Corporate Strategy and Governance

This research focuses on understanding the corporate strategy and governance of IKEA. It aims to analyze the impact of corporate governance and strategy on the performance of the organization. The study explores the concept of corporate strategy and governance, factors affecting it, and recommends ways to improve it.

CORPORATE STRATEGY AND GOVERNANCE
1

Table of Contents
Introduction, background and problem review................................................................................4
Introduction..................................................................................................................................4
Background of study....................................................................................................................4
Research Problem........................................................................................................................7
Research Aim...............................................................................................................................7
Research Objectives.....................................................................................................................7
Research Questions......................................................................................................................8
Significance of study....................................................................................................................8
Literature Review............................................................................................................................9
Concept of corporate strategy......................................................................................................9
Concept of corporate governance................................................................................................9
MESA Model...............................................................................................................................9
Business Strategic Transformational Model..............................................................................10
Anglo-Saxon Model for improving corporate governance........................................................12
Impact of corporate governance and strategy on business performances................................13
Discussing primary and the secondary research............................................................................14
Research Onion..........................................................................................................................15
Research Philosophy..................................................................................................................16
Research Approach....................................................................................................................16
Research Design.........................................................................................................................16
Data Source................................................................................................................................17
Data Analysis Technique...........................................................................................................18
Ethical Considerations...............................................................................................................18
2

Critical review...............................................................................................................................19
SMART objective......................................................................................................................19
GANTT chart.............................................................................................................................22
Critically reviewing results........................................................................................................22
Recommendations and the action plan..........................................................................................24
Recommendations......................................................................................................................24
Actions Plan...............................................................................................................................26
Reference List................................................................................................................................29
Appendices:...................................................................................................................................34
Appendix 1: MESA model.........................................................................................................34
Appendix 2: Anglo-Saxon Model..............................................................................................35
Appendix 3: Gantt Chart............................................................................................................36
3

Introduction, background and problem review
Introduction
Corporate strategy and governance are two important aspects that determine a procedure that is
followed by an organisation in order to develop strategic plans. The strategic plans are used in
operations and significantly reflect on the structure of authority and the competence of the
workforce. In this case, the research is based on the chosen organisation that is IKEA. IKEA is a
Swedish multinational company that is headquartered in Leiden, Netherlands (Ikea.com, 2018).
The company was founded by Almhult in 1943 and is believed to be the largest suppliers of
wooden furniture in the world till 2008. The research will focus on understanding the corporate
strategy and its governance in order to identify the prevailing problems in the organisation. The
research is aimed at understanding the problems of the organisational corporate governance and
their strategy. It will, therefore, provide the aims, objectives and the problem statement of
research. It will also propose a literature on the subject to understand the depth of the issue and
recommend suitable ways to mitigate problems faced as a result of the prevailing issues.
Background of study
IKEA is globally known to follow a dynamic structure for both economic and its sales forces.
Therefore it invests in ideas that devote its efforts and attention to the management of relational
dynamics and its related components. As per the views of Filatotchev and Stahl (2015), IKEA
group is an amalgamation of several companies which are collectively known as INGKA
Holding B.V. which follows an ownership structure. Along with the INGKA foundation in the
Netherlands it is the owner and provides funds in two different ways is reinvestment in IKEA
group or donation for the purpose of charity through its foundation known as Stitching IKEA.
The company operates globally by means of value chain system which is parented by the
strategy of production, development, distribution and retail (Galpin et al. 2015). It also includes
its manufacturing units, centres for distribution or customer distribution as well as purchasing
offices. It has 328 stores in 28 countries and on the whole, the operations are carried out in 43
countries (Hahn and Kim, 2016).
4

Figure 1: Ownership structure of IKEA
(Source: Highlights.ikea.com, 2018)
At present, the company is no longer a multinational company but an integration of enterprises,
globally (Lofthouse, 2018). This has resulted in a complete transition in corporate strategies and
governance. The organisation is presently aiming at providing value-based services which are in-
line with the sustainability of the business. Sustainability is the cornerstone of business strategies
of IKEA and the organisation expects of maintaining integration of the daily work of the co-
workers (Marques, 2018). Therefore, it believes that through this step the organization can
accomplish the purpose of improving lives. As per the opinion of Murphy and Smolarski (2018),
it is for this reason that the organization has to determine by integrating with other organisations
to create a deep impact on people or its customers.
5

Figure 2: Corporate governance of IKEA
(Source: Inter.ikea.com, 2018)
The corporate governance of the chosen organization that is IKEA secures arrangement of the
continuous amalgamation of core business sectors. As suggested by Naidoo and Gasparatos
(2018), the core sectors of business of IDEA are subdivided into three segments which are:
franchise, industry and the supply chain.
6

Figure 3: Corporate structure of IKEA
(Source: Inter.ikea.com, 2018)
Research Problem
The company is facing grave issues in management decisions when they are about to venture
into other foreign countries. The corporate strategies that are owed to the conventional business
model have led to an increase in its operational costs, slowing down of sales and portrayal of
incompetence with respect to other competing organizations in the global market. Among the
contemporary issues, the organisation has found that there is a gap in the market communications
which is affecting its sales vehemently. The strategy used for marketing communications is too
conventional due to which there is a predominance of misinterpretation of information and at
decisions of management with the distributors. This results in a lacking in communication with
the target audience or consumers. IKEA has issues with the promotion of its products and
communication with suppliers and distributors. It has resulted in a delay in supplies to the market
and an increase in demand which is usually compensated by the supply rate.
Research Aim
The aim of the study is to analyse the impact of corporate governance and strategy on the
performance of IKEA.
Research Objectives
7

