Managing Innovation at IKEA: Performance and Industry Analysis Report

This report provides an in-depth analysis of IKEA's innovation management, performance, and its position within the industry. It begins with an executive summary and introduction, followed by an overview of IKEA's organizational structure and its innovation history. The report examines IKEA's existing innovation performance and capabilities, including a SWOT analysis and an innovation audit, assessing strengths, weaknesses, opportunities, and threats. The report also analyzes the industry landscape in 2020, highlighting the impact of the COVID-19 pandemic and changing market dynamics. The report covers IKEA's financial resources, market share, brand loyalty and the Space 10 innovation lab. The report concludes by discussing the challenges and opportunities facing IKEA in the context of innovation and the evolving business environment. The report provides an overview of the company's innovation history, existing innovation for formation calculators of enterprise, and industry in 2020.

Managing Innovation
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EXECUTIVE SUMMARY
Innovation and enterprise both are interlinked with each other. Innovation is defined
as process of developing something new within a society or community. This report focuses
on concept of innovation the organisational context of IKEA. The evolution of innovation has
changed the market as well as business sector. It is important for enterprises to adopt new
change so that it is easy to access new opportunity and goals are accomplished. From the 19th
century, innovation starting place around the globe as periods start focuses on invention and
innovation and technical invention across the globe. IKEA is a large enterprise in retailing
industry which has done innovation with the change in industrial specific field. Furthermore,
it is essential for industries in this competitive era to deliver a change within the society.
Development & growth of a nation defence of honour scale of innovation and sustainability
period of businesses. The technological and business development has gone far from time to
time which increases the importance of innovation globally. Entrepreneurs make changes as
well as in aviation in market with aim of gaining profit goodwill or can you change in
society.

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................2
INTRODUCTION.................................................................................................................................4
MAIN BODY........................................................................................................................................4
Organisation & Industry Overview.................................................................................................4
The Organisations existing Innovation Performance and Capabilities.........................................5
The Industry in 2020..........................................................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10
Books & Journal:.............................................................................................................................10

INTRODUCTION
Innovation is defined as process of developing something new product or a thing. The
evolution of innovation has affected business sector at wider scale (Stubbs, 2019). In business
sector it is important for enterprises to focus on new change so that their sustainability
increases for longer period of time. Main aim of this report is to understand the importance of
innovation within business sector. With entry of new businesses as well as opportunities
enterprises have develop new way of doing businesses in market this increases the
importance of innovation. IKEA, which is a multinational group that manufacture and
assemble home appliances as well as other goods and services which, is headquartered in
Netherland. The enterprise deals in kitchen appliances home accessories furniture and other
useful goods as well as home services across the globe. This report comprises of organisation
and its innovation history, existing innovation for formation calculators of enterprise, and
industry in 2020.
MAIN BODY
Organisation & Industry Overview
IKEA, a Swedish organisation headquartered in Netherland and is the largest
manufacturer of home appliances other goods/ services. It was founded by Ingvar Kampard in
20 July 1943. The parent organisations of company are INGKA Holdings, Stitching INGKA
Foundation, INGKA B.V. Also, company is known as world largest furniture retailer which
433 stores operating in 52 countries worldwide. Most of the large market of company
operates in countries such as UK, Japan, China and India. The majority of company’s stores
are located outside city centres because of land cost traffic access. It has ample number of
products goods and services such as smart home, solar PV systems, furniture rental furniture
and home where etc.
Innovation history
From evolution to Revolution company has focused on their innovation and has been
successful in providing new changes to society as well as community. In 2013, they launched
refugee shelters offering an alternative to the unlock able that are more commonly adapted to
house victims of displacement. Further, they have launched spaced and innovation lab in
Copenhagen which focuses on development of improving the future of life styles as well as
well-being etc. Moreover, they have been changing their market strategies because of flexible
demands and trends of market as well as customers globally (Erdogan, 2020).
To enter into a foreign market they also use many entry strategies such as joint venture,
localisation and partnership with some local brands. By use of these strategies, they are able
to explain their business in most efficient manner. It has been also examined that it was a
difficult stages in many countries for IKEA to run their businesses store such as in U.S, 2002,
Japan and China. Organisation have also many competitors such as Walmart, Amazon,
Wayfair, serious, Tesco, American Woodmark, pepper fry and many other private label
brands. It has been analysed that these competitors dominates the market of enterprise which

