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Critical Thinking on Organizational Structure of the IKEA Corporation

5 pages
1367 words
Carnegie Mellon University
Type of paper: 
Critical thinking
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The IKEA is a multinational formation of companies which are based on selling furniture that is unique in design. This multinational company was established in the year 1943. The furniture selling company was founded by a man known as Ingvar in Sweden. The company mainly operates on the sale of household accessories such chairs, beds and study tables. The group is termed as the best performing organization. The excellent performance has arisen because furniture sold by the IKEA are stylish and go for lesser costs. The IKEA Corporation has also been known for its multinational operations ass it is based in more than fifteen countries that are distributed among the various continents (Thompson, 2005). This multinational organization operates having its sharp holds on the organizational structure and also basing its operation on international alliance and joint ventures. This company is always experiencing growth and a result there is the need to develop an efficient organizational structure which meant to help the company improve its operations. I have concentrated my discussion on the most effective organizational structure which is intended to help the IKEA organization to handle competition in its international services.

My recommended organizational structure is meant to overcome the problem of the current IKEA structure. The existing organizational structure that is in place is exhibiting some weaknesses as it has its concentration in Netherlands and Switzerland. The mentioned operation has led to declining in profits recorded in other regions. The organization structure that I strongly recommend is commonly referred to the geographical organization structure. I recommend this arrangement as it will effectively help the IKEA Corporation to attain the global expansion strategy. I firmly believe that the adoption of this particular method will support the international operations of the IKEA and also simplify the management process (Meyer, 1997). The innovative geographical organization structure allows any given organization to cover a span of different regions. This organization structure is based on the sense of organizing business according to areas.

The geographical organization structure has been recorded to be employed by a much multinational organization to cover the broad bases they operate in. Besides this particular strategy allowing the multinational organization achieve maximum control and coordination of its operations, the policy will also enable the manager to enjoy benefits of economies of scale. The geographical organization structure is designed in such a way that it will have the CEO being based in the headquarters at Netherland. Currently, the IKEA is being headed by a male known as Peter Adgnefgail. The CEO or the president will still be in charge of the originations activity and will still play their managerial role. This method also calls for the post of regional heads. These local leaders will be answerable to the CEO and the president on the responsibility of acting to needs of foreign operations.

The regional heads will also directly answer to a group of individuals who are branded the title of top executives. The high executive act in liaison with the senior managers when it comes to making decisions about them in the expanded operating regions. The structure also calls for the post of managers. Managers operations are restricted to small smaller areas and are directly answerable to the region executives. I came up with this particular organization structure taking into consideration the global expansionist goal that the organization has. The global expansionist target is based on included the plan to extend IKEA operations to venture into the Japanese market. Apart from venturing into new markets, I came up with the consideration of how large the organization is. The agency has recorded o be operating in in 43 countries and is estimated to own 328 stores across the globe. The geographical organization structure is described in the chart below.

Figure 1.1 represents the proposed business structure.

The IKEA managers are the critical, essential individuals in this organization as they formulate plans on how the organization will perform its activities. The program which mainly adopted by this particular body involves having subcontracted producers from all over the world to supply them with the manufacturing facilities which they lack. Also, the managers formulate a strategy that includes the IKEA clients assembling the products by themselves to reduce the overall cost. The annual strategy cycle of the IKEA requires the managers of IKEA to examining vital strategic factors that affect the organization. The main reason for carrying out the yearly strategic cycle to handle strategic challenges and take advantage of the recognized benefits. The multinational organization also embraces the aspect of division of labor. Unit of work can be described as a procedure where the production process is carried out in bits by different individuals. The little bit carried out depends on how well does one perform in that particular sector. The IKEA organization practices division of labor as it enhances the quality of output generated. Also, the division of labor has recorded to utilize the available human resource efficiently and also reduce in job collusions as every employee knows what is expected of them.

The IKEA business has also embraced a given suggestion which gives the recommendation on how a business should enter the international market. The ideas given include adopting a globalized supply chain. A globalized supply chain is meant to enable the efficiency of this multinational organization. Another given a suggestion involves locating the ultimate area which optimum resources to utilize. Resources are very important as they contribute to the overall productivity of the firm. IKEA is a productive firm which has a going concern and thus should be endowed with enough resources to achieve the going concern. The last suggestion which should be followed involves having international alliances and joint ventures in the countries they operate in. The global partnership is meant to help the IKEA to run in collaboration with an already established firm. The international coalition is intended to allow the multinational organization to sell its product using the name of the collaborating companies.

The IKEA business culture much influences the suggested organizational structure implementation. The IKEA has recorded a culture which accommodates new inventions that are meant to help the organization realize its objectives quickly. This business culture can be described in a straightforward term as being flexible. The managers of IKEA have also recorded to embrace the practice of strategic and tactical planning. The two names are at times used interchangeably, but mostly there occurs a difference between the two terms (Grochla & Szyperski, 1975). Strategy planning involves the top managers planning the company's next move while tactical planning involves the physical implementation of the set plan.

The IKEA has recorded to be a multinational organization which has a lot of loyal customers due to their stylish designs which are cheap. This company is already established in 43 countries. The company has an expansionist policy which is meant to globalize its product, but I believe its current organizational structure may limit it from achieving this objective. The adopted organization structure is ineffective as it focuses mainly on the operation based in Sweden. I have therefore come up with a business structure that I believe will help the IKEA business organization to achieve its globalization goal. The strategy I have recommended is known as the geographical organization structure. This structure will be useful as it will manage the operation of this organization in their respective locations.



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