Today, the world business is increasingly high competitive and diverse. For any organization to succeed in the global market, it has to make necessary changes that will enhance its competitive advantage and as a result increase market shares and profitability. These changes range from finding new and meaningful methods to solution as well as differentiating is organizational structure. IKEA is a multinational company that sells ready assembled furniture, home accessories and appliances. This paper therefor examines IKEA current organizational structure and various changes it should undergo to achieve international expansion and innovation.
IKEA is a multinational company was founded in 1943 by Ingvar Kamprad. During the 1960s, IKEA discovered its business strategy of providing their consumers with a variety of stylish home furniture at an affordable price. To achieve this strategy, the company partnered with many of its customers in designing and producing the materials, whiles the customers given the responsibility of assembling the final product. As a result, grew very fast expanding its other first store in Norway in 1963. It further expanded its retail stores in many other countries including Switzerland, Germany, France, Australia, China, United Kingdom and the United States. IKEA runs the chain of stores through non-profit foundations, holding and operating companies. This kind of complex corporate structure was established partly in response to high taxation by the Swedish government.
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To examine IKEA current organizational structure, Henry Mintzberg The five Basic Parts of the organization will be used to analyze the significant role each part plays in the organization. In the Mintzberg’s theory, any multinational company must have a strategic apex as part of its organizational structure (Hultman et al. 2012). Strategic apex entails the people in charge of governing and overseeing the various functions of the organization. These people also ensure that objectives and the mission of the organization is reinforced in strategic planning as well as the needs of people are met. The CEO of 1KEA believes in three missions for the IKEA group. One of the missions is to ensure that the consumers are provided with high quality and affordable products( Kim, 2007) . Secondly, is to ensure that the company maintains a long-term access to natural resources by promoting recycling as well as preserving energy. The last mission is to ensure that people get better quality life and the communities surrounding IKEA. So as to ensure that the missions are achieved, the Chief Financial Officer of IKEA focuses on elaborating the supply and finance chain management to minimize the cost of goods distributed and manufactured throughout the long chain. Additionally, he has to ensure that the right pricing is done depending on the foreign exchange market to maximize their profits.
Below the top management, there are other middle line managers who help in the daily distribution of duties and tasks to the employees. Some such as the Human Resource Managers collect feedback on the performance of employees and submit it to their superiors. They can also make small decisions concerning the organization at the lowest level. At IKEA, the HRM, focuses on creating a workforce that is gender balanced in order to create a distinct corporate culture. Further, this helps in creating a working environment that is more skilled, innovative and diverse. Directors involved in the retail and expansion focus on observing what customers may need as well as discussing problems with workers for possible solutions.
Mintzerb theory also has an essential element known as technostructure. According to Hellström and Nilsson (2011), technostructure refers to experts in various fields that provide an organization with skills, knowledge and expertise on how to handle certain things. This kind of experts includes those involved in planning, control and personnel. In the current IKEA organizational chart, planning and control experts relates with the organizational structure. Steve Howard, who is the director of sustainability is involved in determining the long term plans of the organization. He has to ensure that the best strategies are utilized in maximizing the scarce resources. Moreover, he ensures that the company complies with international laws relating to manufacturing products that are environmentally friendly.
Support staff is another essential element of IKEA organizational chart. Support staff refers to individuals who provide the organization with extra assistant. In IKEA, the Range and Supply department works closely with the Retail and Expansion department in the supply and distribution of products efficiently and effectively ( Kim, 2007) . The communication corporate team helps in training the employees the organization culture occasionally. Therefore, the team is given the mandate of ensuring that the organization values, beliefs and missions are passed directly to the employees hence indirectly helping the organization achieve its objectives.
The operating core is the last element in IKEA organization chart. Unlike the supporting staff, the operating core works by providing direct support in the distribution of outputs, transformation and other input functions ( Jonsson, & Kalling, 2007). IKEA industry department is considered as the operating core of the organization because of the various activities it is involved in. The procurement department has to provide materials to it for production purposes. It transforms the raw materials into high quality products. Afterwards the products are given to the supply department for distribution. Despite the industry being the core of the company, it is important for all other departments to work effectively in order to promote the organization sustainability.
The organizational structure of IKEA. Source: www.ikea-group.ikea.com.
IKEA organizational structure is hierarchical where a large number of employees must report to each manager. While this kind of organizational structure has provides greater satisfaction to employees and greater levels of self-actualization, there are some challenges that may be associated with this kind of structure when it comes to innovation and development. To improve this, IKEA needs to strive in an organizational structure that enhances a network strategy in the following ways. One, IKEA needs to change its organizational structure by selecting direct suppliers and logistic partners. This kind of structural network is important because it will create both opportunities and restrictions undertaken by IKEA. This will enable the company achieve its main goal which is providing affordable high quality products to as many customers as possible. This is because the direct suppliers will be involved in mobilization more external resources as compared to the company going to look for the materials themselves. Moreover, this kind of network structure will ensure that there is smooth flow of products as well as development of new products ( Baraldi, 2008).
In order to compete with other fast growing companies, IKEA needs to clearly define the content of relationship between each department in the organization in terms of roles, trust and commitment. For example, IKEA can choose instead of having an interchangeable sub-supplier , it can have a first-tier unique supplier that will be given the responsibility of supplying large volumes of materials hence sustaining high trust and commitment( Baraldi, 2008). Additionally, when opening its China store, the organizational set up was different that it’s current one in order to meet the Chinese cultural tenets.
IKEA also needs to implement an organic organizational kind of structure. In this kind of structure there is high level of flexibility and the roles are decentralized. This is in contrast with its formal mechanistic structure where there is a high level of formality and the employees are given specific job descriptions outlining their roles and responsibilities. In this kind of structure the employees will have broader job descriptions hence performing duties depending on the needs of the organization at that time as well as their expertise. This will enable IKEA promote entrepreneurial behaviors hence promoting innovativeness in the organization. Thus, IKEA will be better placed to implement various changes that promote product development and technology. IKEA current organizational structure inhibits individual initiative as well as entrepreneurial development thus limiting it from implementing various changes.
In conclusion, IKEA is a multinational company that has a mission of providing its consumer with affordable stylish products. To continuously achieve this objective, the company has invested in a sustainable workforce, resources and product. By analyzing IKEA organizational structure chart, it follows a functional kind of organization structure that plays an essential role in ensuring that the strategic goals of the company are met. In addition, it ensures there is greater satisfaction of employees and high levels of self-actualization. However, to ensure innovation in the fast changing technology, various adjustments have to be done for the company to gain competitive advantage and echieve international expansion.
References
Baraldi, E. (2008). Strategy in industrial networks: experiences from IKEA. California management review , 50 (4), 99-126.
Jonsson, A., & Kalling, T. (2007). Challenges to knowledge sharing across national and intra-organizational boundaries: case studies of IKEA and SCA Packaging. Knowledge Management Research & Practice , 5 (3), 161-172.
Hellström, D., & Nilsson, F. (2011). Logistics-driven packaging innovation: a case study at IKEA. International Journal of Retail & Distribution Management , 39 (9), 638-657.
Hultman, J., Johnsen, T., Johnsen, R., & Hertz, S. (2012). An interaction approach to global sourcing: A case study of IKEA. Journal of purchasing and supply management , 18 (1), 9-21.
Kim, S. W. (2007). Organizational structures and the performance of supply chain management. International Journal of Production Economics , 106 (2), 323-345.
