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IKEA Company and Its Intrapreneurial Organisation Report

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Updated: Jul 30th, 2021

Introduction

IKEA is a Swedish company that mainly specialises in furniture production and selling. It is usually seen by the customers as the symbol of Scandinavian laid-back attitude and courteousness. IKEA positions itself as an innovative company which brings origination to the market. For numerous reasons, this company is loved and hated at the same time but is a never-ending topic of discussion for its bright and bold image of a company that firmly incorporated an intrapreneurial approach (Rodin 2014).

This paper analyses the intrapreneurial peculiarities of IKEA dwells on its organisational innovations and draws conclusions based on the lessons that were learnt throughout the history of the company. The author emphasizes on the factors that subsidised the major success of the company and explain the reasons why IKEA is so unique and momentous to the modern market in terms of its approach and attitude. Organisational innovations and the inability of other companies to copy IKEA are also discussed in the paper.

Organisation Innovation

The biggest innovation that IKEA has brought to the market was the company’s effort to make its customers’ life easier. They managed to offer their products and services at a price that was lower than anything present in the marketplace (Silberzahn & Dyck 2011). IKEA adjusted their processes and became explicitly outstanding. IKEA offers personalised and adopted resolutions for their customers. This allows the company to create an initial bond with their customers. This type of private and personal interaction turns these customers into loyal advocates of IKEA’s product line and maintains the image of the company.

The fundamental company’s innovation is their willingness to give freedom to their customers – they were allowed to take on the final construction of the furniture. Furthermore, IKEA became an inventor of subcontracting by discovering an enthusiastic companion in Poland. IKEA succeeded to build up an effective distribution mechanism. On the other hand, the Polish manufacturers profited from technology transferences, lasting agreements, and consistency in decision-making (Vedin 2011).

IKEA is a successful brand that was built to exceed the expectations of the customers and provide quality product and service to everyone in need. One of the key factors behind the effectiveness of the brand became the company’s management effort (Griffin 2012). They introduced the notion of an intrapreneurial organisation and elaborated a plan that was designed to transform the theoretical assumptions into practical accomplishments. IKEA managed to keep the promises given to its customers, and their practice is essentially based on the conformity with the customers’ wishes (Martin, Gustafsson & Choi 2016).

The intrapreneurial/ innovative process

When speaking about IKEA, intrapreneurship denotes the practice of establishing new projects and a tactical regeneration within the present organisation to make the best of the innovative prospects and produce monetary value (Welter, Ljunggren & Blackburn 2013). As an intrapreneurial company, IKEA strives to minimise the number of difficulties on the way to solving the problem. Research shows that intrapreneurial organisations are innovative, motivate their stuff efficiently, and open new horizons to the employees’ productivity and their ability to work in a team (Ness 2012).

On the other hand, a distinctive trait of IKEA’s innovation is their ability to tell an attractive story without manipulating or deceiving. The company shows creative intelligence and uses (in a good way) their customers’ emotions when releasing a heartfelt commercial or a touching advertisement spot. IKEA managed to transform their plain and simple offers into special and complex pitches that represent the proposal at an empirical cost (Roca & Garcia 2013).

Another part of the innovative process is the way that the furniture is laid out in the IKEA stores. They do not showcase separate sections such as beds or chairs, but rather guide the customer through the path that reveals the whole range of IKEA’s products. According to the company, this also helps to increase the time that the customers spend in the stores critically (Lindeborg & Lindkvist 2013).

The IKEA process is motorised by the introduction of new goods and a continuous torrent of product modernisations. By this, the company guarantees that they will respond to the customers’ needs as soon as possible and maintain the universal brand individuality which is substantial to the loyal customers’ retention rate (Nandram 2014).

The intrapreneurial/ innovative lessons learnt

In the history of IKEA, there were good and not so good lessons that the company learnt. The importance of the conducted studies is in the fact that they carefully described the key factors that influenced the consecutive development of the company. IKEA became a vivid example of an innovative company that adopted the intrapreneurial approach.

The study by Jonsson and Foss dwelled on the international expansion and perception of the IKEA brand. They found that IKEA had established the organisational instruments that sustain an enduring learning course pointed at the recurrent change of the plan for the reproduction (Jonsson & Foss 2011).

Another discovery is that IKEA sees the reproduction as a tiered phenomenon: subordinate-level characteristics (promotion efforts, rating, etc.) are permitted to fluctuate across IKEA stores in reply to the marketplace-based learning, while complex-level characteristics (central values, ideas, etc.) are simulated in an unchanging style across stores, and transform very deliberately in reply to the education.

The two consecutive studies by Norton, Mochon, and Ariely dwelled on the fundamental procedure behind the IKEA innovational efficiency, which is demarcated as the customers’ readiness to pay more for the self-made products than for the equal goods made by others, and revealed the aspects that affected both customers’ inclination to participate in the self-construction and the value that resulted from such actions. The authors of the study also stated that making products satisfies the customers’ emotional need to indicate the presence of a certain skill to themselves and the others and that the mental state of capability connected to the self-made goods leads to their amplified assessment (Norton, Mochon & Ariely 2011, 2012).

The main lesson learnt but not completely resolved is the unclear goal behind the company’s mission. Even though it says that IKEA’s mission is to provide an extensive catalogue of furniture that is of good design and purpose, outstanding eminence and resilience, and rather low prices, the company says almost nothing about the exceptional quality documentation for assembling it (Schrage 2013). This recurrently causes customers’ dissatisfaction with IKEA’s products, and quite a few customers turn away to other furniture manufacturers, disregarding all the features offered by IKEA.

