The Integrated Case listed below is 3.0: "IKEA: Scandinavian Style" please examine this organization in detail and describe some of the factors that drive the organization, including company values, culture, technological practices, and their response to innovation. Please help to contain the following questions below:

A synopsis.

A description of the design and structure of the organization.

An examination of the organization's culture and an outline of the company values.

A description of what motivates the employees. (Motivational Practices)

An analysis of environmental concerns surrounding the organization.

A review of the organization's practices concerning social responsibility.

An assessment of how the company is a learning organization.

A conclusion that summarizes the main points.

In addition to the criteria above, be sure to address the following:

An evaluation of the organization's technological practices.

A description of the innovative qualities and indicators for change.

Issues regarding power, conflict, control, and political stance.

Case Study

https://ccis.vitalsource.com/reader/books/9780357141618/pageid/662

KEA: Scandinavian Style INTEGRATIVE CASE 3.0 IKEA: Scandinavian Style

"Behind the mountain, there are people too." Old Swedish Proverb

As one of the world's most successful people in business, Ingvar Kamprad never forgot the dreams, aspirations, and hard work of rural people or their ability to solve complex problems. Growing up on the farmland of southern Sweden, Kamprad embodied many of the traits of the hearty men and women who surrounded him and, as an ambitious working boy, revealed the business traits that contributed to his later success and reputation. As a child, Kamprad learned the concept of serving the needs of ordinary people by purchasing matches in bulk, which he then sold to rural customers at a profit. While still in his teens, he expanded his retail operation to sell everything from pencils to Christmas cards and upgrade the efficiency of his distribution by using the regional milk-delivery system.

Beginnings

In 1943, at age 17, Kamprad formed IKEA with initials representing his first and last names, along with the family farm (Elmtaryd) and the nearby village (Agunnaryd). Anticipating the rising consumerism amid the rebuilding boom that followed the war, IKEA moved quickly to provide families with low-cost furniture designs through the convenience of catalog sales. With the opening of the company's first showroom in 1953, Kamprad created a vertical integration model, uniting various suppliers under the IKEA umbrella, coordinating long-run production schedules, and controlling distribution. That model expanded in 1964 by introducing the first warehouse store, eliminating an entire step in product distribution by allowing warehouse container pick-up by customers. The business lessons Kamprad mastered as a boy entrepreneur were evidenced at the corporate level in many ways. For example, the bulk purchasing of matches in his youth was a forerunner to the bulk purchase of fabric that expanded upholstery choices for consumers and made the luxury of fabric options, formerly limited to the wealthy, available to all customers. Likewise, IKEA used imaginative distribution and delivery options, such as when an IKEA employee cleverly discovered the company's "flat-box" approach in 1955. While attempting to load a table into a customer's automobile, an employee removed the table legs, enabling a new vision of selling furniture unassembled. Practical solutions wedded to

a low-cost promise created a new IKEA formula of "knockdown" furniture, flat-box storage and shipping, and assembly by consumers armed with IKEA-developed assembly tools and visual instructions. This formula revolutionized the home-furnishings industry. A significant strength of IKEA lies in its pioneering distribution created through unique corporate-supplier relationships. In the company's earliest days, Swedish fine furniture manufacturers attempted to boycott IKEA and drive it out of business for selling furniture at such a low cost. Kamprad outmaneuvered them by forging new partnerships with other Scandinavian manufacturers, providing assurances of long production runs.

Moreover, top managers learned that affordable furniture could be provided without owning the factories. IKEA is a "hollow" or virtual corporation because nearly all its manufacturing is outsourced. IKEA uses typical short-term purchasing contracts with suppliers, which means it can quickly adjust orders to changes in demand and not be saddled with substantial unsold inventory. Suppliers also compete with one another to keep costs low. IKEA has indirect control over suppliers because it often purchases 90 to 100 percent of a supplier's production. Aware of supplier relationships, IKEA maintains constant vigilance in working with suppliers to find ways to cut costs while keeping quality standards high, occasionally even agreeing to underwrite supplier technical assistance. That can-do attitude with suppliers has served IKEA well over time.

