Arab Open University

Faculty of Business Studies, KWB

T306A TMA- FALL 2016/2017

Please read these instructions carefully. However, contact your tutor in

case any difficulties with the instructions. You should submit your
completed assignment to your tutor no later than the due date, which
will be announced later.
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When you have completed each of your TMA, fill in an assignment form
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It is very important that you ensure that your tutor receives each
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meet the cut-off date for any of the TMA, please contact your tutor as
soon as possible to discuss your situation.
Plagiarism
You can score very well on this assignment using the materials
provided as part of the course. However, if you have access to other
sources of information such as reference books or the Internet, you
may find it interesting to look there for additional relevant information.
Very short extract from published sources may be included in context
but you should avoid copying significant amounts of text from other
authors. You should note that whilst the internet can provide lots of
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information much of it is not refereed and should be treated with

caution.
If you take material from the course or elsewhere and incorporate it in
your answer word-for-word, you must indicate where you have taken it.
Not to do so it termed plagiarism and is regarded as an infringement
of copyright. To attempt to pass off such work as your own is cheating.
You must therefore acknowledge all your sources of
information.
Plagiarism will lead to a loss of marks and extensive plagiarism could
mean that you fail this TMA. For more information about what
constitutes plagiarism or cheating, you should refer to the current
Assessment Handbook.
General
There are three questions in this TMA at the end of this case study. You
should answer them all. You should notice the mark allocations for
each question and allocate your effort accordingly. Appropriate use of
diagrams is expected throughout the TMA.
Read the following case and then answer all the questions that follow:

IKEA
IKEA started in Sweden over 50 years ago with one mans vision.
Ingvar Kamprad, the founder of IKEA, asked the questions:

Why are nice homes only possible for people with a lot of money?
Why should none be able to afford a nice, functional home?
Why does furniture have to be so expensive?
Why is there no one offering a wide range of home furnishing
articles of good form and function at prices so low that the many
people can afford them?

Ingvar Kamprad wanted to help create a better everyday life for the
people in the area of Sweden where he lived. He was brought up in a
farming community where ordinary people were struggling to make a
living out of stony fields and limited resources.
Nothing could be taken for granted and survival meant hard work,
ingenuity and working together. Ingvar Kamprads desire to help
ordinary people founded the basis of a strong company culture, which
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has helped to make IKEA so successful. It is not surprising that IKEA