The research study will be conducted in order to accomplish the objectives which are as follows:
● To understand the concept of corporate strategy and governance
● To analyse the impact of corporate governance and strategy on organisational
performance of IKEA
● To evaluate the factors affecting corporate strategy and governance of IKEA
● To recommend ways for improving corporate strategy and governance of IKEA
Research Questions
The research questions for this study are given which are as follows:
● What is the concept of corporate strategy and governance?
● What is the impact of strategy and corporate governance on the IKEA performance?
● Which factors are affecting the corporate strategy and governance of IKEA?
● What are ways that can be recommended for improving the strategy and corporate
governance of IKEA?
Significance of study
The study is focussed on understanding the concepts of corporate strategies and their governance
on the organisation, IKEA. Corporate governance is a crucial factor that determines the way the
organisation can process with the operations. It even dictates the relationship of the management
of the organization at its different levels. In addition to this corporate governance also defines the
relationship that exists among all the core business models of the organization. However, these
entire relationship chains are defined as per the strategies developed for the organisation.
Henceforth this sudden will help to understand the corporate governance of IKEA and its
subsequent relationship with its core business. The study will induce a better understanding of
the prevailing issues with respect to corporate governance and its strategies and the failures
associated. In addition to this, the study will concentrate on the necessity of the action plans that
are required to combat the risks associated with management of sudden occurrence of events that
reflects of massive catastrophic change.
8

Literature Review
Concept of corporate strategy
Corporate Strategy is important in every organisation as it helps in defining goals of
organisation, besides defining ways for achieving it. According to Rothaermel (2015), corporate
strategies of an organisation are focused on implementing and developing ways for satisfying
organizational objectives and promote corporate goals. An organization can develop corporate
strategy by using different analytical tools like SWOT, VRIO, and PESTLE. For example;
corporate (globalisation, pricing, and localization) strategy of IKEA is found to be helpful for
determining its competitive advantage and sustainability in future. On the contrary, Formentini
and Taticchi (2016) argued that developing corporate strategy in an organisation is always
expensive. It is noted that organizations need to hire external consultant for developing effective
corporate strategy, which requires cost. Therefore, it can be said that if corporate strategy is
beneficial for gaining advantage over competitors in today’s highly competitive market, it also
requires huge cost for developing and implementing it.
Concept of corporate governance
Corporate Governance is essential in organisation as it focuses on developing practices,
processes and rules for directing and controlling the firm. Based on the viewpoint of Tricker and
Tricker (2015), responsibilities of the board of corporate governance is to set strategic aims of
the organization, establishing leadership, supervising management and reporting it to
shareholders. Corporate governance has four different pillars that include leadership, fairness,
accountability, and transparency. The pillars are simply dedicated to enhancing the
organizational performances by attracting investors. For example; corporate governance of IKEA
is focused on participating in responsibility towards environment and society for bringing
sustainability. On the contrary, Klettner et al. (2018) argued that corporate governance provides
long-term benefits, instead of immediate benefit. It is not beneficial for aiding organisation
during immediate crisis. Thus, it is found that though corporate governance is helpful in
increasing organisational profitability, the profit can be gained after a long period.
MESA Model
9

The focus of MESA model is to provide the platform that promotes mutual planning and
understanding for increasing the performances of organisation. According to Visser and Tolhurst
(2017), the MESA model takes into consideration different corporate strategic initiatives that aid
an organisation to move towards organisational goals. The different strategic initiatives that are
found to be taken by organisations of UK include management of product development,
management of asset performances. Different organisations can use MESA model for developing
their strategic initiatives in an appropriate manner.
The model emphasises that good review of quality of products can help in determining the level
of product quality is supplied to the customers. Flammer and Luo (2017) noted that quality
products help in attracting new customers and retaining the old ones, which thereby enhance
profitability of company. Other initiatives that are highlighted in MESA model are regulatory
and quality compliance, meeting demands of customers and employees. For example; it is found
that IKEA in UK is offering one-weekend-off initiatives for providing its co-workers with
quality, ensuring fairness and improved work-life balances. Other strategic initiatives that can be
taken by organisations, include annual bonus, pension-loyalty schemes for motivating employees
to move towards goals of company.
It is important to note that business operations and strategic initiatives are interlinked with one
another. As commented by Aguilera et al. (2018), business operations stand as important step of
MESA model, which helps in improving company’s performances. Different operations that are
linked with strategic initiatives include customer-focused, financial as well as performances
focused. The MESA model emphasizes service management and CRM (Management of
customer relationship). The organizations can, therefore, be benefitted by MESA model as it has
the capacity to improve relationship between company and customers. In addition to this, MESA
model is also helpful for organisation as it an make it supply focused, product and asset
reliability forces. Larcker and Tayan (2015) noted that operations of production stand as the
important part of MESA model. Organisation can make use of MESA model for allocating pop
resources at time, tracking products, labor management, focus on logistics and dispatching
products. Moreover, MESA model is also helpful for process and quality management operation
of company (Refer to Appendix 1).
Business Strategic Transformational Model
10

