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Ikea Leadership Theories and Concepts

Essay by   •  March 25, 2012  •  Case Study  •  3,191 Words (13 Pages)  •  5,311 Views

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INTRODUCTION:

This article provides us with the information on IKEA's success which is rooted from culture and innovation in IKEA which were shaped and maintained by Mr. Ingvar Kamprad - IKEA founder. In this final exam essay, I would like to discuss three elements of inputs in the Congruence Model which has brought success to IKEA; consider four key elements in the organizational culture as illustrated by Author Shein in Figure 11.5 and point out examples at IKEA that helped bring it such a strong corporate culture. In addition, I will also assess the level of technological complexity and degree of environmental instability at IKEA to recommend the type of organizational structure as I expect from IKEA.

This final case study consists of the following parts:

* Introduction and listing of issues to be discussed.

* Abstract.

* Answering the questions.

* Lessons to be learnt after completing this case study

1. Abstract

IKEA is a furniture company founded by a Swedish billionaire - Ingvar Kamprad, who is a successful leader and a living legend of IKEA. He made a great contribution to the innovation and successes of IKEA as well as keeping it grow strongly: Just in 10 years, sales of IKEA tripled from over $ 4 billion in 1993 to more than $ 12 billion in 2003.

Starting a new career with IKEA by small business in the village Agunnaryd Elmtary - where Kamprad lived, but finally he turned to selling furniture. Since 1952, IKEA's innovation has changed the furniture industry with the initiative "flat-pack method" for IKEA furniture products. 04 years later (1956), "the concept has almost completely codified" (Kamprad wrote).

One of the great successes of Ingvar Kamprad is the shaping and maintaining of an IKEA culture closely linked to his native Sweden. This is a culture of solidarity (empathetically agreed by many people). That culture aims at "making the daily life many people better". This culture is strengthened and supported by IKEA through:

* Employing co-workers (IKEA prefers the word "co-workers" to "employees") who know how to support each other and have good spirit of teamwork;

* Expecting co-workers to find innovative and better ways to do tasks in every aspect;

* Respecting co-workers and their opinions;

* Setting goals for the whole company, co-workers and working tirelessly to achieve them;

* Making cost become a part of everything they do, from improving the manufacturing process, shopping wisely, to traveling less expensively;

* Avoiding complex solution - the simplicity is an important part of the IKEA culture;

* Leadership by actions, so IKEA leaders are expected to embark in working when needed and create a better working environment; and

* Believing that a diverse workforce helps strengthen the company as a whole.

2. Answering the questions

2.1. Question 1: Discuss three elements of inputs in the Congruence Model that brought success to IKEA.

Congruence model includes components to support a company's operations: input, formal organization, informal organization, work, people, and output (Figure 11.2 - Chapter 11, Theory and concepts of leadership). In this model, inputs are mixed into a process of interaction between work, people, formal organization and informal organization before becoming output.

Inputs of the model include environment, resources and history. The environment that impacts the company includes 10 elements (degree of technological change; new products/services necessary for competitiveness; Product/Service Lifecycle; market growth rate; Customers' constantly changing expectations and requirements; competitive situation; Business and Market Globalization; applicability of the Product or Service; accessibility to information, the company's impact on the environment). The company's resources include 05 elements (Finance, Human; Facilities; Information, Time). History - the establishment and operations of the company consists of people associated with the foundation of the Company and events associated with achievements of the company).

In this article, I would like to discuss the elements of inputs a in the Congruence Model that made IKEA successful as follows:

2.1.1. History:

IKEA was founded by Ingvar Kamprad - who was not only a successful founder and leader but also a living legend of IKEA. Stories and anecdotes about Kamprad and IKEA are still circulated among the furniture business people as well as and even other product businessmen in Sweden and all over the world.

Ingvar Kamprad was born on 26th March 1926 in Elmtaryd Agunnaryd, a poor village in Sweden. Right when very small, Kamprad heard of business and showed a talent for business. At age 5, Kamprad was known as a clever boy selling matchboxes to households in the village. It was the boy Ingvar Kamprad who helped berries pickers and fish men sell their products. At the age of 13-14, Ingvar Kamprad truly earned significant amount of money when he began turning to sell seeds to people in the region. In 1943, when he was 17 years old, Ingvar Kamprad determined to start his own business by establishing a company. The name IKEA was born then. Over nearly 70-year history of formation and development, IKEA has become a giant multinational corporation.

IKEA's history of formation and development is also associated with many events and outstanding achievements. It was the initiative that to change the furniture industry in 1952 - the flat-pack method which lets customers freely choose, transport and assemble products on their own. The initiative helped IKEA save transportation costs, traveling costs; especially with this business model, IKEA could make a significant cut of manpower and costs to solve customers' questions or needs for repairing or switching goods. In 1953, Kamprad first held a private exhibition of IKEA furniture with more than 1,000 people lined up early to see the exhibition on the first day of exhibition.

In summary, the business talent of legendary Ingvar Kamprad and many events associated with the outstanding achievements in history has brought great success

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