makes it difficult for entity to operate worldwide properly. In comparison with their
competitors, IKEA is also facing difficulty in in market because of Omni channel business
model that combines its experimental physical blue box stores with convenience of online
shopping. The format stores of warehouses which were a tremendous innovation are currently
placed outside of city centre to assist company to keep their expenses and other problems at
low (Garnier, 2019).
From explained matter, it states that with IKEA global expansion of business, they are
developing their innovation and changes worldwide with purpose of helping people around
community. Therefore, specified paragraph reflects the overview of selected entity and their
innovation history.
The Organisations existing Innovation Performance and Capabilities
The performance of innovation and capabilities in regard with IKEA has been always
and challenging task because of flexible/ demands of customers at global level. So, to analyse
these innovation performance and capabilities of enterprise SWOT analysis and other factors
related to performance of enterprise has been discussed below-
SWOT Analysis – Capabilities
It is a tool used by many enterprises to determine and analyse the internal capability
of company accessing strength weakness opportunities and threats (Natalicchio, 2017). It is
crucial to use this to so that capabilities of selected entity are being determined and which
assist in gaining information across the market. It is a time consuming tool because they
require deep level of knowledge expertise and reliable information so that capabilities are
accessed in a proper manner.
STRENGTH
 Main strength of IKEA is that it is
situated globally which increase its
customer base.
 Then it has a strong brand image and
Goodwill worldwide.
 It has larger product portfolio which
graces the market of a company.
WEAKNESS
 As company provides cheap products
to the consumer they have a
perception that quality will be also
low this results in low profit to
business.
 Another weakness of IKEA is that
they have their stores outside city
centres and which makes it
inconvenient for customers to access
their stores.
OPPORTUNITY
 Due to increase of a current economy
situation prices for lower priced
products has increased which can
enhance the business market of
company.
 With on-going current situation of
covid-19, people do not purchase
THREATS
 Because of this pandemic situation
market and economy of many
countries has slow down and which
has affected traffic store of IKEA.
 Due to their competitors like Amazon
and Walmart are using new strategies
for your business they are dominating

products we are offline and mostly
preferred online purchasing which is
a huge opportunity for firm.
the market of IKEA Company.
Innovation Audit
Innovation Audit is defined as process through which firm manages the innovation &
its overall stages. The this audit process is a time consuming because it comprises of 5 stages
which are discussed below-
Setting the stage- It is first stage of innovation audit process in which planning and
organising is being done with customer’s industry research and a support on innovation goals.
In context with selected company, to set up their research lab space 10 they have been using
many business models & digital technologies to carry out their goals or objectives properly
(Marsh, 2018).
Anonymous surveys- Then second stage measurement and feedbacks from
employees are being carried out to examine views over innovation. So, in relevance with
selected organisation they have also been carrying out service within the management which
help them in decision making towards their implementing innovation (Tronvoll, 2019).
Detailed interview- This suggests that detailed overview of innovation is necessary
which is done by carrying out detailed surveys thorough every individual. In context with
given enterprise to gain detailed interviews they conduct SWOT analysis which helps them to
gain information and valuation in regards with new change.
Executive briefing- Further, this stage describes a brief of summary innovation
which helps in improving efficiency level and overall planning. The innovation of space 10

research lab is carried out with the purpose of helping and improving lives of people. In
relation with chosen Company, implementing master plan assist them to make decisions and
have changed their priorities to enhance their innovation proficiency.
Rapid adaption- It is last age in which workshop collaboration activities and other
campaigns are being implemented so that how an innovation will be adopted is known to the
public as well as organisation. Innovation of space 10 is an exhibition space also so which is
being used as workshop by enterprises. It helps them to adapt rapid innovation. So, by
assessing organisation innovation audit it is easier to make decisions and use resources at
optimum level (Raj, 2020).
The discussed process is a time consuming but is an effective way of managing new
changes within a management. It is essential to focus on this process so that everything is
carried out in a systematic way without facing any problem or issue.
Assessing Organisation’s Existing Innovations Performance
Existing innovation performance of IKEA is flexible because of on-going pandemic
situation of covid-19. This situation has affected performance of company and has affected
their overall organisational structure. Organisational existing innovation performance has
been affected by many factors which are discussed and explained as follows-
 Money/ availability of financial resources and return on investment- Their current
existing innovation performance is based on space 10 which is a research lab
headquartered in Copenhagen district which is also an exhibition space and is
operated by Rebel agency with aim of exploring innovative and responsible Business
models to help and improve lives of people. Also, IKEA have many financial
resources which helps them to expand the research lab with their new innovation
strategy (Granger, 2018). Moreover, with availability of money they are able to
introduce new changes in their stores and their research lab appropriately.
 Market share of product and growth rate of innovated product- Market share of
home appliances with new features, furniture new designs, increases the growth rate
of their innovation which is Space 10. As there purpose of innovation is to enhance
and improve the standard living of people by providing high quality a product with
different specifications next their brand different from competitors.
 Brand Loyalty- The scale of brand loyalty is important for a business because it
reflects the impact of product or innovation within the market. It also depends on
customer’s perception over the product. In reference with chosen enterprise, they have
a strong brand loyalty because of providing affordable home ware products with
higher quality. The long-time of customer retention to the business/ products reflects
the brand loyalty. Because of maintaining customer relationship management chosen
enterprise is able to manage brand loyalty worldwide.
After analysing the above paragraph it has been examined that on the existing revision
performance and capabilities are most essential part of business which is required to be
accessed in correct way. Existing innovation performance is important to analyse so that