Supplier Relationships

With 1,300 suppliers in 53 countries, IKEA's integrated design, production, and distribution face new problems. The sheer numbers can weaken long production runs and disperse supply lines. Global reach also means that domestic requirements vary from one region to another or that certain areas, such as Eastern Europe, have few suppliers capable of high-quality, low-cost production. In addition, furniture competitors have not been idly sitting by but have garnered lessons from the furniture giant. In the face of these challenges, IKEA continues to believe in the power of its ingenuity. Design teams work with suppliers in imaginative ways. For example, the need for expertise in bent-wood design for a favorite armchair resulted in a partnership with ski-makers. Likewise, the need throughout Scandinavia for affordable housing resulted in IKEA's expansion into manufactured homes, built on supplier factory floors and delivered to construction sites, ready to be filled with IKEA furnishings, conveniently assisted through $500 in IKEA gift certificates to the homeowner. From the outset,

In his effort to bring "a little bit of Sweden to the world," Kamprad created a lifestyle model that would mold consumer habits and attitudes. IKEA represented more than catchphrases such as low price and convenience. Looking out for families with modest incomes leads to IKEA's constant adherence to frugality, reflected in a cultural abhorrence for corporate office perks such as special parking or dining facilities. IKEA executives are expected to fly "coach." True to the rural values of his homeland, Kamprad nurtured the ideal of the IKEA family, referring to employees as co-workers and bestowing the name Tillsammans (Swedish for "Together") on the corporate center.

Mission and Culture

The higher cultural purpose of IKEA was reaffirmed in 1976 with the publication of Kamprad's Testament of a Furniture Dealer, which states explicitly that IKEA is about "creating a better everyday life for the majority of people." He went on, "In our line of business, for instance, too many new and beautifully designed products can be afforded by only a small group of better-off people. IKEA aims to change this situation." The purpose of providing fine-looking furniture to the masses was to be met via an internal culture that Kamprad described with words such as the following: "informal, cost-conscious, humbleness, down to earth, simplicity, will-power, making do, honesty, common sense, facing reality, and enthusiasm." Achieving this purpose meant employees had to have direct personal experience with the needs of the customer majority. Visualizing the constantly changing needs of a customer base comprised of farmers and college students, young professionals, and on-the-go families, Kamprad defined IKEA's business mission as "to offer a wide variety of home furnishing items of good design and function at prices so low that the majority of people can afford to buy them." This is "place-holder" furniture, filling the constantly changing needs in the lives of individuals and families. Nevertheless, the company would go further than merely providing the solution to a consumer's immediate needs. Kamprad and his co-workers gently imprinted Swedish style and cultural values of home, frugality, and practicality from furniture design to catalog layout or the arrangement of warehouse showrooms.

As CEO Anders Dahlvig explained in a 2005 interview for Business Week, "IKEA is not just about furniture. It is a lifestyle." That lifestyle is reflected in the consumer shopping experience. The convenience of helpful touchesproviding tape measures and pencils, a playroom that frees parents for leisurely shopping, and a restaurant midway through the building to provide a shopping breakis crucial for the IKEA experience. Also familiar is the grey pathway, guiding the shopper along wide aisles through the 300,000square-foot store. The route is a veritable labyrinth that provides the charm of surprise as shoppers venture past the showrooms or lead to total confusion for those who venture off the intended path. Everything is carefully orchestrated; price tags are always draped to the object's left, large bins lure with the promise of practical and inexpensive "must-haves," and room arrangements include special touches that spark vision and stimulate add-on purchases.

IKEA's attention to detail is honed through various strategies that link management and co-workers at all levels to their customers. Antibureaucracy Week places executives on stock-room and selling floors, tending registers, answering customer queries, or unloading merchandise from trucks. IKEA's Loyalty Program and Home Visits Program allow company researchers entrance to consumer homes better to determine individual and community needs for furniture designs. Such efforts can be practical, such as specially designed storage units for urban apartment dwellers or deeper drawers to meet the wardrobe needs of Americans. They can also help in detecting or anticipating cultural shifts. Through its advertising, IKEA was the first retailer to acknowledge the broadening definition of family to include multi-racial, multi-generational, and single-sex family arrangements and promote its openness to "all families."