Figure 4: Business Strategic Transformational Model
(Source: Ostergaard, 2018)
The model business strategic transformational is aimed towards improving business strategy and
enhancing operational excellence for gaining competitive advantage. Dodgson (2018) mentioned
that model of transformation strategy is focused on improving the business strategy of
organization. The mentioned model is useful for organisations as it helps businesses in
developing, aligning, communicating and implementing strategy. The model puts emphasis on
effective communication between managers and employee for successful execution of strategy.
Organisation can even develop its strategy using the model, which can be helpful for bringing
long-term success. Windsperger et al. (2018) added that the strategic transformation model is
essential for bringing excellence in operation of business. The companies can be benefited by
current model to arrange resources of organisation; such as employees, time and money for
delivering values of business and employee, customer satisfaction. However, Ostergaard (2018)
argued that offering dynamic leadership is the main concern of present model. Leadership
strategy of organisation helps in effectively meeting the goals of study. Any organisation can use
model of strategic transformation for improving its leadership strategy governance. It can
11

provide organisation with the understanding of providing training to leaders, which can enhance
their skills. Jung et al. (2017) noted that change management is also the concern of current
mentioned model. The management of change in any organization can be maintained by the
model, which can accelerate the performances of company.
Anglo-Saxon Model for improving corporate governance
The model Anglo-Saxon is focused on controlling and supervising corporation operating in
United States, Australia, Canada, and United States. As opined by Jung et al. (2017), Anglo-
Saxon model simply relies on capital market and control the entire operation. The organizations
can use the present model for improving capital market of organisation. The present model
emphasizes that banks are only slightly responsible for the operation of the business. The present
model Anglo-Saxon is helpful for organisation as it helps makes the managers understand that
they are independent of the investment banks. It is noted that companies can use the investment
banks rarely, such as in the situation when there is any planned takeover, such as LBO and MBO
transactions. The mentioned model is found to be focused on raising the capital of company on
liquid and large capital markets. Ostergaard (2018) noted that the model of Anglo-Saxon puts
emphasis on results that are achieved by organizations. The current model is therefore helpful for
organisation as it aims at measuring the level of success.
The Anglo-Saxon model is beneficial to be by different organisations of UK as it has the
capacity to measure success by analysing share dividend and price. Contrarily, Viscelli et al.
(2017) argued that the role of Anglo-Saxon model is to provide security to the stakeholders of
the company. The stakeholders include customers, shareholders, suppliers, employees. Any
organisations of UK can use Anglo-Saxon model for providing security to its different
stakeholders by providing value to them. For example; IKEA, a well-known furniture company
of UK is found to be greatly concerned about the stakeholders of organisation. Epstein (2018)
commented that customers stand as the most important stakeholders of any organisation, which
gives company a meaning. The model Anglo-Saxon can aid the company, such as IKEA to give
priority to customers, along with other stakeholders for enhancing the performance of
organisation. The model is found to be beneficial for providing values to employees (high
salaries, respect) of the company so that they work together for meeting demands of customers.
12

Therefore, it can be said that biggest role of Anglo-Saxon model is to implement goals and make
steps for meeting it (Refer to Appendix 2).
Impact of corporate governance and strategy on business performances
Figure 5: Impact of corporate strategy and governance on organisational performances
(Source: Dodgson, 2018)
Improved Reputation
The corporate governance of an organisation is beneficial for boosting its reputation. According
to Aguilera et al. (2018), publicising the policies of corporate governance develops interest of
stakeholders for working with organization. The strongest fiscal policies, as well as internal
controls of organization, make lenders become the partner of organisation. It helps organisation
to lift the business to a higher level in the highlight competitive market. In addition to this,
corporate governance also makes organisation value its other stakeholders, such as customers,
13

supplier, employees and practice transparency by sharing the internal information. It, therefore,
allows key stakeholders to feel confident about products and develop loyalty.
Fewer Lawsuits, penalties, and fines
It is noted that corporate governance takes into consideration instituting policies, which makes
companies remain compliant with state, federal and local regulations. For example; while hiring
employees, the organization considering corporate governance makes review of company that
whether the hiring practices are falling under Commission of Equal opportunity of employment.
In addition to this, corporate governance makes organization practice fair actions by making
accounting department focus on external audit. Moreover, corporate governance also is
beneficial for limiting fraud and conflicts to a greater level.
Discussing primary and the secondary research
Research methods Tools used
Research philosophy Positivism
Research Approach Deductive
Research Design Descriptive
Research Strategy
Survey
Interview
Data collection method
Quantitative (Employees)
Qualitative (Managers)
Data sources
Primary (Survey, Interview)
Secondary (Books, journals and websites)
Probability (survey)
14

Sampling method Non-probability (interviews)
Sample Size
3 Managers
100 Employees
Tools used Research methods
Table 1: Description of research methods for data collection and analysis
(Source: Self-developed)
Research Onion
Figure 6: Research Onion
(Source: Saunders et al. 2009)
Research Philosophy
15

