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 Kamprads 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 1980s 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 Symbols

Routines and rituals

The Paradigm

Power Structures

Control System

Organisational structures

Routines
Company customs Production processes Distribution

Stories

Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Rituals
Rites Rites Rites Rites

of of of of

passage enhancement integration renewal

Stories Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Stories
Embedded in organisation Reminder of organisational values The IKEA stories

Entail

Kamprads philosophy and accomplishments

Stories Symbols Routines and rituals Power Structure s

The Paradigm

Control System

Organisational structures

Symbols
Symbols include acts, objects and Logos IKEAs symbolic action simplicity IKEA Logo Scandinavian heritage

Stories Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Power structures
Inverted pyramid No barriers Customer needs and preferences

Stories

Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Organisational structure
Flat structure Informality Open communication

Stories Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Control systems
Emphasis on a reward system Big thank you event

Stories

Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

Organisational structures

Paradigm
Strong corporate culture Swedish heritage Simplicity tradition Functional quality products

Stories Symbols

Routines and rituals

The Paradigm

Power Structure s

Control System

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
Bowmans Strategy Clock Hybrid strategy
Low
DIFFERENTIATION price High IKEA Differentiation Hybrid
Low Price Low Price/Added value Low PRICE High Differentiation Focus Differentiation

How does IKEAs culture support production and distribution?

Emphasis on minimising costs Flat packaging - frugal beginnings Economies of scale

Large

scale organisation Highly standardised products

How does IKEAs 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 IKEAs culture effect other aspects of success?

Learning from experience

Better

knowledge transfer

Globalisation
National

cultural differences

Hofstedes Cultural Dimensions

Small Power Distance/ Collectivist Large Power Distance/ Collectivist

Individualism Index

Mexico Japan Spain

Germany

Sweden

France

Small Power Distance/ Individualist

USA

Large Power Distance/ Individualist

Power Distance Index

(Source: Adapted from Harris & Moran, 2000)

How does IKEAs culture effect other aspects of success?

Learning from experience

Better

knowledge transfer

Globalisation
National
Planning

cultural differences
permission

Low cost = large scale retail

Conclusion
Strong consistent culture Link between culture and performance Synergy between culture and strategy Causality?

References

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