Operations and Project Management: IKEA Case Study Analysis Report

This report examines the operations and project management strategies of IKEA, a leading furniture retailer. It begins with an introduction to the company and its operations, followed by a review and critique of operations management principles, particularly focusing on the introduction of a new product, a 58-inch television. The report analyzes the effectiveness of Six Sigma and Lean principles within IKEA's operations, highlighting how these methodologies can improve efficiency and reduce waste. It then applies the concept of continuous improvement, analyzing a continuous improvement plan using relevant theories and models. The project life cycle is explored, including an analysis of project methodologies, tools, and leadership within the PLC. The report concludes with a critical evaluation of the PLC, comparing large and small-scale projects, and assessing its overall effectiveness. The report provides valuable insights into how IKEA manages its operations and projects to maintain its competitive edge in the market.

Unit: 16 Operation and Project Management
Qualification: BTEC HND (Level 5)
Address:
Term 2
Qualification Code: D/508/0491

Table of Contents
Introduction.......................................................................................................................3
LO1: Review and critique the effectiveness of operations management principles..............3
M1 Review and critique the implementation of operations management in relation to Six
Sigma methodology and Lean principles.......................................................................................5
LO2: Apply the concept of continuous improvement:..........................................................6
M2 Analyse the effectiveness of a continuous improvement plan using appropriate theories,
concepts and/or models...................................................................................................................7
D1 Apply appropriate theories, concepts and/or models to justify strategies of a continuous
improvement plan for achieving improved efficiency...................................................................8
LO3 Apply the project Life cycle:.........................................................................................8
M3 Analyse the rationale for the project methodologies, tools and leadership within the PLC
for the given project......................................................................................................................11
LO4: Review:.....................................................................................................................11
M4 Critically analyse how the use of appropriate theories, concepts and models in the PLC
will differentiate between large and small-scale projects...........................................................13
D2 Critically evaluate the PLC through a practical and theoretical exploration of its
effectiveness....................................................................................................................................13
Conclusion:.......................................................................................................................14
Reference:........................................................................................................................15

Introduction
In this unit “Operation and Project Management” I’ll explain the importance of
management for leading furniture company IKEA, what the company can offer with high
quality goods and wide range. The company I choose IKEA, is the largest furniture
manufacturing and retailer organisation that is operating business in different parts of world
according with what the customers need and demand.
LO1: Review and critique the effectiveness of operations
management principles
IKEA is the company I choose to work in this unit. Is one of the largest companies in
the world which already sell the electric fairs and washing machine. The company decided to
introduce a new product development which is the Large Screen Television Market. The size
the company decided is 58 inch, which will be the minimum because after this screen they
will develop other models which will be bigger than first one.
The positive things in this IKEA project is the name of the brand. Probably majority
of people has minim one item from IKEA, which can be electric friars, furniture, plates, etc.
All the customers know and trust this company because they know the story, they already has
an experience with their product. If the customer has to decide to buy a product from a new
company on the market or IKEA, 98% they will choose IKEA because of the bread name.
Another good thing for IKEA is that they already sell electronics and if they will start
this screen new project, they will not start from zero level, their employees has experience,
we are not speaking about something new 100% for IKEA.
The negative things can be marketing competition. Now exist many companies how
sell the screen for many years on the market like: Samsung, LG, Sony, Panasonic, etc. For
example: Samsung sell the first tv in 1970 and can be a serious competitor for IKEA because
of their tv experience. Beside these big companies, there are still small companies that have
been producing televisions for years. The companies who make just tv, they can make 100
different screens annually but IKEA makes a wide range of product. So, for IKEA to have a
good manage on the market with the new product (screen 58 inch) will be a bit difficult
because they already have a lot of different product.
Operations Management is about how the business can be administrated to create the
high level of efficiency in a company. It’s a complicate process to covering materials, select
the good labour and services to maximize the profit of company.

Operations vs Operation Management:
Operation is an idea you have in your mind which can be a concept or function.
IKEA had a concept to develop a new project which is the large screen 58 inch. They
decided the model, how the screen will be and what they need to create the new item.
The management works as a strategic oversight which is about how the idea will be
built in real life, how actually the idea can become real. We refer here to the screen design
and how the screen idea can be implemented. Any company in the world who wants to
develop a new item, the employee has to thing about how they idea can be interesting and
they can implement it.
When we speak about operations, we have to know that needs to exist a relation with
other business functions like: finance, human resources and marketing. All this tree are the
main functions in any company. Is important to have a good communication if they want to
achieve the same goal, they have to work as a team.
1. Financial function:
This function is responsible to found and after controlling the business capital investment and
collecting the money, the equipment and of course plant expansions. The operation managers
have to understand the financial investment and vice versa because without understanding the
methods the method between them, the financial plan will not exist anymore. Good
communication on both sides is important.
2. Marketing function:
This function has to understand the customers need and to be in close contact with them, at
the same time, with their needs and desires. After that, they have to generate a good company
services and find a way to develop a new market. For example, If the marketing department
wants to sell, first they have e to understand the what operation the company can produce and
find the type of customization operation to deliver. Marketing function with operation
function work are very close in their collaboration to provide good service to their customers.
3. Human Resource function:
This function is the responsible with recruiting which is one of the most important keys in the
company. Is very important to see and understand that the all human being is different and
this function has to know in which department every person can work. Someone can be good
for speaking and good communication with people, other employee can be good to work
themselves to plan, or creative people, etc. Human Resource has to see the employee’s skills
and hire people in any good position for them

