Transcript Slide 1
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 Kamprad’s 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 1980’s – 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 Routines and rituals Control System Symbols The Paradigm Power Structures Organisational structures Routines Company customs Production processes Distribution Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Rituals Rites Rites Rites Rites of of of of passage enhancement integration renewal Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Stories Embedded in organisation Reminder of organisational values The IKEA stories Entail Kamprads philosophy and accomplishments Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Symbols Symbols include acts, objects and Logo’s IKEA’s symbolic action – simplicity IKEA Logo – Scandinavian heritage Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Power structures Inverted pyramid No barriers Customer needs and preferences Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Organisational structure Flat structure Informality Open communication Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Control systems Emphasis on a reward system “Big thank you” event Stories Routines and rituals Symbols The Paradigm Control System Power Structure s Organisational structures Paradigm Strong corporate culture Swedish heritage Simplicity tradition Functional quality products Stories Routines and rituals Symbols The Paradigm Control System Power Structure s 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 Bowman’s Strategy Clock ‘Hybrid’ strategy Low DIFFERENTIATION price High IKEA Differentiation Hybrid Differentiation Focus Differentiation Low Price Low Price/Added value Low High PRICE How does IKEA’s culture support production and distribution? Emphasis on minimising costs Flat packaging - frugal beginnings Economies of scale Large scale organisation Highly standardised products How does IKEA’s 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 IKEA’s culture effect other aspects of success? Learning from experience Better knowledge transfer Globalisation National cultural differences Hofstede’s Cultural Dimensions Individualism Index Small Power Distance/ Collectivist Large Power Distance/ Collectivist Mexico Japan Spain Germany France Sweden Small Power Distance/ Individualist USA Large Power Distance/ Individualist Power Distance Index (Source: Adapted from Harris & Moran, 2000) How does IKEA’s culture effect other aspects of success? Learning from experience Better knowledge transfer Globalisation National cultural differences Low cost = large scale retail Planning permission Conclusion Strong consistent culture Link between culture and performance Synergy between culture and strategy Causality? References Allen, S. (2005) Ingvar Kamprad – IKEA founder and one of the world’s richest men [Internet]. Available from: <http://entrepreneurs.about.com/cs/famousentrepreneur/p/ingvarkamprad.htm> [Accessed 12th April 2005]. Brown, A. (1998) Organisational Culture, 2nd edition. Prentice Hall, Harlow pp.240-241. Cardwell, D. (2005) Red Hook resident group sues to block an IKEA store. New York Times 154 (53122) Cabinet Maker Chandler, A. D. (1990) Response to the contributors to the review colloquium on scale and scope Business History Review 64 (4) pp.736758. Edvardsson, B. and Enquist, B. (2002) The Ikea Saga: how service culture drives service strategy. The Service Industries Journal. 22 (4) pp.153-186. Guardian Newspaper. 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