comes from Sweden - a country that has long been famous for the way
in which it cares for its citizens. In a recent IKEA publication,
Democratic Design, the concept of giving everyone the same
opportunity in life is set out in the following way:
..Everyone who has grown up in Sweden has learnt - either from their
Dad, or from society in general - people who are not all that well off
should still be given the same opportunities as people who are. Its
hardly surprising that, as a Swedish company, IKEA espouses Swedish
values.
Creating an anti-brand
The IKEA concept was a revolutionary one, which was well ahead of its
time.
Essentially, IKEA has built an anti-brand, which stands for the good of
the many people rather than a narrow group of shareholders. IKEA
began with the question: Who is on the side of the customer?
From this stemmed a corporate philosophy, which asked two further
questions:
Isnt there room for an anti-brand that stands for low price, high
quality and innovation? Isnt there room for an anti-brand that stands
for the benefit of everyone?
High quality at affordable prices
In order to realize the aims of his business idea, Kamprad needed a
way of designing which would make it possible to maintain high quality
standards, while at the same time making reductions in price. The
solution he came up with was based on common sense and a respect
for the customer. He carried out detailed research in the different life
stages and the needs of customers at each stage (e.g. setting up home
for the first time, raising a young family, retiring etc.). From this, he
was able to calculate what customers would be able to afford, while
still having some money over.
Then he sourced the right materials and the production units, which
had the expertise and capacity to produce goods economically. In
many cases, he approached producers who were not part of
mainstream furniture manufacturing. For example, a shirt
manufacturer may well be suited to producing loose covers for settees
and beds.
Large IKEA stores were built on the outskirts of towns where rates were
cheaper and people could park easily.
The furniture was sold in flat packages which saved space and allowed
for ease of handling and transport.
Finally, Ingvar Kamprad built his business on the philosophy We do a
little, you do a little, together we save money which meant that the
customer became part of the production process. The DIY idea
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was refined and put into operation on a large scale. All this allowed for
long production runs, which provided economies of scale and growth
whilst maintaining the quality of the finished products. Instead of
increasing the numbers of service personnel when the business grew,
he kept the numbers the same, reasoning that employing more people
would cost more money and this would make the products more
expensive (so that buyers would not be able to afford them).
The simplicity of the way of working is what makes IKEA successful.
The initial vision to create a better everyday life for the many people
is even more relevant today than it was 50 years ago.
IKEAs vision
A vision is the ideal or aim to which an organization and its people
work. The vision statement should answer the question Who is
IKEA? Having a clear vision enables an organization to enthuse its
employees, customers, suppliers and other important stakeholders.
Ingvar Kamprads vision, for example, was different and exciting
because it said that ordinary people mattered. Nowadays, many
modern organizations set out to create a corporate and a personal
vision for the people that work for the organization.
Today IKEAs corporate vision is that of A community of
professionals, constantly developing the skills necessary to create a
better everyday life at home for the many people.
This is translated down to a personal vision for IKEA employees:
I, as an employee at IKEA, can make a difference. I am able to help to
create something for the benefit of everybody, a better everyday life
at home.
IKEAs mission
Having created a clear vision, it is then necessary to translate the
ideas into a mission - i.e. a purpose which can be used as a clear
guiding principal for how the organization and its employees will be
able to achieve the vision. The mission statement lays out the direct
practical steps, which the organization and its employees will be able
to take to achieve its vision. With a clear mission, it is possible to set
out what the organization and its people need to do to secure
improvements in performance.
IKEAs mission is: To develop the skills of every IKEA employee, so
that they may become professionals in providing a complete range of
home decorating products of good form and function at a low price.
The mission for IKEAs employees is: I will gain the knowledge
necessary to develop myself and my skills so that my work and my life
are more meaningful.
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Developments of IKEAs corporate mission are reflected in the

companys businesses practices, which conveniently can be set out
under the mnemonic IKEA:
(I) INNOVATION: Discovering better solutions to reduce costs without
affecting quality, finding innovative production methods and materials.
(K) KNOWLEDGE: Existing within the business, incorporating 50 years
of history and home decorating practice throughout the world.
(E) EXPERIENCE: Existing within the stores, incorporating ideas,
inspirations relating to home decorating solutions.
(A) ACCESSIBILITY: Availability of complete home furnishings at all
times at low, appropriate prices.
Todays business idea-democratic design
Today, IKEAs business idea has come some way since the earliest days
of Ingvar Kamprad. IKEA sets out its business idea in the following way:
To offer a wide range of home decorating articles with good form and
function, at prices so low that as many people as possible will be able
to afford them.
The three key dimensions of IKEA are therefore: Good FORM and
FUNCTION, at a LOW PRICE.
Most designers will accept the principle that the form of a product
depends on its function, e.g. the shape of a chair is determined by the
need for a person to sit comfortably on it. The product, which the
designers create often, incorporates two important dimensions- good
design and practical function.
Nevertheless, it is still possible to encounter form without any obvious
function. Sometimes beauty alone provides sufficient justification for
the existence of an object - it becomes art. In the same way, it is
sometimes possible to encounter function without form - a product is
so eminently well suited for its purpose that its appearance is of no
consequence.
In our homes, however, the best solution is almost invariably a
combination of both form and function. However, form and function in
harmony are only half the story.
Affordability also has an important part to play. Price is the third and
most critical dimension for those who seek to make good design and
practical function available to the many, not just the few. It is the
combination of form, function and a low price at the same time, which
makes IKEA products unique.
Illustrating the key dimensions The Oggla Chair
The best way to illustrate the concept of democratic design at IKEA is
to take a specific example. Form the Oggla Chair is inspired by
Thonets Vienna chairs and was first produced for IKEA at its Thonet
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factory. The chair was produced in formed wood and was light, strong
and beautiful.
Function - this was a typical example of a chair, which could be easily
stacked, fitted many styles, and was comfortable and elegant without
being extreme. Thanks to its lightness, it was easy to move and
handle.
Low price - this, however, was not enough for Ingvar Kamprad, who
commented, The chair is too expensive - we cant sell it in a flat
pack.
Designer Gilles Lundgren found the solution. A supplier in the USA,
together with the enthusiasts from Smaland in Sweden, found new
materials and production methods to make it possible. Today the chair
is made in recyclable polypropylene for use indoors and out. It comes
with a stool, an Ogglett, in many different colors and combines the
three dimensions of IKEA: form, function and a low price.
Meeting the needs of the consumer
Because IKEA is fundamentally concerned with serving the
requirements of the many people, the design process begins with
finding out what the consumer wants. IKEA therefore engages in a
continual cycle of market research to find out about consumer
lifestyles, what benefits consumers are seeking from a range of
household furnishings, what consumer perceptions are of existing
products and many other things. IKEA has always been conscious of
the importance of a detailed analysis of customer needs.
For example, because IKEAs primary market is the many people
rather than the privileged few, a prime concern of furniture design will
be to provide solutions for people who may live in small, compact
homes. The form and function of furniture designed by IKEA is thus
very much driven by the needs and requirements of consumers.

