Strategic Planning: IKEA organizational chart (Essay Sample)
IKEA: A Case for Keeping the Current Organizational Chart
For this Critical Thinking Assignment, IKEA has asked you to make a case for not changing the organizational chart for IKEA's planned international strategy. Let's assume that some top IKEA executives want to keep the current structure.
Recently, there has been pressure from a few IKEA leadership to consider that IKEA must become more innovative in its approach to global expansion. There are people within positions of power who insist that a new organizational chart be created to support the new international strategy. As you develop your paper, consider how organizational structure contributes to or hinders innovation and global expansion.
To complete this assignment, review additional information about IKEA on the internet. Defend why you think IKEA should maintain the same organizational chart, based on the strategy implementation concepts presented in this course. Be aware that you need to substantiate your recommendations/rationale for keeping the organizational structure. Include the organizational chart as part of your supporting analysis for why this organizational chart supports IKEA's international strategy.
Your well-written paper must meet the following requirements:
4 to 6 pages in length
Formatted according to the CSU-Global Guide to Writing & APA
Contain at least five scholarly or peer-reviewed articles/journals. The CSU-Global Library is a good place to find these resources.
Include a title page, section headers, introduction, conclusion, and references page
Your proposed organization chart/s (Figure X)
Discussion and explanation of how you determined this is a good structure for IKEA
Summary of the highlights of your paper.
The effectiveness of any organization is highly dependent on its structure. Multinational companies continually find it difficult to organize their resources, support services and to allocate responsibilities. Most of these companies prefer adapting standardized structures as a way of simplifying costs and making it easier to share risks and other information. In addition to this, centralized or standardized structures are preferred because they help simplify the process of decision-making (Jonsson, 2007). On the contrary, it has been argued that these structures inhibit innovation as well flexibility in local markets. The ensuing discussion seeks to explicate why it may be beneficial to keep an existing organizational chart in line with a new international strategy. In making this case, the paper utilizes IKEA organization chart as an example.
Figure 1: IKEA organizational chart (Source: Jonsson & Foss, 2011).
Over the years, IKEA has assumed a replicating organizational chart whereby it has tried to compound the benefits of structure standardization with the strategy of local adaptation. In line with this, the company treats its organizational chart as a hierarchy encompassing flexible features, positioned near the bottom of the hierarchy tree. The company has thus been able to pursue its internationalization strategy by replicating its value chain across borders. It is important to note here that replication entails creating similar retail outlets, which deliver uniform products/services (Jonsson & Foss, 2011). Like with other companies, which have pursued a mass distributing strategy, IKEA has been successful in applying the replication format of organizational structure.
The organizational chart of IKEA has allowed the organization to transfer capabilities and routines from the parent company to related subsidiaries. In this context, there is an overlap in routines, intangible assets, as well as operating procedures as a result of knowledge transfer. For example, the company's franchise system, IKEA range, production, and supply activities are under Inter IKEA Group, which is in turn under IKEA Holding B.V (Jonsson & Foss, 2011). AS such, the company's decision-making process remains highly centralized with major decisions been made by the top management. Centralization has increased the effectiveness of the company's value chain while ensuring that the top management directs all major changes. While there is replication of operation activities particularly in IKEA Range and retail, a standardized and near-centralized organization structure has ensured th
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