Realizing Strategy

Realizing Strategy

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Realizing Strategy

Introduction

IKEA is the world’s chief company in home furnishing. It was established in 1943 in Sweden by Ingvar Kamprad, when he was only 17 years old. IKEA operates in about 389 locations, in 48 nations in the world, with its headquarters being situated at Delft, Netherlands. The company vision is to build a better daily life for many persons in the world. Its business idea is to give an extensive range of elegant, functional products of home furnishing at affordable prices to ensure that more people are able to afford its products. The company is dedicated into providing high quality but affordable products. The IKEA group of companies contains ownership structure which guarantees long-term approach and independence. The company operates with a hierarchical, but highly centralized organization structure which can be termed as highly functional with an international market strategy. It is able to control its functional activities and concurrently take low cost advantage and enhance international suppliers’ quality. The company has also enhanced control on strategic direction and minimizes functional lay-offs. Logistic process efficiency is ensured by integrating the distribution and purchasing process under one canopy (IKEA.com, 2016). This paper proposes a change the IKEA organization chart based on the current changes and expansions of the company operations to global level, to adapt a more decentralized, divisional based structure.

Organization Chart

The best organization structure for this company should consider the global distribution of the company’s operational function. The company has currently experienced extensive international growth, such that it operates in four continents with 389 stores located in 48 countries. This means, more supervision is needed at regional level to enhance effective operation and maximization of profit generation. In addition, IKEA is a home furnishing company which gives various home furnishers to fit different modern homes located at different part of the world. This is a market branch which is highly influenced by the culture of the people. A home furnisher designed used in Asia may not be fully accepted in Europe. In this regard, new design may be needed to satisfy the preference of customers in every market niche. Thus, divisional structuring is very important to this company. In this case, those managing operation in the region may require some form of flexibility to enhance effective implementation of the new cultural based changes in product design and material supply. Thus a more decentralized organization structure may be need. This will be integrated to other structuring factors that include the functional aspect of organization chart or structure (Grant & Jordan, 2015). Below is the proposed organization chart.

Discussion

The chart was created in this manner first to demonstrate the hierarchy in the company. Although all other managers are hierarchically in the same operation level, they are all below the CEO who acts as the head of the organization and who the managers should report to. This creates a sense of accountability among managers in the company. The Management functions are grouped into two main groups which include functional group and operational groups. Functional group represents main management group that enhances the general operation of any organization in the world. It is basically based on the various organization operations that control the general operation of the organization to enhance the organization success. The main important functional groups in an organization include finance, human resource, and communication. These departments play an essential role in ensuring effective operation of an organization. Although strategy process organization development and IT management belong to this category of management functions, it is more advance such that it is the only management process that will influence all other department including other functional sections. Strategy process organization development will focus on developing varies ways in which different issues in different management sections can be handled in the company. Moreover, the information technology serves as the backbone of the operations of the entire organization. In this regard, this is a very important functional area since it influences the general operations of all other managerial positions in the organization. This is the main reason it appears in a higher position compared to other functional managerial categories. The management sections in the functional category can be used enhance operation in the entire company including the regional level.

Operational department are unique since they generally focus on the product manufacturing process and its distribution to the market. It includes retail and expansion, industrial management, and range and supply management. This group of management is more concerned on the customer needs and the market situation, other than normal organization management strategies. The strategies employed in this management group may differ extensively based on the regional of operation since these operations may vary based on various factors which include customers taste and preference per region.

Summary

Although the current organizational structure has not failed in enhancing the operations of the company, it is important to note the organization operation can be enhanced beyond the level it is today by modifying the organization structure and regionalizing the production management. This means, all functional operations will have employees to enhance their operations at any level and report back to their managers in company’s headquarter. However, the managerial operations under operational group should be extended to regional office to enhance the customization of product to fit the customer needs.

References

Grant, R. M. & Jordan J. (2015).  Foundations of strategy  (2nd ed.). Hoboken, NJ: John Wiley & Sons. ISBN- 13:  9781118914700 

IKEA.com. (2016). Retrieved from < http://www.ikea.com/ms/en_US/this-is-ikea/company-information/index.html#organization>