Current Challenges

Over the decades, efforts to strengthen IKEA and consumer family ties and encourage repeat business as customers moved from one phase of life into another produced a unique global brand famous for innovation. The company's devotion to lifestyle solutions led to rapid movement on two fronts, the expansion of product lines (now over 12,000 products) and the expansion of global markets. By 2019 there were 424 IKEA stores in 52 countries. Global economic woes of recent yearsincluding slumps in world stock markets, rising unemployment, and personal financial insecurityincreased sales and profits for IKEA. As consumers searched for ways to trim overall expenses and cut home-furnishing costs, the company continued experiencing steady growth with a 2018 worldwide sales increase of 4.7 percent, to 38.8 billion Euros. However, the company's rapid global expansion and the rise of imitators in providing low-cost, quality home furnishings led some critics to believe IKEA had abandoned its maverick methods and relinquished its innovative edge. They detected a loosening of the company's strict core values, established more than half a century ago and reinforced in the training of co-workers in the IKEA Way. Other critics take the opposite view and claim that IKEA is provincial. The problems from this viewpoint result from those strict core values, regularly monitored through Commercial Reviews, measuring how closely the various stores adhere to the IKEA Way.

IKEA repeatedly surveys customers, visitors, suppliers, and co-workers about their satisfaction with the IKEA relationship. Repeating the surveys provides clear feedback and even measures significant trends if the results exceed the expected 5s toward the dreaded 1s. The critics would argue that the constant pressure for Kamprad's "little bit of Sweden" creates a culture that scorns strategic planning, is slow to react to cultural nuance in new locations, and offers limited opportunity for professional growth or advancement non-Swedes. They could point out that the notion of people behind the mountain should work both ways.

Globalization

Global expansion into non-European markets, including the United States, Japan, and China, magnified the problems and the need for flexibility. Examples abound. The focus on standardization rather than adaptation poses problems for an industry giant such as IKEA, particularly as it enters Asian markets that are culturally different. IKEA's dependence on standardization for everything from store layout to the Swedish names of all products presented translation problems when informing Asian consumers about shopping and shipping procedures. Addressing cultural differences (women are the prime decision-makers and purchasers for the home), store and product specifications (e.g., lowering store shelves and adjusting the length of beds), or consumer purchasing power (a worker may need up to a year and a half to purchase a product) was critical to company success in China. Furthermore, IKEA managers realized the need to shift focus from selling furniture to providing home decorating advice when they discovered that many skilled consumers could use the convenient tape measures and pencils to sketch pieces that they could then build for themselves at home. In the U.S. market, IKEA was slow to make allowances,

such as a shift from measuring in meters to feet and inches. While consumers embraced low pricing and the convenience of break-down furniture, the company's delay in bed size designation to the familiar king, queen, and twin drove U.S. customers bonkers because "160 centimeters" meant nothing to them. Co-worker issues also arose. Angry American workers in locations such as Danville, Virginia, moved to unionize amid complaints of discrepancies in pay ($8.00 per hour compared to the $19.00 per hour for workers in Sweden), vacation (12 days annually for U.S. workers compared to five weeks for their counterparts in Sweden), and the constant demands by strict managers in requiring, for example, mandatory overtime. Officials with IKEA admit they "almost blew it"

in America and that they are committed to being both global and local. They insist they are responsive to issues and people. The company points to a history of standing against corruption and to its quick response when a subcontractor's bribery efforts brought the hint of

scandal to IKEA's door. Management proudly points to the company's recent record in looking out for the needs of ordinary people through charitable projects such as IKEA Social Initiatives, benefiting over 100 million children. Service to people "behind the mountain" also requires acknowledgment of the mountain. IKEA prioritizes sustainability, working to improve company energy efficiency as reflective of its commitment to thrift, the wise use of natural resources, and family-level regard for stewardship of the earth. From eliminating wood pallets and the ban on plastic bags to installing solar panels and the phasing out of sales of incandescent light bulbs, IKEA leads consumers and competitors by example and demonstration of its core values.

Behind the Curtain

Despite critics' concerns, those values established by Kamprad remain intact through the combination of co-worker training in the IKEA Way and a carefully crafted organization structure that leaves little room for cultural or corporate change. In 1986, Kamprad remained senior advisor on a board dominated by fellow Swedes after his retirement. The organization structure resembles the IKEA flat box, with only four layers separating the CEO and the cashier on the sales floor. Historically, financial details about IKEA have been kept tight and neat and, until recently, secretive. The entire public disclosure of information such as sales, profits, assets, and liabilities appeared for the first time in 2010 on the heels of a Swedish documentary. The ability to maintain such an opaque organization dates back 30 years. 1982 marked the transfer of IKEA ownership to INGKA Holding, held by Stichting INGKA Foundation (a Dutch nonprofit with Kamprad chairing the foundation's five-member executive committee). The IKEA trademark is owned by IKEA Systems, another private Dutch company whose parent, IKEA Holding, is registered in Luxembourg and owned by Interogo, a Liechtenstein foundation controlled by the Kamprad family. This complex organizational set-up enabled IKEA to minimize taxes, avoid disclosure, and through strict guidelines, protect Kamprad's vision while minimizing the potential for takeover.

