Operations and Project Management for IKEA

timer Asked: Mar 11th, 2019
account_balance_wallet $20

Question Description

Q1) Critically examine three relevant Operation Management (OM) decision areas (e.g. quality, inventory management, layout or process design etc.) in your chosen company (or workplace, as long as evidences can be validated with credible resources within your workplace) (suggested 750 words)

Q2a) Compare and contrast your chosen organisation with another contemporary one using the 4 Vs (Volume, Variety, Variation and Visibility) (suggested 150 words – please see Note 2)

Q2b) Examine the ways to improve operational performance within your chosen company (suggested 350 words).

Note 1: Introduction and conclusion is suggested to be 250 words.

Note B: Please include a table with the comparison of your companies 4 V’s in Appendix A and include a short discussion referring to this in the main body of the Report.

You will be required to undertake a case study and complete a case analysis report. This can be based on operations of your current or previous workplace or any other organisation known to you. The report will be 1,500 words in length (not including references and appendices). It should include answers to all the case questions (given above) and must make use of relevant unit concepts on the aspect covered.

*** Words count = 1500 words.

*** In-Text Citations and References using Harvard style.

*** References should be at least 20 references.

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                                                 IKEA is a privately-held, international home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company, which pioneered flat-pack design furniture at affordable prices, is now the world's largest furniture retailer. IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden and it is owned by a Dutchregistered foundation controlled by the Kamprad family. The company which was originated in Småland, Sweden, distributes its products through its retail outlets. As of August 2009, the chain has 301 stores in 37 countries, most of them in Europe, North America, Asia and Australia.  The IKEA Concept began when Ingvar Kamprad, an entrepreneur from the Småland province in southern Sweden, had an innovative idea. In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. So when Ingvar started his furniture business in the late 1940s, he applied the lessons he learned in Småland to the home furnishings market. Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible - except on ideas and quality. The name IKEA comes from the initials of Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the farm and village where he grew up.        Despite its Swedish roots, IKEA is owned and operated by a complicated array of not-for-profit not and for-profit corporations. The IKEA corporate structure is divided divided into two main parts: operations and franchising. Most of IKEA's operations, including the management of the majority of its stores, the design and manufacture of its furniture, and purchasing and supply functions are overseen by INGKA Holding, a private, for-profit profit Dutch company. Of the IKEA stores in 36 countries, 235 are run by the INGKA Holding.. The remaining 30 stores are run by franchisees outside of the INGKA Holding. INGKA Holding is not an independent company, but is wholly owned by the Stichting Stichting Ingka Foundation, which Kamprad established in 1982 in the Netherlands as a tax-exempt, tax exempt, not-for-profit not foundation. The Ingka Foundation is controlled by a five-member five member executive committee that is chaired by Kamprad and includes his wife and attorney. While hile most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation, the IKEA trademark and concept is owned by an entirely separate Dutch company, Inter IKEA Systems. Every IKEA store, including those run by Ingka Holding, pays pays a franchise fee of 3% of the revenue to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated and, ultimately, uncertain. Inter IKEA Systems is owned by Inter IKEA Holding, a company registered in Luxembourg. Inter IKEA Holding, ng, in turn, belongs to an identically named company in the Netherlands Antilles that is run by a trust company based in Curaçao. The owners of this trust company are unknown (IKEA refuses to identify them) but are assumed to be members of the Kamprad family. In Australia, IKEA is operated by two companies. Stores located on the East Coast including Queensland, New South Wales, and Victoria are owned by INGKA Holding. Stores elsewhere in the country including South Australia and Western Australia are owned by Cebas Pty Ltd. Like elsewhere, all stores are operated under a franchise agreement with Inter IKEA Systems.   The IKEA vision, business idea and market positioning statement provide a framework for all IKEA marketing communication worldwide. The IKEA vision is "To create a better everyday life for the many people." To meet this vision IKEA provides many well-designed, well functional products for the home. It prices its products low so that as functional many people as possible can afford to buy them. However, in creating low prices IKEA is not willing to sacrifice its principles. ‘Low price but not at any price’ is what IKEA says. This means it wants its business to be sustainable. IKEA supplies goods means and services to individuals in a way that has an overall beneficial effect on people and the environment. Customers all over the world have responded positively to IKEA’s approach. The business idea is "To offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them." The market positioning statement is "Your partner ner in better living. We do our part, you do yours. Together we save money."        The IKEA Concept is based on offering a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Rather than selling expensive home furnishings that only a few can buy, the IKEA Concept makes it possible to serve the many by providing low-priced products that contribute to helping more people live a better life at home. The IKEA Concept guides the way IKEA products are designed, manufactured, transported, sold and assembled. All of these factors contribute to transforming the IKEA Concept into a reality.  Fundamental activities such as eating, sleeping, storing items, socialising and so on create a demand for furniture and practical products that solve essential human needs. The IKEA product range meets these needs by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. The IKEA range includes products for every part of the home. Low Price Function Design Uniquely IKEA 1. Design- While most retailers use design to justify a higher price, IKEA designers work in exactly the opposite way. Instead they use design to secure the lowest possible price. IKEA designers design every IKEA product starting with a functional need and a price. Then they use their vast knowledge of innovative, low-cost manufacturing processes to create functional products, often co-ordinated in style. Then large volumes are purchased to push prices down even further. Most IKEA products are also designed to be transported in flat packs and assembled at the customer's home. This lowers the price by minimising transportation and storage costs. In this way, the IKEA Concept uses design to ensure that IKEA products can be purchased and enjoyed by as many people as possible. 2. Function- The many people have many needs. They live with kids. They need more storage. They have to make the most out of a small space. So IKEA designers are always seeking new ways to improve people's lives - without emptying their wallets. But how can good design and function be combined with good quality, all at a low price? It starts with focusing on what's important. Will an expensive finish on the back of a shelf or under a table-top improve the function? Absolutely not. So IKEA designers do not do it, because a product is of no use to the customer if it is not affordable. 3. Low Price- Low price is a prerequisite for the IKEA Concept to realise the IKEA vision - "to create a better everyday life for the many people". As the IKEA Concept aims to serve "the many people", the IKEA product range needs extremely low price levels. IKEA designers do their part to keep prices low by using production capabilities from other areas in unique and previously unimagined ways - like having a shirt factory produce furniture upholstery. Or using leftover materials from the production of one product to create an entirely new one. IKEA customers also contribute to keeping prices low. They select and pick up the products themselves, transport them home and then assemble them themselves. And they can ...
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Tutor Answer

