Comprehensive Report on Business Operations: Ikea Case Study

This report provides a detailed analysis of Ikea's business operations, encompassing various aspects of business management. It begins by differentiating between public and private sectors and exploring different organizational structures within the business. The report further examines the impact of local, national, and global economic environments on business strategies. Accounting's importance within Ikea is highlighted, along with the functions of the Human Resource department and key features of employment legislation. A significant portion of the report is dedicated to leadership roles, including team development stages, motivational theories, and leadership styles. Customer service's impact and the advantages of customer profiling are also discussed. The report concludes with a comprehensive overview of the profit and loss account and provides valuable insights into Ikea's business practices and strategies, drawing from various academic sources and industry insights.

How Business Operate

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Different types of the organisation which are under the public and private sector..........1
1.2 Explaining the different structures within the business....................................................2
1.3 Impact of the local, national and global economic environment on the business .........2
TASK 2 ...........................................................................................................................................3
2.1 Importance of accounting in the Ikea...............................................................................3
2.2 Various functions performed by the Human resource department ..................................3
2.3 Features of the employment legislation............................................................................4
TASK 3............................................................................................................................................4
3.1 Explain the profit and loss account..................................................................................4
TASK 4............................................................................................................................................5
4.1 Role of leadership in the business....................................................................................5
4.1.1 Explaining the stages of team development .................................................................5
4.2 Defining three motivational theories................................................................................5
4.2.1 Explaining different leadership styles...........................................................................6
TASK 5 ...........................................................................................................................................7
5.1 Impact of customer service on the business ...................................................................7
5.2 Advantages of customer profiling to a business...............................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In this how business operate refers to the working of the business which is helping the
customers or clients and provide them quality services. For this report Ikea is taken for
discussion. It deals in home ware furniture and headquarters in Leiden, Netherlands. This report
will study about the different types of organisations which are found under public and private
sectors. This will more study about the different structures of the within business. This report
will explain about the external factors and their impact on the business so that company should
change their strategy to cope up with that. This will study more about the importance of
accounting which is helping the business. Functions of HR department and their benefits on
business performance will be elaborated.
TASK 1
1.1 Different types of the organisation which are under the public and private sector
There is mainly two types of the sectors public and private sector and under which there
are various types of organisations which are doing the business. Private sector business are
operating on the private grounds. There are various types of the business which comes under this
: Sole proprietor, Partnership, Limited Companies, Cooperatives, Franchise and the Charities.
Private
 Sole proprietor - this is one of the traditional business which has only one owner that
will operate business. For starting this type of business minimum capital is required. In
this owner is running the business with employees. The advantage of this business is
taking this decision on their own. No discussion and decision can be taken in minimum
time. It earns more profit than other type of business. This business has unlimited
liability.
 Partnership - in this type of the business two or more than two persons are involved.\
partners have sharing in the profit as well as losses. All the partners divide their ratio of
the investments so that no chances of confusion will be there. Before starting the
business Partnership agreement in which all partners names, address, business name,
capita;l contribution, distribution of \profit and loss etc.
Public
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 Offices which are coming under the central government - this type of business has more
involvement of government. These business has more than 50% shares of the
government.
1.2 Explaining the different structures within the business
There are different types of structures which is in the business. Structures are sole
proprietorship, corporation, limited liability company and many more.
 Limited liability company - this is mixed part of the corporations and partnership. This is
created to protect the liability of business owners. There is no limitation the company in
number of shareholders. This company is also known as 'Lacs'.
 Corporation - this business structure is more expensive than others. It is independent
business entity which has more rules and regulations. In this type of business no one is
taking risk in the putting the personal assets on the business.
 Partnership- this type of the business involves two or more then two partners involved in
this. Before entering in the business persons has registered himself in the Partnership
agreement. In this agreement name of the both partners, address, name of the business,
capital contribution, distribution of the profit and loses.
1.3 Impact of the local, national and global economic environment on the business
Impact of the business on the national level, local and global level. Diverse impact on
the business at different levels.
National level - on national level globalisation has more impact on the business.
Business is successful then it will support in the providing the opportunities of the employment.
It will also help in increase in the GDP. The business can earn more profit in this and help the
company to develop in the eyes of law.
Global level- at global level people are working at the global level and business can
effect competition at international level. The more the competitors there are chances losses occur
to the business. It will more affect the business at global level.
Local level - in local level people are more affected in business. Employment
opportunity, skills improve and with their knowledge.
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TASK 2
2.1 Importance of accounting in the Ikea
Accounting is very essential for the business. People get to the real position of the
business. Its importance are:
 Evaluate the performance of businesses- this shows the financial position of the business.
