Management Functions at IKEA

IKEA is a company with stores all over the world. While IKEA’s corporate structure is one where some stores are franchised through Inter IKEA Systems B. V by INGKA Holding Group which operates the stores in Europe, North America and Australia, others are franchised independently, they all share the same uniform traits as is expected of an IKEA store. The large number of stores worldwide requires a management team to ensure products are delivered exactly where and when it is needed.

The flow of information and coordination needed to ensure this needs to be handled in a way that results in the most efficient and effective way of operation. The four management functions typically undertaken by an organisation to progress in its line of business, for IKEA it’s to get its products out into the market on a global scale : Planning Function In any organisation there is a need to set goals for growth. In addition to identifying and setting goals, there is also the need to decide what line of action is to be taken and the allocation of resources needed in order to achieve those goals.

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(Daft & Lane. 2010, p. 6) Planning falls into 4 categories, namely Strategic, Contingency, Tactical and Operational. In order to plan effectively, management have to be aware of the ever-changing business environment in areas that would affect them and also be able to forecast future conditions. For IKEA, this function can be utilised in managing the production of its goods from the raw materials stage until the end finished product.

Coordination is extremely crucial as it has over 1,600 suppliers across 55 countries.

Taken into consideration it’s large catalogue of over 10,000 items, clear and careful planning is important to ensure that it’s supply chain is running efficiently in order to meet supply demands. When planning for a production, a demand forecast is needed so as to be able to plan as close to the volume that is needed when it is needed. Poor or insufficient forecasting would affect the planning and IKEA would be effectively flying blind. A result would be that retailers would constantly be met with extremely volatile inventory where there would either be an over supply of product or insufficient supply.

Both scenarios incur cost and loss of revenue. Long term or strategic planning for the growth of the company may involve decisions on new store outlets, or change in product lines, or even additional initiatives to go green/increasingly environmental friendly would need advance planning. This would keep the company better prepared for the unforeseeable future. (Nieuwenhuizen et al. 2008, p. 50) Planning provides direction and allows employees to focus and encourages forward thinking. In addition, having a solid plan encourages a more participative work environment.

Today’s business environment is also growing increasingly unpredictable and change can happen at any time and affect any one area of a business. Advance planning helps soften the impact of any change that may come unexpectedly as well as have in a place a contingency plan that appropriately addresses any issues that may arise out of that change. Once the planning phase has been finalized and set into a workable plan, management would need to disperse the information out across to the various departments involved.

It determines how the actions or activities that have been decided on will be assigned and grouped across the organization. Assigning responsibility for the task to be accomplished would require the employees to fully understand and be aware of what is expected. Communication is important and for IKEA, this is even more important when its products and external store image are expected to be uniform no matter which country the store is located in.

Responsibility for logistics, transportation, distribution, purchase of raw materials etc will be handed over to the relevant departments to oversee. With a company as large as IKEA, effective organisation of resources spreads the work and make it all the more manageable when the right people are assigned the right job. In other words, organising enables management to divide and allocated the work amongst its employees. The division and grouping of work is required in order to put the planning and set goals into action.

If a certain company policy has been set and is to be executed in all of its stores worldwide, it would make little sense for headquarters employees to personally handle each store in all 55 countries. Work that has been divided and allocated to various departments or individuals must be grouped and further organised into subsections if needed. Each individual or department’s roles and responsibilities must be clearly outlined so that the actions undertaken would take effect with the goals set in mind. (Kroon. 1995, p223).