Please read the case study illustrated below, and answer questions about it: “Innovation at IKEA” Redecorating and renovating have become the international pastime. In a post 9/11 world facing persistent terrorist alerts, more and more people are opting to stay home and make their homes safe havens. This phenomenon, coupled with lagging economies worldwide, has contributed tremendously to the success of IKEA – the Swedish home furniture giant. In the past 10 years sales for IKEA have tripled, growing from over $4 billion in 1993 to over $12 billion in 2003. Much of IKEA’s success can be attributed to its founder, Ingvar Kamprad. Kamprad used graduation money to start IKEA in the small Swedish village where he was born. He started off selling belt buckles, pens, and watches, whatever residents in the small local village of Agunnaryd needed. Eventually, Kamprad moved on to selling furniture. One day in 1952, while struggling to fit a large tale in a small car, one of Kamprad’s employees came up with the idea that changed the furniture industry forever – he decided to remove the legs. IKEA’s flat-pack and self-assembly methodology was born. It rocketed the company past the competition. “After that [table] followed a whole series of other self-assembled furniture, and by 1956 the concept was more or less systematized,” writes Kamprad. Kamprad is dedicated to maintaining the corporate culture he has helped define over the past 50 years. He is a simple man – his idea of a luxury vacation is riding his bike. He is fiercely cost-conscious and, even though his personal wealth has been estimated in the billions, he refuses to fly first class. He values human interaction above all, and, even though retired, he still visits IKEA stores regularly to keep tabs on what is going on where the business really happens. The culture at IKEA is a culture closely connected with Kamprad’s simple, farm-raised, Swedish roots. It is a culture that strives “to create a better everyday for the many people.” IKEA supports this culture by • hiring co-workers (IKEA prefers the word co-workers to “employees”) who are supportive and work well in teams; • expecting co-workers to look for innovative, better ways of doing things in vevery aspect of their work; • respecting co-workers and their views; • establishing mutual objectives and working tirelessly to realize them; • making cost-consciousness part of everything they do from improving processes for production to purchasing wisely to traveling cost effectively; • avoiding complicated solutions – simplicity is a strong part of the IKEA culture; • leading by example, so IKEA leaders are expected to pitch in when needed and create a good working environment; and • believing that a diverse workforce strengthens the company overall. The IKEA culture is one that resonates for many. The buildings are easy to identify – the giant blue and gold warehouses that resemble oversized Swedish flags are hard to miss. Millions of customers browse through the Klippan sofas and Palbo footstools (Nordic names are given to all IKEA products) in the stark, dimly lit warehouses. The surroundings may not be lavish and the service may be mostly self-service, but customers keep going back not just for the bargains, but to experience the IKEA culture as well. Required to answer: Problem 1. Discuss the three input components of the Congruence Model as they apply to success of IKEA. Problem 2. Consider Schein’s four key organizational culture factors. What examples can you identify within the IKEA organization that contributes to the company’s strong corporate culture? Problem 3. Based on the level of technological complexity and the degree of environmental uncertainty present at IKEA, what type of organizational structure would you expect?
Please read the case study illustrated below, and answer questions about it:
“Innovation at IKEA”
Redecorating and renovating have become the international pastime. In a post 9/11 world facing persistent terrorist alerts, more and more people are opting to stay home and make their homes safe havens. This phenomenon, coupled with lagging economies worldwide, has contributed tremendously to the success of IKEA – the Swedish home furniture giant. In the past 10 years sales for IKEA have tripled, growing from over $4 billion in 1993 to over $12 billion in 2003.
Much of IKEA’s success can be attributed to its founder, Ingvar Kamprad. Kamprad used graduation money to start IKEA in the small Swedish village where he was born. He started off selling belt buckles, pens, and watches, whatever residents in the small local village of Agunnaryd needed. Eventually, Kamprad moved on to selling furniture. One day in 1952, while struggling to fit a large tale in a small car, one of Kamprad’s employees came up with the idea that changed the furniture industry forever – he decided to remove the legs. IKEA’s flat-pack and self-assembly methodology was born. It rocketed the company past the competition. “After that [table] followed a whole series of other self-assembled furniture, and by 1956 the concept was more or less systematized,” writes Kamprad.
Kamprad is dedicated to maintaining the corporate culture he has helped define over the past 50 years. He is a simple man – his idea of a luxury vacation is riding his bike. He is fiercely cost-conscious and, even though his personal wealth has been estimated in the billions, he refuses to fly first class. He values human interaction above all, and, even though retired, he still visits IKEA stores regularly to keep tabs on what is going on where the business really happens.
The culture at IKEA is a culture closely connected with Kamprad’s simple, farm-raised, Swedish roots. It is a culture that strives “to create a better everyday for the many people.” IKEA supports this culture by
• hiring co-workers (IKEA prefers the word co-workers to “employees”) who are supportive and work well in teams;
• expecting co-workers to look for innovative, better ways of doing things in vevery aspect of their work;
• respecting co-workers and their views;
• establishing mutual objectives and working tirelessly to realize them;
• making cost-consciousness part of everything they do from improving processes for production to purchasing wisely to traveling cost effectively;
• avoiding complicated solutions – simplicity is a strong part of the IKEA culture;
• leading by example, so IKEA leaders are expected to pitch in when needed and create a good working environment; and
• believing that a diverse workforce strengthens the company overall.
The IKEA culture is one that resonates for many. The buildings are easy to identify – the giant blue and gold warehouses that resemble oversized Swedish flags are hard to miss. Millions of customers browse through the Klippan sofas and Palbo footstools (Nordic names are given to all IKEA products) in the stark, dimly lit warehouses. The surroundings may not be lavish and the service may be mostly self-service, but customers keep going back not just for the bargains, but to experience the IKEA culture as well.
Required to answer:
Problem 1. Discuss the three input components of the Congruence Model as they apply to success of IKEA.
Problem 2. Consider Schein’s four key organizational culture factors. What examples can you identify within the IKEA organization that contributes to the company’s strong corporate culture?
Problem 3. Based on the level of technological complexity and the degree of environmental uncertainty present at IKEA, what type of organizational structure would you expect?
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