This helps the firm to know the true position of business(Valter, Lindgren and Prasad.,
2018). There are more accounts which also helps in knowing business. These are profit
&loss account, balance sheet which helps the organisation to know turnover of the
business.
 Helps business to be statutory compliant - accounting ensures that proper recording of
the liabilities is necessary. According to time of repayment which has to be paid. Those
are provident fund, pension fund, VAT, sales tax, income tax etc. For statutory
complaint timely business has to repay its liabilities on time.
2.2 Various functions performed by the Human resource department
There are several functions carried out by human resource department which are :
 Hiring and recruiting - this is one of the basic functions performed by this department.
This section makes sure that persons who are come to give interview, are selected
according to job criteria(Ramadani and et.al. 2017). Long process has top be followed by
the organisation as well as persons. This section is responsible for the appointing new
employees in the department.
 Training and development- In these employees who are newly appointed are given
training which is needed in following all procedures that are followed in the company.
All the skills and capabilities which is required to accomplished specific task will be
inculcate to them. Crucial aim of training sessions is to expand the knowledge and skills
of employees so to increase their productivity while working. Training could be given
with the help of coaching, online classes, on the job training etc.
 Employee benefits- in these people who appointed in this department has given facilities
like health insurance, providing all the basic amenities which are house, water, schools
for their children and many more.
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2.3 Features of the employment legislation
There are many laws which are made by the government which are made to protect the
rights of employees. This helps employees to do their work peacefully. It is the duty of every
organisation to give peaceful environment of people. It is the right of each and every employee.
Government has made certain rules to help them (Perren and Kozinets ., 2018) . These are :
 Working hours - it is compulsory for every firm that assign work to employee of eight
hours. If any employee is working for more than 8 hours then employer as well as boss
has been arrested and given punishment which is decided for them. It is crime. Employee
become tired after certain time period.
 Healthy and safety environment: In organisation people must provide safety equipments
which are needed by employees. This reduces accidents and injuries by implementing in
the firm. This is very much compulsory to provide safety equipments to employees.
Other than that if the environment of workplace is safe and healthy then it creates
motivation in the employees which will increase their efficiency results in increase in
overall efficiency of Ikea.
TASK 3
3.1 Explain the profit and loss account
This is one of the financial statements which determine turnover of the company. It
provides information about the cash inflows and outflows in the businesses. P&L states firm
about the sources of revenues and expenses which are made in accounting year (Mann ., 2018).
Key information about P&L account.
 Goal of the business which is determined about the profit earned over losses. It is the
duty of the entity to make this statement because it was necessary document which is
needed by many of people who want to know the position of the firm.
 This is mostly required by the investors, shareholders and many more. Basic elements of
this account is revenue, cost of goods sold, gross profit, operating expenses, operating
incomes, other income or expense, income before tax, income tax, net income and
earning per share.
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TASK 4
4.1 Role of leadership in the business
There is most significant role of the leader in business. Leader is the person who posses
the skills which make him the perfect for this. Leader is the person who guides employees and
make them to follow the path which is suggested by organisation. He is the mentor of the
employees who solves all their problems. He is appointed by firm to show the correct path to
employees. He acts as the mediator between the employees and superior authority (Long and
et.al. 2018). If any problem is face by the employees in that case he is liable to help them and
solve that issue with the help of the superiors. He must be having all knowledge and skills which
are required for this job.
4.1.1 Explaining the stages of team development
There are five stages of team development which are : forming, storming, norming,
performing and adjourning.
 Forming - in this stage people are involved in the certain team. Existing team members
are welcoming the people who are newly assigned in team. This stage helps to know each
other well on various means like social interactions and many more.
 Storming- this stage tell about the competition and conflict. Team performance decreases
in this because people are more looking for the individualistic. Work must be done to
overcome from the obstacles, differences of persons, work on team goal.
 Norming stage - in these conflicts are resolved and some sense of the responsibility
emerges. Again team performance increases and members try to achieve the goal set by
the company (Kannothra and et.al. 2018) .
 Performing - in this stage people are more matured organised and systematic working of
organisation. Focus is shifted to achieve team goals.
 Adjourning- the more enhancement is given on the finishing the tasks with full
documents and efforts and results.
4.2 Defining three motivational theories
Motivational theories are made to help the employees. This contributes in the working
habits of them.
 Maslow hierarchy of needs- This theory states that motivation is required by individual to
perform better while working. It's the duty of company to motivate their employees in
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various ways which is explain by the Maslow theory. It is in the shape of pyramid where
physiological needs has to be achieved then only it will move to safety needs and so on.
◦ Self actualisation: It includes achieving full potential at the workplace and try new
thing so to improve their knowledge.
