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IKEA’s Operation in the USA Essay

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Updated: Mar 7th, 2022

Introduction

IKEA is a privately owned company that started in South Sweden and it manufactures furniture for home and office use. The founder, Ingvar Kamprad is a Swedish. The firm operates in 38 countries with Netherlands as its headquarters. The firm employs about 130,000 people across the world.

The shareholdings of this multinational corporation are not clear, though INGKA Holdings B.V. controls most of its operations with Michael Ohlsson being the chair and the chief executive officer of this holding.

IKEA has earned reputation for its cost control abilities that have seen it lower its products’ prices compared to those of competitors. Its continuous product development techniques have seen it offer quality products in the market and enticing more customers to the company’s stores.

This has seen the firm expand its stores to markets that the company had not ventured into before. Through IKEA creative management, this firm has ventured into the hospitality industry. Currently IKEA runs several restaurants across many cities in Europe.1

It also has playing grounds where parents can drop their children and pick them later. This allows children to get maximum entertainment while parents are given the opportunity to run their errands without worrying about disturbance from their children2.

There has been a constant upward surge on the rate of unemployment in the U.S. The Federal government has made several efforts to reverse this but with limited success. The entry of IKEA into Danville Virginia was therefore most welcome.

The firm has employed a considerable number of people in Virginia, improving their living standards. The state also benefits from its tax collection.3

Positive Actions

IKEA Company is one of those firms that employees would want to be. Its health care policies, a serene working environment, the remuneration rates among other factors are attractive to many people. Los Angeles Times reports that employees of this firm in Sweden are happy with the way it operates.4 They are allowed to form unions and they take overtime at will.

Through these unions, employees can easily address their grievances to the management. Employees feel that they are able to advance their careers since training and education is offered. Through unions, the firm is now able to compensate employees that suffer any form of accident in line of duty as all employees are insured.

Moreover, the employees are paid for days they are not on duty for reasons such as being sick, on holiday or being on leave. The management is also very friendly and has established a mutual relationship with employees and their unions. New York Times reports that, IKEA employees in most European countries are satisfied with the policies at firm’s work place as the pay is considerably better than what most firms offer in the job market.5 IKEA has on-job training aimed at improving the quality of the workforce. This is done three times a year to ensure that the workforce remains updated on the market requirements.

It has medical insurance cover for its for its employees that guarantees them quality treatment in case they get injuries when at work. This has improved their morale, leasing to increased output. The company policies also have sick leave in which case the employee gets full salary. They are also allowed holidays thrice every year.

The company helps employees cut transportation costs by offering transport to and from the work. Safety measures at work, the on-job trainings, the insurance cover, the sick pay and sick leave and the holiday allowance among many other incentives have endeared workers to the firm6.

They feel appreciated and this has reduced work related stress while increasing their output and the output of the firm.

Negative Actions

IKEA’s corporate image has been proven different from its real internal structure. The glamour with which it presents itself to the outside world is very different from the way it operates.

Cunningham argued that human resource is the most important asset that a company may own because of its ability to control other factors of production. This asset is uncared for by this huge multinational corporation.7

Los Angeles Times reports on the real issues that take place within the firm with regard to human resource management.8 It brings to focus the dehumanizing conditions that workforce has to put up with at the workplace.

The employees of IKEA have seriously complained about high handedness and the way the company is run. In Europe, and specifically in Sweden where it started, workers can take overtime at will and without any form of coercing from the management. At the plant in Danville, Virginia, workers do not determine when they take overtime hours after normal working hours9.

Failure to take an overtime stipulated by the management would lead to automatic punishment. The situation has been so bad that workers developed a feeling that they were imprisoned by these regulations.10

Kylette Duncan narrates to Los Angeles Times that at one point, she had to cancel her medical appointment for her husband because she had to work for an overtime that came up abruptly. So devastated she was that she quit the job all together after working only six months at IKEA. She settled for a lesser paying job in another firm.

This report further reveals that IKEA’s employees in Europe have a starting wage rate of $19 per hour. However, this amount at Danville, Virginia is $8. The cost of living in Virginia is as expensive as or even more expensive than in some of these countries.

The revenue the firm generates from the American market is more lucrative than many of these European countries. Why then should they discriminate against American employees? Giving them a remuneration that is less than half that their colleagues earn elsewhere is discriminatory.11

IKEA’s code of conduct stipulates that formation of unions is acceptable among employees. In Sweden, employees have successfully formed unions through which their grievances can be addressed.