The research philosophy that is chosen for the study is that of positivism. As opined by Peng et
al.(2018), the philosophy for the research refers to the mode in which the research is to be
conducted. This includes both the mode of data collection and the way the data is to be used. As
the research philosophy that is chosen is positivism it will involve using the theories which are
existent in relation to the subject. The positivist philosophy of research will help to test the
proceedings of the research prices. This means that as per Strand (2017), positivism is such a
research philosophy that believed in the concept that science is the ways to understand sing the
truth. There are several ways by which researchers perceive the application of research
philosophy that is of positivism. Therefore in the context of the study of the corporate
governance of the chosen organization, IKEA positivism will lead to a collection of valid data
which may be both qualitative and quantitative data. Since positivism denotes presentation of
factual data by means of observation, therefore, data that will be collected through observation
from relevant sources in case of secondary data.
Research Approach
The research approach that will be used to conduct the study is that of a deductive approach. This
approach will help to analyze data that is collected along with documentation which is related to
the research topic. As per the views of Rothaermel (2015), the deductive approach helps to
develop hypothetical situations which will analyse a situation that has occurred in real time very
closely. This approach is chosen as it gives a definite pattern that will be followed for the
research data. Similarly, in the case of this research study, the data that will be collected relevant
to corporate governance will be assessed on the basis of the existing theories.
Research Design
Research design defines the research strategies which are incorporated to integrate various
components of research topic in an efficient manner. The design, therefore, will help to address
all the stated research problems or issues. As per the views of Roux and Pree (2018), there are
three basic types of research but this research study will use descriptive design. Descriptive
design will help in analysing the case study of IKEA and present all the relevant observation in
the form of data collected. The data that will concede will help to understand the situation
16

pertaining to corporate and the strategies of IKEA. This may involve collection of data from the
south cells which may be newspaper articles, documentaries, public review top comments.
Data Source
The data that will be collected for conducting the research may be from different and valid
sources. In case of a research study that the data that is collected to substantiate the purpose of
the research is mainly classified as primary or secondary data.
Primary data
The data that is collected by first hand experiences that is from the field of study is known as
primary data. This data that is collected by using a primary data source can be n the form of
surveys or interviews.
Survey
The survey is one of the widely used ways to collect primary data. It involves a questionnaire
that is a set of questions which are constructed in a way that is relevant to the subject. The
questions are framed in a way that they solve the purpose of the study. In this study, 100
employees or the respondents will be selected to obtain appropriate responses.
Interview
Interview is a constituent of the research strategy that is used to obtain data that is considered to
be qualitative data. In this case, the managers of IKEA will be subjected to an interview wherein
they will be accountable to respond to the set of questions which are open-ended in nature. In
this case, 3 managers will be considered for conducting the interview at IKEA.
Secondary data
Secondary data refers to the information that is collected from several sources which are already
documented as well as published by valid entities. This means such data are usually collected by
others other than individuals who are conducting the research. Sources from which the secondary
data for this research study can be collected may be journals, articles or magazines.
Data Analysis Technique
17

The data that is to be collected from various sources need to be analysed using appropriate tools.
The tools used for data collection and for further analysis may be broadly classified into basic
segments. These will be quantitative and qualitative data collection. In this research work, both
the tools that are qualitative and quantitative tool will be used. For the purpose of analysing
information that is collected from respondents of the interviews, qualitative techniques are used.
For the analysing the data that is collected from surveys will be applicable for quantitative
analysis. The quantitative analysis will involve the use of graphs and charts using Excel
spreadsheets to make the data more visibly presentable at the same time more comprehensive.
Figure 7: Data Analysis Technique
(Source: Self developed)
Ethical Considerations
The research will be conducted, adhering to the applicable code of ethics with respect to conduct
of a research project. The data that will be collected and later presented for further analysis of its
to make it globally accepted will be done so as per the Act of Data Protection of 1998. The data
that will be conducted from the primary sources will not be utilised for any commercial use.
18
Dataanlaysis

Therefore, it can be said that the research will be conducted by mandating privacy as well as
confidentiality regarding the details presented by the managers of the chosen organization,
IKEA. Apart from this, this research work will significantly focus on anonymity of the
respondents. In this respect, the research will be conducted involving the employees as the
managers of IKEA after obtaining approval of permitting the researcher for both interviews and
surveys.
Critical review
SMART objective
SMART objective 1
Specific To understand the concept of corporate strategy and governance
Measurable The present objective will be effective in present case as it can help readers
understand the concept of the research topic. The first objective will clear the pros
as well as cons of corporate governance and strategy in business operation.
Attainable In order to attain the first objective, secondary source, such as different journals,
books as well as online articles will be studied. Furthermore, the researcher will
make use of company’s website for deriving statistical information for completing
the study with satiety.
Realistic The current objective will be realistic as it will provide information on research
topic. The present researcher will study the previous study and find it effective in
giving the study a meaningful ending.
Time
bound
1 week to 2 week
Table 2: SMART Objective 1
19