Achieving and maintaining low prices

IKEA continually strives to provide beautiful, practical furniture at a low
price. This means, for example, that IKEA designers work with
production unit suppliers to design furniture in a way, which makes the
most rational use of available production capacity. It means that
products are designed to be produced in environmentally suitable
materials that can be purchased at reasonable prices and that products
are designed so that customers can assemble them themselves at
home in order to save money.
IKEA purchasers travel the world to find the best possible
manufacturers at the lowest possible price, without undermining the
designers original idea or lowering the quality of the product. The
result is that design engineers are not frightened by the mathematics
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of making maximum use of materials and technology. It also means

that customers do not need a degree in engineering to put their
furniture together!
Meeting environmental standards
Nowadays, consumers demand that furniture design meets the highest
environmental standards. IKEA has responded to this consumer
demand and has set itself high standards, which mean that:

Manufacturing is carried out so that materials, technology and

transportation have the least possible damaging effect on the
environment
Raw materials are used rationally and waste is minimized.

Unfortunately, no manufacturing process is completely

environmentally friendly but at IKEA, a very strong emphasis is placed
on thinking and acting ecologically. For example by striving:

Not to consume resources at a rate faster than nature can

replace them
Not to use unnatural materials and substances
To preserve nature and its inhabitants
To refrain from dumping waste

Conclusion
This case study shows the importance and influence of vision within a
company. Ingvar Kamprads original vision has provided IKEA with a
clear set of goals and principles that have contributed enormously to
the success of the company. His vision to provide home furnishings of
good design and function at prices so low that the majority of people
could afford them has led to a company culture, which necessitates the
best practice in not only the design of its products but also the design
of the company structure and its systems.

Questions:

1. Apply the Hard Systems Method to this IKEA situation case,

including spry diagram in order to brainstorm, analyse and make
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suitable recommendations. Provide a detailed narrative

explaining your thinking process. (1500 words)
(50 marks)
2. What are the main insights or new understandings that you
gained from the application of HSM to the IKEA case study? (400
words) (15 marks)
3. What are the main criticisms of the Hard systems method? To
what extent do you agree with these criticisms? (400 words) (15
marks)
4. What is CATWOE? What do the letters stand for and how is this
tool used (based on the case study)? (400 words) (20 marks)

End of Questions