This whole issue is very different from what is taking place at its plant in Danville. This firm has made a deliberate step to ensure that members do not form a union whatsoever12. They have even hired Jackson Lewis, a large law firm to help it thwart attempts by the members to form a union.

One is left wondering what is so unique with the American population that employees should not be allowed to form unions. The unfortunate working condition in this firm has seen employees get more frustrated as days go by.

Despite the comparatively fair salary, state-of-the-art facilities and its healthcare programs, many of its employees have considered resignation as the best option.13

Conclusion

IKEA is a multi-national corporation that operates in several countries across the globe. Its efficiency in operations and cost management has seen it expand in many regions. The company’s health care policies and remunerations have seen it earn admiration among many workers.

In Sweden, this company has given workers a chance to form unions through which their concerns can be addressed. They are also allowed to take overtime at their own pleasure. This has created an environment where they feel valued and this has translated into more productivity for the firm.

However, all this sugarcoating of this firm was in an attempt to hide its ugly face from the unsuspecting public. Its plant at Danville, Virginia has unmasked the firm’s true face. The firm is not a bed of roses as many had been mislead to believe. At IKEA, there exists a rare form of racial discrimination.

The firm treats its employees differently, its yardstick being the country of origin. In America, this company treats its workforce with contempt. Its effort to post friendly messages about career offerings in various nations is just an attempt to clean up its mess.

This firm operates with outdated standards, standards that existed before the world’s second liberation, those standards that would see one die at workplace and it is considered normal, the standards that are unacceptable in the contemporary world.

Bibliography

Adams, Susan and Joseph Weiss. “Gendered paths to technology leadership”. New Technology, Work and Employment 26, no. 3, (2011): 222-237.

Bradley, Howard. Staff Development. London: The Falmer Press, 1991.Print.

Cunningham, Barton. The Stress Management Sourcebook. Los Angeles: Lowell House, 2000.

Daft, Richard. Organizational Theory and Design. Mason, Ohio: South-Western Cengage Learning, 2010.

Fried, Richard. Stress Management for Success in the Workplace. Washington: Lulu.com, 2008.

Giddens, Antony. The Consequences of Modernity. Malden: Malden Blackwell Publishers, 2009.Print.

Griffin, Ricky and Gregory Moorehead. Organizational Behavior: Managing People and Organizations. Mason, OH: Southwestern Cengage Learning, 2011.

“IKEA’s U.S. Factory Churns out Unhappy Workers”. Los Angeles Times. April 10, 2011.

“At IKEA’s Only U.S. Factory, Workers Vote to Join Unions”. The New York Times. July 27, 2011.

Thomas, Angela. Coaching for Staff Development, Personal and Professional Development. Leicester: St. Andrews House, 1995.Print.

Footnotes

1 I”KEA’s U.S. Factory Churns out Unhappy Workers”. Los Angeles Times. April 10, 2011, 12.

2 Susan Adams and Joseph Weiss. “Gendered Paths to Technology Leadership”. New Technology, Work and Employment 26, no. 3, (2011): 222-237.

3 “At IKEA’s Only U.S. Factory, Workers Vote to Join Union”. New York Times. July 27, 2011.

4 “IKEA’s U.S. factories churns out unhappy workers”. Los Angeles Times. April 10, 2011, 12.

5 Ibid. p. 8

6 Antony Giddens. The Consequences of Modernity. (Malden: Malden Blackwell Publishers, 2009).Print.

7 Barton Cunningham. The Stress Management Sourcebook. (Los Angeles: Lowell House. 2000), 31.

8 “Ikea’s U.S. Factories Churns out Unhappy Workers’’. Los Angeles Times. April 10, 2011.

9 Howard Bradley. Staff Development. (London: The Falmer Press, 1991), Print.

10 Richard Daft. Organizational theory and design. (Mason, Ohio: South-Western Cengage Learning,2010).

11 Ricky Griffin and Gregory Moorehead. Organizational behavior: managing people and organizations. (Mason, OH: South-Western Cengage Learning, 2011).

12 Angela Thomas. Coaching for staff development, personal and professional development. (Leicester, St. Andrews House, 1995). Print.

13 Richard Fried. Stress management for success in the workplace. (Washington: Lulu.com, 2008).

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IvyPanda. 2022. "IKEA's Operation in the USA." March 7, 2022. https://ivypanda.com/essays/ikea-company-analysis-2/.

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