SMART objective 2
Specific To analyze the impact of corporate governance and strategy on organizational
performance of IKEA
Measurable The second objective will be effective in analyzing the impact of corporate
strategy as well as governance on the performances of the present company,
IKEA. The current objectives will aim to show that if corporate strategy and
governance can help IKEA to enhance organizational productivity, it also can
increase the cost of company. Moreover, present objective, therefore, will
highlight the link between dependent variable (organisational productivity) and
independent variables (corporate governance and strategy) of study, thereby
bringing satisfactory outcome.
Attainable In order to meet the second objective of present study, the researcher will use
primary source. Managers, as well as employees of IKEA, will be interviewed
and survey respectively for analyzing the impact IKEA corporate strategy and
governance is feeling on company's performances in UK.
Realistic It will be realistic as it will make reader understand the proper link between
dependent as well as independent variable.
Time
bound
2 week to 4 week
Table 3: SMART Objective 2
SMART objective 3
Specific To evaluate the factors affecting corporate strategy and governance of IKEA
Measurable The third objective will be focused on evaluating different factors that affect the
corporate strategy and corporate governance, in context of IKEA. It will help in
20

analysing the industry life-cycle, besides knowing the existing corporate
strategy.
Attainable The present objective will be attainable by using primary sources. Interviewing
the managers of IKEA can help in getting in-depth information from perspective
of managers while surveying employees will provide information on current
topic from employee’s perspective.
Realistic The objective will be found realistic as it will draw the real issues faced by
IKEA based on corporate strategy and governance.
Time
bound
2 week to 4 week
Table 4: SMART Objective 3
SMART objective 4
Specific To recommend ways for improving corporate strategy and governance of IKEA
Measurable The fourth objective will be found effective in current study as it can help in
drawing proper recommendations for eradicating the loopholes in IKEA’s
corporate governance and strategy. Moreover, the present objective will also be
beneficial for IKEA, as it can aid company to enhance its organisational
performances by improving corporate strategy.
Attainable The last objective will be achieved by using sense and humour of researcher.
The current study will make use of Positivism philosophy, which will give
researcher the space to use own senses by analysing loopholes in corporate
governance and strategy of IKEA.
Realistic The fifth objective will draw out real-methods which will make IKEA overcome
21

its corporate issues and gain competitive advantage.
Time
bound
5 week to 6 week
Table 5: SMART Objective 4
GANTT chart
(Refer to Appendix 3)
Critically reviewing results
It is noted that organisations need to focus on corporate strategy as it helps in defining corporate
objectives, besides helping company to enhance organisational productivity. As opined by
Windsperger et al. (018), corporate governance is helpful in developing confidence of investors.
It is found that corporate governance of IKEA is aimed towards carefully managing interest of
several parties, including customers, suppliers, customers as well as shareholders. In the present
context, it is found that managers of IKEA are focused on environmental as well as social
responsibility for supporting their businesses. On the contrary, Larcker and Tayan(2015) argued
that corporate governance in organization increases the cost of company. It is noted that
corporate governance requires greater administrative. Moreover, corporate boards are provided
with responsibility to meet for creating resolutions, so as to get into contractual agreements and
financial agreements. In the present case, it is noted that IKEA is focusing on conventional
method of promoting products. Digitalization requires a lot of costs, which makes the company
stick to the traditional method.
Communication plays a major role in enhancing the performances of organisation and bringing
profitability. Based on the viewpoint of Visser and Tolhurst (2017), corporate governance is
focused on ensuring economic growth as well as corporate success. It is noted that corporate
success can be gained by including a good leadership strategy and good communication.
Furthermore, it is also known from the results that corporate governance provides inducement for
enhancing the performances of employees within the organisation. In the present case, it is seen
22

that poor communication among employees of IKEA is the result of improper corporate
governance. Poor leadership strategy is, therefore, the result of poor communication within the
workplace, which disrupts the functionality of company. It is also noted that corporate
governance of IKEA has shielded liabilities of shareholders of company. It is therefore seen in
the result that IKEA is ailing to put focus on raising the capital, which is thereby stressing its
position in the competitive UK market. On the contrary, Flammer and Luo (2017) argued the
above author and said that corporate governance makes the company comply with regulations. It
is thereby found that costs of administration are much higher in IKEA, which is thereby
increasing the extra cost of company. The result is that IKEA is failing to provide proper training
to the employees for enhancing their skills for meeting the expectations of customers. Increasing
cost of administration is, therefore, resulting in dropping profit of IKEA by 10% in the year 2015
(IKEA, 2018). It is also noted that IKEA is focusing on pricing strategy for meeting customer’s
interest. The result has therefore reduced the sales rate of company to a greater extent.
Corporate Governance makes the organizations follow numerous formalities, which includes
documenting and holding annual meetings of shareholders. Tricker and Tricker (2015)
mentioned that corporate strategy and governance makes an organisation record the big decision
taken in the annual meetings with shareholders and approve it by director’s board. It is noted that
it creates stress on IKEA as failing to follow the formalities of corporate governance, UK court
can pierce corporate veil against the company. In addition to this, shareholders of IKEA can be
liable for all the debts of company. Klettner et al. (2014) commented that new products and
customization is essential in today’s market for meeting demands of customers and adapting to
market change. It is found that IKEA is capable of performing product customisation as the
company preliminarily makes proper analysis of its customers.
The result is that the customers are highly attracted towards the products of company and even
are making repurchasing decision. It is thereby improving the profit rate of company, which can
in turn aid company to gain sustainability. Furthermore, customization of product is also
resulting in brand development and formation. Contrarily, Formentini and Taticchi (2016)
argued that corporate strategy and governance mainly aims at analysing process and procedures
of business which makes company move towards goals. It is noted that equality needs to be
focused while hiring employees within the organisation. As per the record 2018, it is seen that
23

