to making change work, Wharton Digital Press, Philadelphia. Slater, SF, Narver, JC & McLachlan, DL 2004, ‘Responsive and proactive market orientation and new product success’, The Journal of Product Innovation Management , vol. 23, no. 3, pp. 334-347. Thompson, P & McHugh, D 2009, Work Organisations: a critical approach, Palgrave Macmillan, Basingstoke. Verbeke, A 2009, International business strategy, Cambridge University Press, Cambridge. Wagener, D 2008, IKEA: competences and capabilities, Grin Verlag, Berlin. Read More