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Presentation by: Mona E Thorvaldsen Kate Mulvana Joan Kawalewale

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Presentation on theme: "Presentation by: Mona E Thorvaldsen Kate Mulvana Joan Kawalewale"— Presentation transcript:

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

2 Agenda About IKEA History – Key Developments Organisational culture
Cultural web Tools of analysis Conclusions

3 About IKEA Global furnishing brand Founded by Ingvar Kamprad
Brand name Unique organisational culture & leadership style Kamprad’s Philosophy Franchisees Market position & share

4 History of IKEA 1943 – Founded: Individual sales
1945 – First Advertisement 1951 – New product ranges & catalogue 1953 – Furniture exhibition 1958 – First IKEA store Expansion into Norway 1980’s – USA & Eastern European markets 1997 – Internet

5 “Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA concept” Ingvar Kamprad

6 Organisational culture
Shared norms, beliefs and values Leads to collective behaviour Segmentation of the organisational culture using the cultural web

7 Cultural Web Stories The Paradigm Routines and rituals Control System
Organisational structures Symbols Power Structures

8 Routines Company customs Production processes Distribution Stories The
Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

9 Rituals Rites of passage Rites of enhancement Rites of integration
Rites of renewal Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

10 Stories Embedded in organisation Reminder of organisational values
The IKEA stories Entail Kamprads philosophy and accomplishments Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

11 Symbols Symbols include acts, objects and Logo’s
IKEA’s symbolic action – simplicity IKEA Logo – Scandinavian heritage Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

12 Power structures Inverted pyramid No barriers
Customer needs and preferences Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

13 Organisational structure
Flat structure Informality Open communication Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

14 Control systems Emphasis on a reward system “Big thank you” event
Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

15 Paradigm Strong corporate culture Swedish heritage
Simplicity tradition Functional quality products Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structures

16 Performance-enhancing cultures
Goal alignment High levels of employee motivation Better ability to learn from the past “Fit” theory (Lorsch, 1976)

17 IKEA Strategy Bowman’s Strategy Clock ‘Hybrid’ strategy Low price
Differentiation DIFFERENTIATION High Differentiation IKEA Focus Differentiation Hybrid Low Price Low Price/Added value Low High PRICE

18 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

19 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

20 How does IKEA’s culture effect other aspects of success?
Learning from experience Better knowledge transfer Globalisation National cultural differences

21 Hofstede’s Cultural Dimensions
Small Power Distance/ Collectivist Large Power Distance/ Collectivist Mexico Individualism Index Japan Spain Germany France Sweden Small Power Distance/ Individualist Large Power Distance/ Individualist USA Power Distance Index (Source: Adapted from Harris & Moran, 2000)

22 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

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

24 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 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 Edvardsson, B. and Enquist, B. (2002) The Ikea Saga: how service culture drives service strategy. The Service Industries Journal. 22 (4) pp Guardian Newspaper. (June 2004) The miracle of Älmhult. [Internet]. Available from: [Accessed 10th April 2005]. Harris, P. R. and Moran, R. T. (2000) Managing Cultural Differences, 5th ed. Gulf Publishing Company, Houston, TX. pp IKEA, (2005) IKEA [Internet], Available from: <http://jobsat.ikea.co.uk/uk/work_intro.asp> [Accessed 16 April 2005]. Johnson, G., Scholes, K. & Whittington, R. (2005) Exploring Corporate Strategy – Text and Cases. 7th ed. Prentice Hall, Harlow. Kling, K. and Gateman, I. (2003) IKEA CEO Anders Dahlvig on international growth and IKEA’s unique corporate culture and brand identity. Academy of Management Executive. Vol. 17 (1) pp Kotter, J. P. and Heskett, J. L. (1992) Corporate culture and performance. The Free Press, New York. Magonelly, L. (2002) How Ikea designs its sexy price tags. Business 2.0. (10) [Internet], Available from: Ebsco host [Accessed 20 April 2005]. Mintel (2004) Furniture Retail – UK – August 2004 [Internet], Available from: <http://reports.mintel.com/mintel/searchexec/> [Accessed 16 April 2005]. Normann, R. and Ramirez, R. (1993) From value chain to value constellation: designing interactive strategy. Harvard Business Review, July-August pp Porter, M. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. The Free Press, New York. Rowe, S. (2005) Judge flattens Ikea’s challenge. Estates Gazette, 508, p.28, Available from: Ebsco Host[1] [Accessed 16 April 2005]. Quick MBA. Strategic Management. Porter’s Five Forces: a model for industrial development. [Internet] Available from <http://www.quickmba.com/strategy/porter.shtml> [Accessed 20th April 2005]. Sancovich, A. (2002) The IKEA Philosophy [Internet]. Available from: <http://www.johnson.cornell.edu/leadership/casestudies/IKEA.pdf> [Accessed 2nd April 2005].


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