there is 6.1% gender pay-gap among employees of IKEA, which is demotivating females to carry
forward with their job roles (retail sector). On the other hand, it is also found that men are
demotivated in distribution channels, as women earn more than men in mentioned sector. It is
resulting in poor performances of employees and even disrupting communication among
employee.
Poor communication within the workplace results in poor organisational performances as the
company fails to attract customers and gain their loyalty for a longer term. Therefore, it is found
that corporate governance, as well as corporate strategy, is largely driven towards managing
company in a manner that fits interest of very stakeholders of organisation. Flammer and Luo
(2017) opined that product differentiation strategy aims at differentiating products of one brand
from another. Corporate strategy, therefore, includes strategy of product differentiation for
helping company to make the brand different from its competitors. It is known that brand image
makes an impressive impression on the minds of customers, which make then make purchasing
or re-purchasing decisions. In the case of IKEA, the managers fail to make differentiation in the
products, while making the company operate in internationally. It is found that all products of
IKEA are same in Chinese and French market. The result that is seen in present case is that the
company is facing difficulty while entering into foreign lands and expands its target market.
Recommendations and the action plan
Recommendations
The research will give a detailed explanation of the impact of corporate strategies and their use in
governance of the organisation. The research will help to reveal the unknown facts that provide
insights into the reason behind the current issue of higher operational costs and lower sales rate.
The research will work towards an understanding the prevailing issues in the context of corporate
governance and the strategies of IKEA. On the basis of findings that will be retrieved while
proceeding with a research study, there will be probable situations that need to be changed for
better performances of organisational business. Therefore, along with the process of the research,
suitable recommendations will be provided that will work towards better management of the
situation and elimination of the unwanted occurrences. As per the situation studied for an
24

improved corporate governance and development of better strategies can be suggested which are
as follows:
Maintenance of compliance for good governance
The board members of IKEA are required of balancing conformance with the aspects of
performance. It is for this reason that the board needs to elaborate the information regarding its
role and functions compared to the management of the company. In addition to this, the board's
role and its relation with governance of the company will help to define a better relationship
between the management and the board.
Clarification of strategies referring to roles for the board
The boards need to play a significant role in formulating as well as adoption of organizational
strategies. The strategy relevant to understanding the extent of contribution of board will help to
develop and determine the role that is appropriate to undertaking as well as clarifying the
understand ability of management.
Regular monitoring of organisational performance
It is recommended that the organization follows a policy of regular monitoring of organisational
performance. This needs to be done maintaining the legal compliance and for monitoring the trial
of the organisation. This means that corporate decisions are made with the maintenance of
consistency with organisational strategies and expectations of the owner. This can be the best by
identifying the criteria of key performance of the organisation and establishing measures for the
determination of success in the process. In case of the board, it is required by the directors to
establish an agreed format for submission of reports in this case.
Recognition of business risks
The organisation needs to establish a sound system that reciprocates of sound management of
risk management along with internal control of fundamental roles of boards. Risk management
techniques need to be effective and ensure better decision making process in more to develop a
deep insight trade-off regarding risk rewards.
Ensuring better ways of retrieving data
25

Regular collection of board papers needs to be ensured that includes the decision s of the CEO.
Different departments may require different form of information as fact information in the forms
of the project briefing, development programs, and site visits will help directories with additional
sets of information.
Evaluating competency of managers
The board is responsible for managing all the action as well as decisions of the organization to
have policies to guide organisational behaviour. For ensuring keeping a relationship of boards'
responsibility with the management it is important that it is required to develop policies of
delegation. The processes which are tab fault like that of the internal processes may lead to poor
communication and an uninformed process of decision making. Therefore enhancement by the
board has to be exercise soon with the emergency board meetings and meetings agendas. This is
to make a difference in order to showcase a probable difference between high performing and
mediocre boards.
Evaluating the skills of the board
For better governance of the boards, it requires to be gauged regarding assessing the performance
of the individual directors. It is recommended that qualities of the board are assessed to
understand the level of competency. This is because it influences the relationship of the board
with the management. It also includes stakeholders and managers as well.
Evaluating performance of the board
It is recommended that board needs to be aware of both strengths and weaknesses. In this
respect, the board has to implement an agreed mode of actions for the evaluation of all the
directorial programs for enhancing the progress of IKEA's governance.
Actions Plan
An action plan helps to define the set of actions that need to be followed to improve the
performance of the organization, IKEA. The following action plan is given address the corporate
governance and better development of strategies in the context of the given topic of research
topic.
26

IKEA Group
Action Plan for Corporate Governance
Sl. No. Action Target deadline How to meet
1 Maintenance of
compliance for good
governance
2 months Elaborating
functional duty of
each board member
2 Clarification of
strategies referring to
roles for the board
2 weeks Clear demonstration
of board's role
3 Regular monitoring
of organisational
performance
2 months Identifying the
organisational KPIs
4 Ensuring better ways
of retrieving data
2 weeks Development of
communication plan
and regular updation
of the plan
5 Evaluating
competency of
managers
3 weeks Assessment of
leadership quality of
board members and
assessing their
capability of handling
sudden unforseen
events
6 Evaluating the skills
of the board
2 months Considering factors
like behavioural
27

competencies to
determine the
relationship between
corporate
relationships
7 Evaluating
performance of the
board
3 months Improvement of the
processes of board by
motivational speech
and training sessions
in board meetings
Table 1: Action plan for corporate governance of IKEA
(Source: Self developed)
28