The Future and India The vision remains, but with global expansion, IKEA's corporate culture ventured into using technology to bond loyal IKEA customers while tapping into their ideas and valuable feedback. The company expanded its e-commerce sales and initiated the IKEA Family Club to strengthen ties with existing customers and build long-term relationships. Family club members assist in sharing values and ideas and providing co-creating value for everything from product development to improvements in stores and services. Members are encouraged to increase their visits to stores, on-site "experience rooms," and the website to familiarize themselves with products and build ties of shared development in finding real-life solutions to the home-furnishings challenges they encounter at various stages of their lives. This latest development in the long history of IKEA reinforces the decades-old goal of the founder to continue to look behind the mountain to meet the needs of ordinary people.

There have been increasing hints of potential change.

In the years immediately preceding and since the death of Kamprad (January 2018), chinks have appeared in the cultural armor. With expanded globalization, devotion to Kamprad's notion of "a little bit of Sweden" only highlights the problems with cultural nuances and continued limited opportunities for non-Swedes to professional advancement. Some cultures balk at embracing the company notions of a flattened organizational hierarchy or domestic partner benefits. There have been other push-backs. Workers in the United States, Ireland, and Portugal accuse the company of heavy-handed pressure against the formation of unions, complaining of "scare tactics." At the same time, official complaints from organizations, including the international UNI Global Union, have been filed with the Dutch government and the OECD (Organization for Economic Cooperation and Development). Across traditional "safe market" areas, such as the United States, the rise of competitors such as Wayfair, Amazon, and even Walmart have begun nicking away at IKEA's hold on consumer flat box shipping with e-market convenience. Some promising markets have seemed almost impenetrable. For example, on the Asian front, IKEA's first effort in Japan failed in 1986, and it took 20 years to return to that market.

Another strategic area for future development remains. INGKA boss and IKEA Systems board member Anders Dahlvig floated the notion a few years ago of separating INGKA into North American, European, and Asian companies to manage better each market's distinct business challenges and cultural nuances. At that time, the idea was not adopted, but the death of Kamprad brought what seemed to be a flurry of changes in an organization whose devotion to tradition had served it well. The company balanced the slashing of 7,500 jobs (mostly office personnel) with a new focus on digital development and the potential for over 11,000 jobs worldwide. Building upon environmental realities and plans initiated before the

founder's death, an additional move was the beginning of expansion away from the suburbs with a planned 30 new stores in city centers.

IKEA's Asian market. India, in particular, offers incredible possibilities with its rapidly growing middle class. A rise in education and income among the young (almost half of the nation's 1.3 billion people are under the age of 25) bodes well for the household needs of apartment dwellers and starter homes in search of low-cost, quality furnishings. One IKEA executive says, "India is an opportunity to make the next 75 years of IKEA."

Regulations to limit foreign investment in Indian retail squelched IKEA's initial entrance plans in 2007. Falling back to regroup, IKEA poured six years into planning for the opening of stores in Hyderabad (August 2018) and Mumbai (2019) with more than 1,000 home visits to assess the furnishing needs of the population, special training for Indian employees, and a scramble to find quality suppliers to meet Indian government requirements that one-third of store merchandise be acquired locally. The question remains whether IKEA's careful planning can meet the particular challenges of the Indian market. The company acknowledges the need for igniting both consumer interest in the IKEA store concept and experience and a robust online presence in a culture that, except for oversized and popular shopping malls, shows a preference for small, trusted shops over big-box stores; where consumers may use catalog images and the convenience of those IKEA tape measures to provide replica requests to local carpenters; where traffic chaos and a clear preference for the Metro or the easy navigation of motorcycles by young professionals makes flat-box pick-up of many items difficult; and where traditional home furnishing needs and a taste for Indian teak over what locals imagine as "inferior plywood and plastic" requires a concerted effort to push the quality of IKEA products. The future will tell whether Kamprad's vision can be united with India's cultural realities and unlimited future potential. It is time for IKEA to revisit the notion of Dahlvig's separation of INGKA into three units to address the unique needs and business environmental challenges of each global region.