Will We Still Love IKEA?

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Table of Contents

Introduction
The Case
Strategic Analysis of the Case
Revisiting the Case
Conclusion and Recommendations
List of References

Introduction

IKEA is a Swedish company that was started by a seventeen-year-old boy in 1943. This company specializes in the manufacture of home and office furniture. The company has experienced consistent growth, and is currently considered the world’s largest manufacturer and retailer of furniture.

A number of challenges in the local market have faced this company, but it has managed to counter these challenges successfully. IKEA has expanded beyond its local market in Sweden. This firm has established a very strong market in the United States and the entire Europe.

The firm is the largest retailer of furniture in the United States. Although some firms have offered it stiff competition in the American market, it remains the leading manufacturer and retailer of home and office furniture.

This firm is also one of the major employers in the United States and in the world. The firm has a large plant in Virginia. The locals were happy with the fact that the firm opened a branch in this city. This was a sign that there would be an increased source of employment to the locals.

The entry of this firm into this city also meant that the locals would be able to purchase the products at reduced prices. This was a reason good enough to warrant a celebration. The firm met the expectations of the locals. It offered job opportunities to the locals and the prices of the furniture in this region generally dropped.

The society benefited because of the incentives that this firm offered the society as part of its corporate social responsibility. The firm was fast becoming a darling to the Americans. However, not all was well after all.

The Case

The employees protested against the strategy adopted by the management. This resentment spiraled in March 2011 when employees went public about the discriminatory policies that the leadership of the firm employed in Virginia.

The labor laws in the United States clearly states that employees should be given opportunity to choose whether they would like to work overtime. In this firm, the choice is not in the hands the employees, but instead it is the responsibility of the management.

The management dictates whether an employee would work overtime or not. It becomes worse when employees are just informed of the overtime when they have just prepared to leave their offices. This has demoralized employees of this firm because they feel that they do not have the freedom to choose when to work overtime.

The management has also been accused of careless because it does not respect the wishes of employees. Moreover, the management is accused of frustrating employees in various ways. The management of the firm has been keen on crashing unions of the employees in its facility in Virginia.

Employees do not have a voice in the firm. They are expected to act as per the wish of the management. Any disagreement with company rules leads to serious consequences on the part of employees.

The treatment given to employees sharply contradicts that given to employees in Sweden, which is the home to this firm. There is clear evidence that this firm has double standards when it comes to treatment of its employees.

Although it took some time to realize this, it is now clear that this firm has a high regard towards some employees and not others. For instance, Anderson (2011, p. 88) observes that IKEA is one of the best employers in Sweden. Employees of this firm are allowed to have up to three fully paid leaves per year.

This is not the case in the United States. In Sweden, and a few other European nations, employees have the capacity to choose when to have overtime. This is not the case in the United States. It is also intriguing that this firm has been racially discriminative in some of its operative activities.

This has raised many controversies given the fact that the founder of this firm was associated with the Nazi movement in his youth. It is a reminder that this firm is as discriminatory as the action of the founder during the Nazi terror. The firm has also been accused of discriminating women.

In various firms in Virginia, women are always treated with concern, especially those who have young children. This may include releasing them early enough to be with their young children.

This is not the case at IKEA. The remuneration given by this firm to its American employees is below per when compared to other regions, especially the home market in Sweden. This firm faces other controversies in its operations in this country, as well as other countries around the world.

This is what raises the main question whether the firm will still be loved as before when these evils had not been revealed. Will the society still cherish the firm after all the revelations about its discriminatory policies?

Strategic Analysis of the Case

The case given above shows that IKEA has a huge responsibility of changing the perception of the society. The perception of the society is very important for a strong brand such as IKEA. In order to develop an understanding between the internal and external environment, the following SWOT analysis would be very important.

SWOT Analysis

SWOT analysis is one of the important tools that are very popular in analyzing a company. It helps in analyzing firms based on the existing internal and external factors. SWOT analysis would be very valuable in analyzing IKEA. In order to bring more understanding of the firm in this competitive market, a SWOT analysis would be appropriate.

It would help bring more insight to the opportunities and threats that this firm would face in the external environment. It would also help in understanding the strengths and weaknesses that the firm has.

Strength of this firm that would translate to increased profitability is a positive image in the market due to its environmental friendly projects. The world is increasingly becoming sensitive of the impact of various business units on the environment.

The concern is emanating from the fact that it has been confirmed beyond any reasonable doubt that various multinational companies are polluting the environment at a very dangerous rate (Coveney & Highfiel 1995, p. 67). Various environmental conservation projects are expected to give this company a different image in the market.

This company will be seen as a firm that is smarter in its environmental strategy. The market will be convinced that this company is not just interested in making profits, but also turning the society into a better place. The firm will easily attract additional customers who are determined to make a positive difference in their society.

This is because they will view the firm as one that helps in conserving the environment. They will consider the purchase of the firm’s product as part of environmental conservation. Because of this, the firm will develop a strong base of loyal customers. This firm may also take this advantage to reach out to the international markets.

The project would give this company a moral right to claim that it is a champion of a clean environment in the entire world. The firm has a team of dedicated and qualified staff who are able to front all the interest of the firm both in the local and regional markets (DeAnne, Gary, Hyde, Tipping 2004, p. 43).

This team also supervises capital that is assigned to it in order to realize the best outcome for the organization.

Despite the above strengths, this firm has some weakness. The first weakness that this firm has is the discontent customers in some region such as the United States. The fact that some of the employees are not satisfied with the way they are managed makes it very difficult for this firm to increase its profitability in these markets.