Reference List
Aguilera, R.V., Judge, W.Q. and Terjesen, S.A., 2018. Corporate governance deviance. Academy
of Management Review, 43(1), pp.87-109. Available at:
https://digitalcommons.odu.edu/cgi/viewcontent.cgi?
article=1011&context=management_fac_pubs [Accessed 26/10/2018]
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge. Available at:
https://eclass.pat.teiwest.gr/eclass/modules/document/file.php/728118/%CE%A7%CF%81%CE
%AE%CF%83%CE%B9%CE%BC%CE%B1%20%CE%B3%CE%B9%CE%B1%20%CE
%98%CE%B5%CF%89%CF%81%CE%AF%CE%B1/%CE%A0%CE%B5%CF%81%CE
%B9%CE%BB%CE%AE%CF%88%CE%B5%CE%B9%CF%82%20%CE%AC%CF%81%CE
%B8%CF%81%CF%89%CE%BD-%CE%91%CE%B3%CE%B3%CE%BB%CE%B9%CE
%BA%CE%AC/Technological%20Collaboration%20and%20Innovation.pdf [Accessed
16/10/2018]
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge. Available at:
http://www.academia.edu/download/35813317/Making_Sustainability_Work_EXCERPT.pdf
[Accessed 27/10/2018]
Filatotchev, I. and Stahl, G.K., (2015). Towards transnational CSR. Corporate social
responsibility approaches and governance solutions for multinational
corporations. Organizational Dynamics, 44(2), pp.121-129. Available at:
http://openaccess.city.ac.uk/7163/. [Accessed: 20 October 2018]
Flammer, C. and Luo, J., 2017. Corporate social responsibility as an employee governance tool:
Evidence from a quasi‐experiment. Strategic Management Journal, 38(2), pp.163-183. Available
at: http://sites.bu.edu/cflammer/files/2018/09/FlammerLuo_SMJ2017_inclAppendix.pdf
[Accessed 23/10/2018]
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance
mechanisms in sustainable supply chain management. Journal of Cleaner Production, 112,
29

pp.1920-1933. Available at:
http://www.academia.edu/download/41348217/Revised_paper_2nd_PURE.pdf [Accessed
26/10/2018]
Galpin, T., Whitttington, J.L. and Bell, G., (2015). Is your sustainability strategy sustainable?
Creating a culture of sustainability. Corporate Governance, 15(1), pp.1-17. Available at:
https://www.emeraldinsight.com/doi/abs/10.1108/CG-01-2013-0004. [Accessed: 21 October
2018]
Hahn, Y. and Kim, D., (2016). Corporate Social Responsibility: A Comparison Analysis. The
East Asian Journal of Business Management, 6(4), pp.13-17. Available at:
http://db.koreascholar.com/article?code=330445. [Accessed: 24 October 2018]
Highlights.ikea.com (2018) IKEA Facts and Figures 2018 Available at:
https://highlights.ikea.com/2018/facts-and-figures/home/. [Accessed: 21 October 2018]
IKEA (2018) Official website of IKEA. Available at: https://www.ikea.com/gb/en/ [Accessed
16/10/2018]
Ikea.com (2018) IKEA GROUP FY15 SUSTAINABILITY REPORT Available at:
https://www.ikea.com/ms/en_US/img/ad_content/2015_IKEA_sustainability_report.pdf.
[Accessed: 22 October 2018]
Jung, K., Choi, S., Kulvatunyou, B., Cho, H. and Morris, K.C., 2017. A reference activity model
for smart factory design and improvement. Production planning & control, 28(2), pp.108-122.
Available at: http://ws680.nist.gov/publication/get_pdf.cfm?pub_id=918224 [Accessed
20/10/2018]
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), pp.145-165. Available at:
https://opus.lib.uts.edu.au/bitstream/10453/33598/4/The%20Governance%20of%20Corporate
%20Sustainability%20Empirical%20Insights%20into%20the%20Development%20Leadership
%20and%20implementation%20of%20Responsible%20Business%20Strategy.pdf [Accessed
18/10/2018]
30

Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at organizational
choices and their consequences. Pearson Education. Available at:
https://books.google.co.uk/books?
hl=en&lr=&id=msofCgAAQBAJ&oi=fnd&pg=PT20&dq=corporate+strategy+and+governance
&ots=NMuBCydwpO&sig=zH4__JKHyr35kOTgUsYpjhA46d0 [Accessed 24/10/2018]
Lofthouse, K. (2018) IKEA PULLS UP CHAIR TO DIGITAL INSIGHTS WITH
PARTNERSHIP Available at: https://www.businesscloud.co.uk/news/ikea-partnership-pulls-up-
chair-to-digital-insights. [Accessed: 21 October 2018]
Marques, J., (2018). Moving forward with social responsibility: Shifting gears from why to
how. Handbook of Engaged Sustainability, pp.1-28. Available at:
https://link.springer.com/content/pdf/10.1007/978-3-319-53121-2_4-1.pdf [Accessed: 1 October
2018]
Murphy, M.J. and Smolarski, J.M., (2018). Religion and CSR: An Islamic “Political” Model of
Corporate Governance. Business & Society, p.0007650317749222. Available at:
http://journals.sagepub.com/doi/abs/10.1177/0007650317749222. [Accessed: 21 October 2018]
Naidoo, M. and Gasparatos, A., (2018). Corporate Environmental Sustainability in the retail
sector: Drivers, strategies and performance measurement. Journal of Cleaner Production.
https://www.sciencedirect.com/science/article/pii/S0959652618326040. [Accessed: 21 October
2018]
Naplesforumonservice.it (2018) Corporate Governance & Corporate Social Responsibility as
Resources in S-D logic for Values Based Service Business - An explorative study of IKEA,
Starbucks and H&M Available at: http://www.naplesforumonservice.it/uploads//files/Sebhatu
%2C%20Enquist%2C%20Edvardsson%20Corporate%20Governance%20%26%20Corporate
%20Social%20Responsibility%20as%20Resources%20in%20S-D%20logic%20for%20Values
%20Based%20Service%20Business.pdf. [Accessed: 22 October 2018]
Ostergaard, E.K., 2018. The Responsive Leader: How to be a fantastic leader in a constantly
changing world. LID Publishing. Available at: https://books.google.co.uk/books?
hl=en&lr=&id=RxxzDwAAQBAJ&oi=fnd&pg=PT15&dq=Run-Grow-
31

