Business Structure Of IKEA

Business Structure

IKEA operates its business on global scale and maintains it in centralized control over functional activities and benefits from high quality and low cost suppliers. In order to ensure efficiency in the logistics process, the organization has integrated purchasing and distribution processes under one umbrella function.

The rapid internationalization triggers a range of challenges imposed on the headquarters in Sweden e.g. increasing difficulty of responding to national needs and cultural nuances, impact of emerging demographic trends forcing IKEA to broaden its focus strategy to respond to varying nation-level consumer groups etc.

These changes can influence the maintaining of IKEA‘s global organizational structure. The

They also work with the engineers in the factories of their own and of their suppliers. They design products with the engineers which makes it more efficient in productions. They also work on the packaging side to shave down the amount of packaging. Even a few millimeters can make a big difference in fitting more pieces into a container. Flat-pack business is the main distinction of IKEA and this reduces shipping costs.

Marketing Mix

IKEA primarily focuses on printed media for marketing communication and it is very successful. It also uses TV, radio and internet for advertisement. The IKEA marketing mix consists of 4 different areas of focus (Chopra, 2009).

1. The IKEA product range is the starting point and other marketing communication is used to amplify the product range.

2. The store is the IKEA retailer’s primary medium for presenting and communicating the range, its low price and the IKEA concept.

3. The IKEA catalogue is the main marketing tool with around 70% of the annual marketing budget. 110 million copies were circulated last year.

4. The IKEA advertising, PR and other types of communication are complements to the IKEA range. SWOT

Beonic sensors were placed on the entrance gates to count the number of visitors in the store. With this, it ensured that the cashiers will be on duty by the time the customer reaches the exit. Simple yet effective method.

Problem 2: IKEA does not have the sufficient innovation with its products and all of its products look similar. Somehow IKEA insists in hiring the same genre of designers and limits the variation on products.

Recommendation: Recruit new designers with fresh ideas and diverse backgrounds yet be faithful to the image of IKEA. His will surely broaden the size of the new season catalogues.

Drawbacks: This diversity may however lead to lack of goal congruence and a distraction from the common goals. There may be a waste of resources to get such a diverse group to agree to a common viewpoint.

Problem 3: Not enough managers that have the mind of a Swede to manage the stores

Recommendation: IKEA can either hire more Swedes with similar ethos OR promote successful managers from various countries to expatriate jobs in other