◦ Self esteem: Prestige and pride of accomplishment of assigned task comes under this.
◦ Belongingness and love: Relationship among employees should be good. All the
employees should respect each other and their work.
◦ Safety and security: Job security, healthy and safety working environment etc.
◦ Physiological needs: It includes food, water, sex, fresh air, free time etc.
 Herzberg's two factor theory- This theory tells that some factors which increase the
morale of the employees and some which creates dissatisfaction among employees. Like
hygiene factor includes salary, working conditions, work environment, safety and
security of employees are the criteria which makes the employees unsatisfied if all these
conditions are not fulfilled by them (Hallin and et.al. 2018).
 Skinners reinforcement theory - this theory tells about the behaviour of employees. This
was invented by Gordon 1987. This tell about the praise, appreciation, promotion and any
other reward which encourages them and helps them to grow in the business.
4.2.1 Explaining different leadership styles
There are various leadership styles that are existed in the companies. Some of them are
Autocratic, democratic, laissez faire and many more.
 Autocratic leadership – In this leadership style all the decision is taken by the single
person or owner of the company. This style helps Ikea while taking quick decision
making.
 Democratic leadership – Democratic leadership states that decision taken by the company
is according to the opinions of employees and employers. Superiors distribute the work to
employees working under them so that they enjoy some authority and taken wise decision
according to the scenario. This is one of the followed styles which is followed in the
organisation as it maintains peace and harmony of the Ikea.
 Transformational leadership - In this style encourage people to bring change in the
organisation. This can be done through the innovation in the existing product and invent
new product in market.
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TASK 5
5.1 Impact of customer service on the business
Customer is the king of market. Providing all the services which will satisfy needs and
wants of the customer. If all products and services provided to consumers will definitely affect
the business. If services are provided with the best quality will improve sales of the business. It is
improving the goodwill in market. Popularity of firm will increase. Profit of the company will
increase. Better services will satisfy the customer more. Mouth publicity from customers will
affect the business in good way.
5.2 Advantages of customer profiling to a business
There are many advantages of profiling customer which are described below,
 It helps firm to know the requirements of the clients which contributes in the business for
growing. By regular feedback will help the workers to make which type of the product so
that their needs and wants would be satisfied.
 This will improve in selling of product as well as services technique. By knowing more
about the customers will help in determining taste and preference of them.
 It will help in making future decision about making the goods. Regular clients details will
help in knowing more about their needs.
CONCLUSION
From this report has concluded that benefits of customer profiling. It has also discussed
more about the impact of customer service on the business. This has discussed more about the
various leadership styles. Steps mentioned while making a team should be clearly monitored by
managers as it will help to improve their overall potential of team. Implementation of
motivational theories helps company to increase their overall productivity and effectivity.
Leaders should opt their style according to their employees as leader main focus is to increase
the efficiency of employees while working.
REFERENCES
Books and Journals
Cohen, R.B., 2018. Internet Innovations–Software Is Eating the World: Software-Defined
Ecosystems and the Related Innovations Result in a Programmable Enterprise. In Digitized
Labor (pp. 159-175). Palgrave Macmillan, Cham.
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Hallin, J.and et.al. 2018. ALMOST INTERCONNECTED—How Sweden’s 50 Largest
Companies Apply a Systems Approach to Sustainability. Applied Science and Innovative
Research.2(3).p.63.
Kannothra, C.G. and et.al. 2018. How hybrids manage growth and social–business tensions in
global supply chains: The case of impact sourcing. Journal of Business
Ethics.148(2).pp.271-290.
Long, T.B.and et.al. 2018. Critical success factors for the transition to business models for
sustainability in the food and beverage industry in the Netherlands. Journal of Cleaner
Production. 175.pp.82-95.
Mann, A.L., 2018. The power to change everything. In Future First (Vol. 9. No. 15. pp. 9-15).
ROUTLEDGE in association with GSE Research.
Perren, R. and Kozinets, R.V., 2018. Lateral Exchange Markets: How Social Platforms Operate
in a Networked Economy. Journal of Marketing. 82(1). pp.20-36.
Ramadani, V. and et.al. 2017. Succession issues in Albanian family businesses: Exploratory
research. Journal of Balkan and Near Eastern Studie. 19(3).pp.294-312.
Valter, P., Lindgren, P. and Prasad, R., 2018. Advanced Business Model Innovation Supported
by Artificial Intelligence and Deep Learning. Wireless Personal Communications.100(1).
pp.97-111.
Online
How business operate. 2018 .[online ] Available through
<http://smallbusiness.chron.com/entrepreneurship-start-operate-small-business-2441.html>
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