Role of Operations in IKEA

This article discusses the role of operations in IKEA and how it aligns with the organizational strategy. It explores the concept of order winners and order qualifiers and their implications for operations. The article also analyzes the organization's product/service mix using value chain analysis. Finally, it provides recommendations for operations management in IKEA.

1. Provide an overview of the organization and the market it operates in.
Ikea has started its operations in 1995 and design its own furniture. It has opened its first store in 1958
at Sweden. Afterwards to save freight charges and other costs, it started producing its own furniture.
IKEA has around 200 stores in 30 countries. Ikea stocks around 9500 items in its store for sale. IKEA has
done a very good job and considered as a leader in their process. IKEA is a leading organization as it has
uniqueness in its operations (Selen & Soliman, 2002).
IKEA has a concept of creating “well-designed” home furnishing products at very low as well as
affordable prices. They have created their own process by setting the retail price. Then they started their
own production process so that they can fulfill their cost objective. So, the product has been designed to
follow IKEA’s standards. This standard mainly helps in removing cost increment. IKEA possess one of the
best tools available so that there will be an error free transition and quick problem solving and make
IKEA the leader in home furnishing. There is a rapid growth in technology leads in creating some new
standards that helps in increasing the demand in the process of planning. It is important for the
organization to adopt all the changes to the operation of supply network and create innovations in the
information systems (Lefebvre, 2004). IKEA tries to be always sustainable and it is a main art of the
organization’s image. There are many problems that have been created because of market forces and
sometimes Ike fails to cope up with the new challenges and all such factors leads in increase in cost. To
cope up with these issues, IKEA always keep investing in IT so that it can help the company in adapting
the changes quickly. IKEA has improved its operations in various segments like-
 It has improved accuracy in forecasting.
 Improved overall supply chain efficiency.
 Improved productivity with the help of management.
 Increase efficiency in sales of the products.

2. What is the role of operations in the organization? What is the operations strategy and
how does this fit into the organizational strategy? How does one affect the other?
Operation management plays a very important role in every organization and the same goes with IKEA
Furniture. Ikea is involved into the selling of furniture, sells appliances and home accessories. The main
motive of IKEA is to provide best quality furniture in low cost and reduce wastage. IKEA tries to utilize its
warehouse in a proper way and maintain timely delivery of the products to the customer in low cost.
IKEA is a very successful organization and it has managed all the operations in an effective manner.
Operation management is very helpful in managing all the operations of the business. It basically
contributes in the improvement of the whole system and designs. It also helps in financial improvement
of the organization. In IKEA, operation management helps in ensuring the sustainability, efficiency and
effectiveness of the activities. Efficiency is considered as a very important factor in terms of achieving
primary goals of the organization means to maximize profitability (Fearne, Garcia Martinez & Dent,
2012). To achieve the same, operations management helps in getting the expert human resources as
well as other resources so that there can be a cost reduction. IKEA has found many ways to reduce the
cost and one of them was discontinuing the less profitable projects as it was utilizing maximum
resources for achieving maximum profit (HITT, 2011). For getting a proper output, it is necessary to
maintain the effectiveness and efficiency of the operations. Utilization of resources in the best way is
also important because it plays an important role in IKEA. It is known that IKEA has a wide control and
coordination range that mainly includes product evaluation, promotion, advertising, product
development, sales and distribution and service. Operation management is very important in case of
manufacturing business because in manufacturing business it is important to focus on different things
like all the processes and operations (Brown, Bessant & Lamming, 2013).
Operations of an organization are considered as serious functions as it includes a series of process that
are interdependent and linked to each other (Operations Management, 2015). It also consumes
resources on the first stage of input. Decisions and the results are depending upon operation function.
Operations function of IKEA is as follows-
 Process designing and identification of requirement- It is related with the planning stage. It is
the responsibility of operations manager to identify the whole process and its mechanism of
execution. It helps in the analysis of required human resources as well as other tools required.

Operations manager should be a skilled person who possesses knowledge of handling the
process in an effective way. IKEA’s operations mainly consist of the raw material, human
resources and technical tools. These are the basic necessary inputs that results in the final goods
after processing (Swink, 2011). These resources should be present in sufficient quantity so that
there would be no shortage in future.
 Processing activities- It is the most important function because it contains high expectations to
fulfill organizational objectives by producing quality goods and services. IKEA is involved in the
production activities that can be carries safely and provide best outputs on time in low cost.
These objectives can only get fulfilled in process stage. In consists of all the activities that need
to be handled one by one. – Operational manager is responsible to review and monitor the
operations of the organization (Jacobs & Chase, 2017).
 Review and monitor- Operational manager has the responsibility to monitor all the functions
while processing of several activities. Monitoring of functions involves cost as well as quality of
the product. In IKEA, there is a proper monitoring of quality of the product and if there is any
issue in the quality then the existing process rejects the product and the same has been sent to
the manufacturing department for the correction process. The organization always try to
minimize the cost of the process so operational managers has to keep a control over that. While
processing of the product, output has been evaluated and then quality department has the
responsibility to review the product to check the quality. This also helps in defining the quality
as well as cost of the product. It helps in cost setting for selling the goods in order to create
profits (Kumar & Suresh, 2009).
3. Discuss and analyse order winners and order qualifiers. What implications do these have
for the organisation's operations and the actions of operations?
Marketplace can be divided into two groups as per marketing. These two groups are order winners and
order qualifiers. Order qualifier refers to the characteristics of any product or service that is necessary in
order for the product or service to be considered by any customer. Order winner refers to the
characteristics that mainly win the bid. So, it is necessary for firms to provide order qualifiers so that
they can stay in a market. They have to maintain the quality and efficiency like the competitors to

