The cultural web - IKEA

Ikea Hybrid strategy:

Ikea recognised that it could achieve a high standard product, but at a low cost, whilst concentrating on building differentiation on the basis of its marketing, range, logistics and store operations (Johnson, Scholes & Whittington, 2005, p.249).

Power structures
The leadership beliefs in an inverted organisational pyramid, where the customer is at the top followed by staff, with top management at the bottom (Sancovich, 2002). The customer is put on top as they have the real power of what Ikea can and should sell. No one in Ikea flies first class is another aspect of the power culture within Ikea (Sancovich, 2002). This is part of the core beliefs of the leadership, as everyone in the organisation should be treated the same regarding of position. In general, Ikea uses an egalitarian leadership style, hence emphasise of getting rid of status and conventions. Even though Ingvar Kamprad is retired, he is still involved in the organisation he founded in 1943 (Allen, 2005). Hence, it is difficult to change the culture in the organisation as he is still pulling the strings. As all the employees is taught and trained the IKEA way, the desire and need for a cultural change is another unanswered question. How is power distributed in the organisation? What are the core beliefs of the leadership? How strongly held are these beliefs (idealists or pragmatists)? What are the main blockages to change?

Organisational structures
Even though Ikea is a large company with multiple divisions spread around the world, the organisation has a strong emphasis of having no hierarchy. Hence, informality and open communication lines between management and staff are an important competence for Ikea, which use this to continue its innovation in products (Sancovich, 2002). The structure itself encourage collaboration between everyone from cleaning staff to top management to keep maintaining Ikeas core competence of giving customers what they want at the right price. How mechanistic/organic are the structures? How flat/hierarchical are the structures? How formal/informal are the structures? Do structures encourage collaboration or competition? What types of power structure do they support?

Control systems
A good example of how much Ikea values its employees, is the Big Thank You event the 9th of October 1999. On this day Ikea gave away the days worldwide sales in form of an equal bonus to everyone working within the organisation. (Sancovich, 2002) There are intensive controls regarding suppliers and distributors, as Ikea is a multinational organisation facing competition from every angle. If one supplier is using operating unethically e.g. using child labour, Ikea is the one that is getting bad media coverage. To try to avoid this, Ikea is at all times trying to optimize the contracts they have with their suppliers so that these issues will not arise. Another aspect is the quality in Ikeas product range. What is most closely monitored/controlled? Is emphasis on reward or punishment? Are controls related to history or current strategies? Are there many/few controls?

Paradigm
Overall

Bibliography:
Sancovich, A. (2002) The IKEA Philosophy [Internet]. Available from: <http://www.johnson.cornell.edu/leadership/casestudies/IKEA.pdf> [Accessed 2nd April 2005]. Johnson, G., Scholes, K. & Whittington, R. (2005) Exploring Corporate Strategy Text and Cases. 7th ed. Prentice Hall. Allen, S. (2005) Ingvar Kamprad IKEA founder and one of the worlds richest men [internet]. Avaiable from: <http://entrepreneurs.about.com/cs/famousentrepreneur/p/ingvarkamprad.htm> [Accessed 12th April 2005].