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A critical examination of how the success of IKEA is supported by its organisational culture. Presentation by: Mona E Thorvaldsen Kate Mulvana Joan Kawalewale.

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Presentation on theme: "A critical examination of how the success of IKEA is supported by its organisational culture. 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 Company customs Production processes Distribution Routines Stories The Paradigm Routines and rituals Control System Organisational structures Symbols Power Structure s

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

10 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 Structure s

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

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

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

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

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

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 PRICE DIFFERENTIATION Low High Low Price/Added value Low Price Hybrid IKEA Differentiation Focus Differentiation

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

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: [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: [Accessed 16 April 2005].http://jobsat.ikea.co.uk/uk/work_intro.asp 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: [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].[1] Quick MBA. Strategic Management. Porter’s Five Forces: a model for industrial development. [Internet] Available from [Accessed 20th April 2005]. Sancovich, A. (2002) The IKEA Philosophy [Internet]. Available from: [Accessed 2nd April 2005].


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