A critical examination of how the success of IKEA is supported by its organisational culture.
Presentation by: Mona E Thorvaldsen Kate Mulvana Joan Kawalewale Jodie Evans Tom A Trosterud
Agenda
About IKEA History Key Developments Organisational culture Cultural web Tools of analysis Conclusions
About IKEA
Global furnishing brand Founded by Ingvar Kamprad Brand name Unique organisational culture & leadership style Kamprads Philosophy Franchisees Market position & share
History of IKEA
1943 Founded: Individual sales 1945 First Advertisement 1951 New product ranges & catalogue 1953 Furniture exhibition 1958 First IKEA store 1963 - Expansion into Norway 1980s USA & Eastern European markets 1997 Internet
Maintaining
a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA concept
Ingvar Kamprad
Organisational culture
Shared norms, beliefs and values Leads to collective behaviour Segmentation of the organisational culture using the cultural web
Cultural Web
Stories Symbols
Routines and rituals
The Paradigm
Power Structures
Control System
Organisational structures
Routines
Company customs Production processes Distribution
Stories
Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Rituals
Rites Rites Rites Rites
of of of of
passage enhancement integration renewal
Stories Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Stories
Embedded in organisation Reminder of organisational values The IKEA stories
Entail
Kamprads philosophy and accomplishments
Stories Symbols Routines and rituals Power Structure s
The Paradigm
Control System
Organisational structures
Symbols
Symbols include acts, objects and Logos IKEAs symbolic action simplicity IKEA Logo Scandinavian heritage
Stories Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Power structures
Inverted pyramid No barriers Customer needs and preferences
Stories
Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Organisational structure
Flat structure Informality Open communication
Stories Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Control systems
Emphasis on a reward system Big thank you event
Stories
Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Paradigm
Strong corporate culture Swedish heritage Simplicity tradition Functional quality products
Stories Symbols
Routines and rituals
The Paradigm
Power Structure s
Control System
Organisational structures
Performance-enhancing cultures
Goal alignment High levels of employee motivation Better ability to learn from the past
Fit theory (Lorsch, 1976)
IKEA Strategy
Bowmans Strategy Clock Hybrid strategy
Low
DIFFERENTIATION price High IKEA Differentiation Hybrid
Low Price Low Price/Added value Low PRICE High Differentiation Focus Differentiation
How does IKEAs culture support production and distribution?
Emphasis on minimising costs Flat packaging - frugal beginnings Economies of scale
Large
scale organisation Highly standardised products
How does IKEAs culture support brand image?
The brand reflects: A strong focus on low cost and functionality Scandinavian style and values Poor customer service and long queues
How does IKEAs culture effect other aspects of success?
Learning from experience
Better
knowledge transfer
Globalisation
National
cultural differences
Hofstedes Cultural Dimensions
Small Power Distance/ Collectivist Large Power Distance/ Collectivist
Individualism Index
Mexico Japan Spain
Germany
Sweden
France
Small Power Distance/ Individualist
USA
Large Power Distance/ Individualist
Power Distance Index
(Source: Adapted from Harris & Moran, 2000)
How does IKEAs culture effect other aspects of success?
Learning from experience
Better
knowledge transfer
Globalisation
National
Planning
cultural differences
permission
Low cost = large scale retail
Conclusion
Strong consistent culture Link between culture and performance Synergy between culture and strategy Causality?
References
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