The initiative of managing the environment is very challenging financially. It would cost this firm, large sum of money if it would sustain such projects over the years it expects to operate in this market (Daft 2009, p. 21). The members of this firm expect to work in collaboration with other firms in order to clean the environment.

The team may not have the capacity to rid the environment of all the electronic wastes, unless it is supported by other agencies within the local society. The local government must be convinced to participate in such projects actively.

Other environmental agencies would also be invited to take part in the elimination of such wastes as plastic materials. The fact such the projects would involve partnership with other firms; success of the entire process may be jeopardized. Success would be pegged on how determined the other partners are in fulfilling their duties.

The firm has a number of opportunities in the external environment. In the local market in Sweden and other European countries, this firm has managed to build a large base of loyal customers.

The governments of Sweden and other European countries have strongly appreciated the move of this firm to help improve the environment of these countries, a fact that has earned it a large base of customers. The Swedish government, and other governments where this firm operates, has maintained a very stable political environment.

This means that the business environment is free from any political unrest that may disrupt normal business operations within the market. This has created a business environment that is very peaceful to various firms in the country.

The firm also enjoys an economic growth in this region that has increased the purchasing power of the consumers. This increased purchasing power has helped the firm to increase its operations to regions beyond its borders. The emerging technologies have also helped IKEA in its operational strategies.

The firm has adopted the emerging technologies in its operations, a fact that has helped it increase its efficiency (Kratschmer 2011, p. 101).

This firm faces a number of threats in its operations. Threats may not be predictable in this industry, though the firm may try to reduce the possibility of occurrence. The first threat that this firm faces is price wars in the market.

The local firms may notice the strategy of the firm to charge lesser prices for its products, especially to those consumers who have shown resolve to combat environmental degradation. There is a possibility that the competitors may consider this move as a strategy that this firm uses to charge cheap prices for their products.

The impact of this is that the competitors may respond by equally lowering their prices in the market. Such price wars are always dangerous to the prosperity of a business.

The initiative may fail to make any serious sense. However, this threat has been minimized by introducing other responsibilities for the project, and the invitation of the whole society to participate.

IKEA stores also face the threat from the emerging technologies. The emerging technologies are beneficial to the firm. However, they can pose serious challenge to the firm if it fails to select the appropriate technology to apply.

Applying a wrong technology may cause serious negative consequences to the firm. Late application of the emerging technologies may also render such a firm less competitive in the market.

Revisiting the Case

IKEA is still considered the market leader in this industry. It is the largest manufacturer and retailer of home and office furniture. The case presented above shows that this firm has been successful in the world market. However, it is yet to address some pertinent issues affecting it.

The firm is accused of high handedness when dealing with the employees. The complaint from employees shows that there is some form of dissatisfaction on the side of employees. The firm has failed to incorporate employees into partners other than employees of this firm (Fayol 1949, p. 127).

This discontent among the employees means that the employees will not be willing to give their best to the firm. They feel that they are not part of the organization. The second accusation leveled against this firm is that the management is discriminative in its operations.

Women have complained that the management does not take care of their interests. This accusation may have negative effect on this firm. It should manage this discontent in order to be successful in this industry. It should find a way of making all its employees feel part of the organization.

Conclusion and Recommendations

IKEA has managed to withstand the market competition that has forced various other firms out of the market. The firm has been operating in a very competitive market within Sweden, the United States and other countries where other firms have similar products.

The management of this firm has come to realize that the best way to beat the market competition is come up with strategies that can help it become unique in the market.

The management has embraced the spirit of competition in the market. It has also come to realize that employees are very important in the determination of success for the firm.

They are the wheel through which a firm can be able to move from one level to the next. However, the firm can improve its efficiency if it considers the following recommendations.

The management should embrace the emerging trends in the market. It should use the emerging technologies such as social media marketing to reach out for the customers.
The management should increase the number of young innovative employees who can help the firm manage the emerging technologies.
The management should increase its corporate social responsibility, especially on environment, to improve its public image.
The firm should consider increasing its partnership with suppliers to ensure that they constantly have the stock.
The management should ensure that employees are constantly motivated in their various duties in the firm.
The management should address all the needs of the employees to the best of its capacity. It should address all the complaints that are put forth by the employees of this firm.

List of References

Anderson, M 2011, Bottom-Line Organization Development: Implementing and Evaluating Strategic Change for Lasting Value, Elsevier, Burlington.

Coveney, P & Highfield, 1995, Frontiers of Complexity: The Search for Order in a Chaotic World, Fawcett Columbine, New York.

Daft, R 2009, Organization Theory and Design, Cengage Learning, New York.

DeAnne, A, Gary, N, Hyde, P, Tipping, A 2004, Ten Guiding Principles of Change Management, Booz & Company, New York.

Fayol, H. (1949). General and Industrial Management. London: Pitman.

Kratschmer, P 2011, Organizational Culture is Highly Resistant to Change: Discuss, GRIN Verlag, New York.

Norton, M, Mochon, D & Ariely, D 2011, “The IKEA Effect: When Labor Leads to Love”, Harvard Business School, Vol. 1, no. 4, pp 11-91.

Palich, LE, Cardinal, LB, & Miller, CC 2000, “Curve-linearity in the diversification-performance linkage: An examination of over three decades of research.” Strategic Management Journal, Vol. 21, no. 2, pp 155-174.

Snider, J, Hill, RP, & Martin, D 2003, “Corporate social responsibility in the 21st century: A view from the world’s most successful firms.” Journal of Business Ethics, Vol. 48, no. 2, pp. 175–187.

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