Why these lessons have made the business more successful

Taking into consideration the lessons learnt, IKEA managed to evolve into an even smarter company, combining its advantages and disadvantages in a clever proportion. They were able to turn their downsides into the strengths and, most importantly, improve the quality of the documentation that came with the furniture. Nowadays, IKEA’s catalogue is more popular than the Bible, and the company even sells houses (Hahn 2015). Regarding the overall experience, the story of IKEA’s progression and innovation is quite similar to Dell’s. Both these companies are selling their products at a low cost, have an idiosyncratic competitive lead, and replicate their business models across numerous marketplaces worldwide.

To lessen their transportation expenses, IKEA uses flat packing to let the customers bring the products together at home. The trademarks of IKEA’s delivery are a worldwide delivery system, great dimensions, compact packaging, and little expenses. IKEA certifies that the ideal packing methods are used, cars run on eco-friendly fuels, and further efficient procedures are implemented. Moreover, only biodegradable resources are used for the wrapping. By optimizing its packaging, IKEA saves millions of dollars. The company became smarter in each way. They were able to develop the image of their business successfully and the money that it makes daily IKEA can spend on marketing purposes.

Why it would be difficult for another firm to adopt some of this organisation’s success factors

The key success factor behind IKEA is the fact that its approach and organisational structure can be hardly copied or at least imitated by other companies. Of course, a company similar to IKEA could be built, but there is no guarantee that a company created on IKEA’s basis would succeed. The most obvious reason for this is the lack of knowledge and experience that the imitating company would encounter. Even the companies that are strictly in the furniture business cannot imitate IKEA because by copying IKEA they would have to disregard their current workplace setting, breach contracts with their investors, and re-educate their employees.

Explanation of how these difficulties could be overcome

The first option would be to research the market and learn about current trends and innovations. This would help the company understand the motion vector of the business and cost-effectively revise its objectives. The second option would be to adopt the intrapreneurial methodology and experiment with various ideas. Reacting to the potentials and possibilities would allow the company’s management to correct itself on time.

It is important to remember that innovation is only discovered through a steady investigation. The most resource-intensive way to overcome the difficulties of adopting IKEA’s ideas would be the rehabilitation of the employees that would have to readjust to a different working rhythm. This most likely would lead to reduced productivity and a tremendous number of layoffs but on the long-term scale this is a decent way to restructure the company.

Conclusion

The paper thoroughly analyses the innovations and the intrapreneurial peculiarities of IKEA’s organisation. The research identifies the key strengths of the company and describes the reasons behind the achievements and failures of the company. The author reviews and analyses these lessons to reach a verdict regarding the current standing of the company and its opportunities.

Moreover, the author carefully addresses the ways that IKEA involves customers into its process and supports the argument with the evidence from other research studies that are consistent with the current topic. The study explains the implications connected to the uniqueness of IKEA and gives recommendations concerning the overcoming of the complications which can be encountered when implementing IKEA’s organisation into any other company.

Reference List

Griffin, R 2012, Management Fundamentals. South-Western Cengage Learning, Sydney.

Hahn, Y 2015, ‘IKEA and Corporate Social Responsibility: A Case Study’, Journal of Distribution Science, vol. 13, no. 10, pp. 45-50.

Jonsson, A, & Foss, N 2011, ‘International Expansion Through Flexible Replication: Learning from the Internationalization Experience of IKEA’, Journal of International Business Studies, vol. 42, no. 9, pp. 1079-1102.

Lindeborg, L, & Lindkvist, L 2013, The Value of Arts and Culture for Regional Development: A Scandinavian Perspective. Routledge, New York.

Martin, D, Gustafsson, A, & Choi, S 2016, ‘Service Innovation, Renewal, and Adoption/ Rejection in Dynamic Global Contexts’, Journal of Business Research, vol. 69, no. 7, pp. 2397-2400.

Nandram, S 2014, Organizational Innovation by Integrating Simplification: Learning from Buurtzorg Nederland, Springer, Berlin.

Ness, R 2012, Innovation Generation How to Produce Creative and Useful Scientific Ideas, Oxford University Press, Oxford.

Norton, M, Mochon, D, & Ariely, D 2011, ‘The ‘IKEA Effect’: When Labor Leads to Love’, Harvard Business School, vol. 11, no. 91, pp. 1-34.

Norton, M, Mochon, D, & Ariely, D, 2012, ‘Bolstering and Restoring Feelings of Competence via the IKEA Effect’, International Journal of Research in Marketing, vol. 29, no. 4, pp. 363-369.

Roca, F, & Garcia, L 2013, Creative Intelligence, Editorial AMAT, Barcelona.

Rodin, J 2014, The Resilience Dividend: Being Strong in a World Where Things Go Wrong, Public Affairs, New York.

Schrage, M 2013, Who Do You Want Your Customers to Become? Harvard Business Press, Harvard.

Silberzahn, P, & Dyck, W 2011, The Balancing Act of Innovation. Lanoo Campus, Leuven.

Vedin, B 2011, The Design-inspired Innovation Workbook, World Scientific, Hong Kong.

Welter, F, Ljunggren, E, & Blackburn, R 2013, Entrepreneurial Business and Society, Edward Elgar, Cheltenham.

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