provide qualifiers. Failure of the same may leads to reduction in sales. In order to provide winners, it is
necessary for the firms to be better than the competitors. Both order qualifiers and order winners are
different from each other and they are very much market specific and time specific (Macbeth, 2018).
Every firm has to work on some parts while making decisions based on order qualifiers and order
winners. They work according to different combinations with different customers in different market in
different ways. Although there are some general trends that all over the market but they are not stable.
It is known that need of customers never reflect by their buying habits so it is important to judge the
behavior of the customers. In the case of IKEA, there are some order qualifiers and winners from
customer’s prospect it is also considerable that trade-offs of the company is focusing on which factors
like product features and price. IKEA is known for-
 Solid material that it used for making the furniture and creates modern designs (Making value
chains work better for the poor, 2008).
 Products of IKEA are worth buying because they really provide quality products in low prices.
 There are different varieties of furniture that can be found in IKEA’s store so customers can have
a look and choose the designs of the products (Hill, Hill & Hill, 2009).
4. Using either Value Chain, product life cycle or portfolio analysis review the organization’s
products/service mix. What implications are there for the organization and for operations?
How will operations react to these?
Value chain analysis ok IKEA mainly refer to the overall analytical framework that can help in
identification of business activities that create value and give competitive advantage to the organization.
Every part in the manufacturing process or in delivering the product has a link in a chain that contribute
to the value if the product. This is the concept that mainly shows the fulfillment of mission and
objectives of the business and known as value chain (Lechehab & Kamassi, 2016).
Primary Activities of IKEA are-
IKEA Inbound logistics- Inbound logistics of IKEA includes the activities related to purchasing of raw
material from many suppliers in 51 countries globally. IKEA has many stores with wide product range

and it consists of many employees. Inbound logistics of IKEA has economies of scale and the
maintenance of relationship with the suppliers creates values. IKEA has a concept of Do-It-Yourself that
means to assemble goods on your own that lower the cost of packaging and create easiness in process
(Kim & Kim, 2016).
IKEA’s Operations-
Operations of IKEA are mainly divided into three parts- Property, Finance and Franchise in which
Franchisee is the core part. IKEA has adopted decentralized business strategy to handle its global
operations. As per the strategy, it is the responsibility of regional managers to take decisions by
considering factors like culture, pattern, consumer behavior and market (Slack & Lewis, 2005).
IKEA’s outbound logistics-
IKEA has its presence in 28 markets along with 340 stores. Customers have to bear the transportation
cost if they buy something from IKEA. This organization provides two kinds of delivery services and one
of them is Parcel delivery. Parcel delivery is to deliver small items whose weight is up to 25 kg and the
cost of this type of delivery is 12 USD depending on the location of the store. The other way is truck
delivery and it is for the purchase that is more than 25 Kg in weight. The cost of truck delivery is 50 USD.
If a customer buys goods online then the delivery will be free.
Marketing and sales-
Home furnishing and home improvement section of IKEA uses media advertising, print media, events,
public relations and direct marketing for promotion purpose. IKEA sells its products through stores,
website, catalogs and web application. All the channels are very efficient.
IKEA service- Customer service is one of the major activities in IKEA’s value chain because this
organization us very particular about the standards set of techniques and practices to provide help to
the customers. It uses online helpdesk as well as telephone customer service so that customer can get
assistance regarding exchange and return of goods. They also try to get feedback from the customers in
order to improve the process. If any customers find out that any part of assembled furniture is missing
then they do not need to again go to the IKEA store. All they need to do is to find out the number of
missing part and call the store and the replacement will be mailed to them (Baraldi, 2008).

5.Recommendations - from the knowlege you have gained from above what
recommendations would you make regarding the role of operations management in the
organisation?
IKEA is doing an amazing job by providing satisfaction to the customer needs and it has a great future. It
only needs to adopt an aggressive approach in the market because the cost of production is rising and
the sales are stable (Schirone & Torkan, 2012). IKEA is using one of the best methods for inventory
management as well as supply chain management but it can start focusing on expanding the dominance
over the other big players in the market by converting into public company and add on some additional
funds to the disposal. IKEA has always used a conservative approach of management but there is a need
of bringing changes into the policies and try to become more innovative in terms of products as well as
strategies. This organization needs to convert operations into web based so that it can reduce the cost
of transportation and logistics. IKEA can also open its stores at the locations where it is not present
currently.

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