Ingvar Kamprad's strategic management approach at IKEA

Ingvar Kamprad and IKEA Case Study

On the basis of information provided concerning Ingvar Kamprad and IKEA, the organizational theory underlying IKEA will be identified. Associated behavioral problems with IKEA's development will also be discussed. Questions were formulated and are addressed in order to more fully delineate IKEA's organizational strategy and development. Assumptions made will be identified throughout discussions. The questions guiding the discussion are as follows:

What organizational theory served as the basis for IKEA's successful emergence within the furniture retailing industry in Sweden and internationally?

What strategic management principles are evident within Kamprad's efforts?

What barriers/behavioral problems existed and how did IKEA overcome them from a strategic perspective?

Organizational Theory

Ingvar Kamprad largely developed and created sustained growth in IKEA through an organizational philosophy based on strategic management. From the earliest days of IKEA, Kamprad displayed a commitment to seeking out and utilizing strategies for responding to the larger environment which he recognized could either inhibit or further facilitate the company's growth.

Behavior Problems/Barriers

One of the problems that IKEA has consistently faced is the challenges presented by efforts to expand. From its' earliest period when efforts were initiated to block the company's growth in Sweden up until IKEA's current and ongoing efforts to expand internationally, the company has had to develop new strategies to respond to the problems at hand. Ultimately, IKEA's organizational structure created on the basis of a philosophy and practice of cost leadership has provided for creative management and enthusiasm amongst all levels of employees. The combination of employee freedom and anti-bureaucratic management fostered by Kamprad has fashioned an environment that is valued by employees and has led to ongoing employee contribution in producing positive results for the company when obstacles emerged. Kamprad consistently encouraged employees to look towards the use of "creative common sense" in alleviating the seeming threats and dangers posed by new environments as the company expanded.

Another challenge faced by IKEA was developing a strategy to continue to deliver low-cost yet high-quality products consistently on an international basis. In response to this problem, IKEA again developed a creative strategy by establishing purchasing offices around the world who focused their attention on identifying potential suppliers. When suppliers were identified, the emphasis remained on controlling and designing for low cost and ease of manufacture. Thus, when necessary, IKEA would actually purchase the manufacturing companies machines, redesign their buildings and implement other processes to increase the production of products that were low cost.

As well, IKEA recognized the potential for the company's management and operation philosophy to be lost as it continued its' immense expansion efforts throughout the world. Thus, it developed a strategy for insuring that this did not happen by maintaining a homogenous core management group that was familiar with and knowledgeable of IKEA's philosophy and practices. Regardless of what country expansion efforts were initiated in, the management remained Scandinavian or those who had brought up and trained throughout the ranks of the company. Management staff served as role models and engaged in efforts to training new employees and regional managers in the IKEA model. Furthermore, Kamprad organized his expansion efforts by developing two separate expansion groups - an expansion group who was sent in to ensure that initial planning and establishment of operations followed the IKEA model, followed by the operations group who served the role of further ensuring that the international stores continued to operate on the premises and values that had made the company successful.

A further challenge is evidenced by questions that have begun to emerge as to whether IKEA will survive the eventual loss of Kamprad and whether IKEA can continue to adhere to models of Scandinavian designed furniture that may not be appealing in some areas of the world.

However, on the basis of the company's history, it would appear that an ongoing commitment to strategic management will allow the company to continue to adapt to problems and challenges that may emerge as the company continues to grow, even without the presence of Kamprad. IKEA has demonstrated even under a new CEO that it can continue in its' commitment to provide the world with a much-needed supply of affordable, high-quality furniture. It has continued to seek out new ways of maintaining its emphasis on cost leadership while adhering to those aspects of its retail philosophy that draw customers into stores and facilitates their ease in viewing and purchasing. In spite of the changing environments in which the company has found itself, it would appear and can be assumed that IKEA has been able to maintain those characteristics that aided it in becoming so successful initially and will continue to do so while adapting to the environment in which it finds itself. There is no evidence to suggest that the company has faltered thus far; therefore, it would appear that this is a fairly solid and valid assumption. As well, on the basis of information provided on IKEA, it would appear and can be further assumed that they have been able to respond effectively to changes in demand and trends without losing their commitment to quality and affordability that has long been associated with the IKEA brand name. Again, evidence seems to support this assumption as the company has continued to successfully market its brand throughout the world without changing its commitment to quality and low-cost.

Summary

Strategic management has allowed IKEA to remain successful for well over 50 years. The company has been extensively successful in relying on creative strategies in responding to changes and risks as they have expanded throughout the world. A basic and solid commitment to low-cost leadership has filtered and been thoroughly integrated throughout the company appealing to customers and lending itself to the creation of a working environment which has been long valued by employees and management. As evidence would suggest, it can be validly assumed on the basis of IKEA's history that the company will continue its ongoing success and effectiveness so long as it remains true and committed to the management philosophy and organizational strategy that have served it well for many years.