Transform+Model+&ots=NbVUQiDFk7&sig=olfAcJRLLz4rwou2mjn6GnqpIlA [Accessed
28/10/2018]
Peng, M.W., Sun, W., Vlas, C., Minichilli, A. and Corbetta, G., (2018). An institution-based
view of large family firms: A recap and overview. Entrepreneurship Theory and Practice, 42(2),
pp.187-205. Available at: http://journals.sagepub.com/doi/abs/10.1177/1042258717749234.
[Accessed: 23 October 2018]
Rothaermel, F.T., (2015). Strategic management. McGraw-Hill Education. Available at:
http://5.202.52.251:2626/handle/Hannan/16818. [Accessed: 24 October 2018]
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education,. Available at:
http://5.202.52.251:2626/handle/Hannan/16818 [Accessed 25/10/2018]
Roux, H. L. and Pree, M. D. (2018) How to Create the Conditions for Social Intrapreneurs to
Thrive Available at:
https://ssir.org/articles/entry/how_to_create_the_conditions_for_social_intrapreneurs_to_thrive.
[Accessed: 21 October 2018]
Scandinavian cooperative advantage. Available at:
http://openarchive.cbs.dk/bitstream/handle/10398/9464/Strategic_Management_in_Era_of_Coop
eration-_Scandinavian_Cooperative_Advantage.pdf?sequence=1. [Accessed: 22 October 2018]
Strand, R., (2017). Strategic management in the era of cooperation: Toward a theory of
Saunders, J.H., Onion, D., Collier, P., Dorrington, M.S., Argent, R.H., Clarke, P.A., Reece-
Smith, A.M., Parsons, S.L. and Grabowska, A.M., (2017). Individual patient oesophageal cancer
3D models for tailored treatment. Oncotarget, 8(15), p.52.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA. Available at: https://books.google.co.uk/books?
hl=en&lr=&id=X4qQBgAAQBAJ&oi=fnd&pg=PP1&dq=corporate+strategy+and+governance
&ots=G15IGb3Uc-&sig=3RWG1-w7agXqSUNT6_OyhA9pLDU [Accessed 27/10/2018]
32

Viscelli, T.R., Hermanson, D.R. and Beasley, M.S., 2017. The integration of ERM and strategy:
Implications for corporate governance. Accounting Horizons, 31(2), pp.69-82. [online] Available
at: http://aaapubs.org/doi/full/10.2308/acch-51692 [Accessed 22/10/2018]
Visser, W. and Tolhurst, N., 2017. The world guide to CSR: A country-by-country analysis of
corporate sustainability and responsibility. Routledge. Available at:
https://www.taylorfrancis.com/books/9781351278911 [Accessed 24/10/2018]
Windsperger, J., Hendrikse, G.W., Cliquet, G. and Ehrmann, T., 2018. Governance and strategy
of entrepreneurial networks: an introduction. Small Business Economics, 50(4), pp.671-676.
[Online] Available at: https://link.springer.com/article/10.1007/s11187-017-9888-0 [Accessed
26/10/2018]
33

Appendices:
Appendix 1: MESA model
(Source: https://www.google.co.in/url?
sa=i&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwjjj9qN_efeAhXBT30KHUyqDs0
QjRx6BAgBEAU&url=http%3A%2F%2Fwww.mesa.org%2Fen%2Fmodelstrategicinitiatives
%2FMESAModel.asp&psig=AOvVaw02Qrfv-FVCXwb2LU2yjN9H&ust=1542975312608074)
34

Appendix 2: Anglo-Saxon Model
(Source: https://www.google.co.in/url?
sa=i&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiMicTE_efeAhWUTn0KHccHD3
kQjRx6BAgBEAU&url=https%3A%2F%2Fslideplayer.com%2Fslide
%2F12916112%2F&psig=AOvVaw2lWFs2cxRf5tnOzxstTfhg&ust=1542975400225079)
35

Appendix 3: Gantt Chart
Main activities/ stages Week
1
Week
2
Week
3
Week
4
Week
5
Week
6
Week
7
Topic Selection ●
Data collection from primary source ● ●
Data collection from secondary sources ● ●
Creating layout ●
Literature review ● ● ●
Formation of the research Plan ● ●
Selection of the Appropriate Research
Techniques
● ●
Primary data collection ● ●
Analysis & Interpretation of Data
Collection
● ●
Findings of the Data ●
Conclusion of the Study ●
Formation of Rough Draft ● ●
Submission of Final Work ● ●
36

37