School: Cornell University


Title: Operations Management
Thesis Statement: Operation management area plays a vital role in controlling and designing
processes of production of goods and services.


Examining three relevant operation management (OM)

Compare and contrast IKEA with Ethan Allen

Ways to improve operation performance within IKEA



Operations Management
Institutional Affiliation




Operation management is a common term in the business arena. It has the upper hand in
the business competitiveness both in the local and international market. Operation management
helps a company want to operant smoothly, grow its business, satisfy customers and boost its
bottom line. According to Hitt, Ireland, & Hoskisson, (2012), global competition, e-commerce,
productivity, customer service, and quality of goods and services the company offers are part of
the operation management. According to Hasan, (2013), operation management entails managing
the systems or two processes which create goods or provide services. Operation management
includes several processes that a company undertakes to enable it to run smoothly (Chen, 2017).
These activities include inventory management, quality management, forecasting, facilities and
layout, scheduling, locating facilities, purchasing, distribution, motivating and training
employees. Also, it involves operation management maintenance as well as distribution.
According to Hitt, Ireland, & Hoskisson, (2012), operations management has an impact on the
organizations' ability to compete. Operation management area plays a vital role in controlling
and designing processes of production of goods and services. It enables the business to improve
efficiency in its production and to meet the customer’s needs.
Examining Three Relevant Operation Management (OM)
According to Chopra, (2009), IKEA is an international retail store which designs and
sells furniture, bathroom and kitchen items, and accessories. IKEA is one of the leading furniture
retail stores in the world. IKEA Corporation is privately held and has various branches in North
America, Asia, Europe and Australia (Chopra, 2009). The main vision of the company it to
between people lives every day. Up to date IKEA has over 424 stores which operate in different
countries. The company offers modern furniture, home accessories and so on to customers at a



competitive price the customers can afford (Hellström, & Nilsson, 2011). IKEA operation
management comprises of many processes which include inventory management, quality
management, and layout or process design and so on.
Quality Management
According to Hitt, Ireland, & Hoskisson, (2010), quality management entails ensuring the
organization products or services are consistent. Quality management entails determining
quality policies, formulating and implementing quality planning and assurance, quality con...

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