decision making in future context are made properly. The above factors specify that it is
necessary to have a proper measuring of performance progress and capabilities so that
resources are used with most efficient way. It is not easy to assess existing innovation
performance because of many factors such as flexible market external and internal factors etc.
which makes it time consuming.
The Industry in 2020
In current year, the business sector has changed because of on-going situation of
pandemic covid-19. This situation has affected market at deeper level making it difficult for
IKEA to focus on the Innovation and new changes. Also, customer’s perception and demand
side changed which has affected our business structure decreasing profit and margin ratios.
Also, company has launched be someone's home campaign with purpose of protecting people
from situation. The stage of innovation of industry in 2020 has been slow down affecting its
growth and development. It has been seen that the year of 2020 of selected industry has been
impacted at death which leads to low profit and benefit from market (Pellegrino, 2020).
Enterprise has also been improving the performance level by implementing effective
strategies such as diversification and differentiation. This year is difficult for manufacturers
as because economy of many countries has slowed down effectively overall market sector.

CONCLUSION
After a brief analysis of an above report, it has been examine that managing innovation in
business is an essential task which tab level of expertise and knowledge. So discussions have
been made about organisation and its overview innovation history assessing enterprise
innovation performance and capabilities and industry in 2020. Therefore, it is important to
make decisions regarding new changes and innovation so that everything is done properly.
Furthermore, it is also stated that innovation audit assist in carrying out process as well as
innovation in most efficient manner. Thus, audit process is also discussed briefly explaining
how organisation carries out their innovation process. So, to achieve goals and objectives
properly it is necessary to focus on concept of innovation at wider context.

REFERENCES
Books & Journal:
Stubbs, 2019. Strategies, practices, and tensions in managing business model innovation for
sustainability: The case of an Australian BCorp. Corporate Social Responsibility and
Environmental Management, 26(5), pp.1063-1072.
Erdogan, 2020. Managing the tradition and innovation paradox in family firms: A family
imprinting perspective. Entrepreneurship theory and practice, 44(1), pp.20-54.
Natalicchio, 2017. Managing knowledge assets for open innovation: a systematic literature
review. Journal of Knowledge Management.
Garnier, 2019. Do enriched digital catalogues offer compelling experiences, beyond
websites? A comparative analysis through the IKEA case. Journal of Retailing and
Consumer Services, 47, pp.361-369.
Marsh, (2018). When and how does labour lead to love? The ontogeny and mechanisms of
the IKEA effect. Cognition, 170, 245-253.
Tronvoll, 2019. From Customer Feedback to Innovation: The IKEA Innovation Journey from
Screws to Click. Service Innovation For Sustainable Business: Stimulating, Realizing And
Capturing The Value From Service Innovation, p.75.
Granger, 2018. Urban Living and Innovation Labs.
Raj, 2020. Barriers to the adoption of industry 4.0 technologies in the manufacturing sector:
An inter-country comparative perspective. International Journal of Production
Economics, 224, p.107546.
Pellegrino, G. and Piva, M., 2020. Innovation, industry and firm age: are there new
knowledge production functions?. Eurasian Business Review, 10(1), pp.65-95.
Vlăduţ, 2018, May. Innovation Audit for business excellence. In Proceedings of the
International Conference on Business Excellence (Vol. 12, No. 1, pp. 1026-1037). Sciendo.
Crane, 2019. An Innovation Audit: Evaluating Corporate Readiness for Innovation.
Berg, 2019. Challenges in the Current Innovation Audit Practice: KTH Master Thesis Report.