Six Sigma and Lean:
Six Sigma is the most important tool in the company because it helps the organisation
to improve the business process. This process has to increase in performance and decrease in
process variation to help to detect improvement and in the same time reduction in profit.
When we speak about “Six Sigma Quality”, we can speak about how can be used to
indicate for a process which can be well controlled. Six Sigma can use qualitative and
quantitative techniques to help to drive the process improvement.
Dan Jones and James Womack are the founders of the Lean Enterprise Academy from UK.
Was a study based on Toyota’s fabled Toyota Production system.
Lean manufactories principles:
 Value: is about how the product will determine the customers to pay for it. In the
same time can refer to the to the customer product services. For example: IKEA has to
establish for the new product, the new screen and they will see how the product will
have a top – down target price.
 The value stream: here will can speak about entire life-cycle from the low material
the customer use. The Lean has a goal and this is to have a complete understanding of
the value stream. In general, the company who want to launch a new product on the
market, will start with a high price and after some time the price will go down
because the other company can come on the market with a better, new model.
 Flow: after we understand the meaning of this principle of Lean, we can see that the
previous principle” The value stream” will stop moving without any point and the
waste will be the inevitable by-product. The step is about creating a value with no
interruption in the product process.
 Pull: this principle helps the previous one” Flow” to be sure than nothing is made
ahead of time and work process. The process is based on forecast, schedule and made
the product until the customer’s order it.
 Perfection: a product will become perfect in time, when all the time will continue to
improvement. Of quality problems and production waste.
M1 Review and critique the implementation of operations management in relation to
Six Sigma methodology and Lean principles
Both six sigma and lean principles help IKEA company in promoting their new
launched 58 inches TV in effective manner. Through Six sigma respective company able to

determine as well as eliminate defect or issues in the TV while manufacturing. On the other
hand, lean principles help them in finding out ineffective factors at their workplace which
may impact on the process of TV manufacturing and promotion.
LO2: Apply the concept of continuous improvement:
Difference between Lean and Six Sigma:
Both of them can obtain the positive result and the difference between them is blurred
because of that. The existent deal between these two tools is that they can approach a
common purpose:
 Lean focus is for a waste reduction and on the other hand is Six Sigma which is
focused on variation reduction
 Six Sigma prefer to use the statistical data analysis and on the other side lean prefer
to approach the company goal using less technical tools as work place organisation
and visual control.
Six Sigma is working with data-driven philosophy of improvement and in the same time can
drive the customer satisfaction and give the result by reduction circle time.
What IKEA wants to improve for screen 58inch idea:
Firstly, they decided this size of the screen because at the moment is the largest one.
They are waiting for the customers feedback and how many the can sell. Because is the first
category of this kind of product for them, they have to wait and see how the screen is
working, the quality and how interesting is for people. A bit problem can be here and this is
how quickly the customers change their mind. Probably after 1 or two years they will change
the style and the size.
If a company wants to do some improvement, the only thing they can do is to see the
customer’s needs. And in IKEA case is just one question “Why the customer needs a largest
screen in the house” the answer can be easy because they don’t have time to go to cinema.
Now we are speaking about speed century where we have to make the customers life quicker
and easier.
The plan for the next five years:
If a company wants to plan for the next 5 years, they have to understand than the first
years is the most important. A good example can be with IKEA, they came with a new
product (screen 58 inch) on the market. The first year is important because they can see how

mane screen they will sell, so how many customers trust their brand. After that they need a
feedback from customers for one year to have a statistic.
We can observe that the people buy what is interesting for them. So, after this screen,
IKEA don’t want to stop here, they want to develop a cleaver tv which the customer will not
need a remote control, and the question will be” Why? “Because when you are tired or have
children, sometimes is very difficult to find the remote control and you waste time looking
for remote control or the remote control has no batteries and is necessary to go out and buy
some batteries.
IKEA understood what is means this “speed century” and now they’re planning to
develop a new big tv with you can control by voice or by phone.
The IKEAS’s plan for the next five years is to develop a new tv which will not need a
remote control because will work on your voice or by phone. Also, the tv can be controlled
by hand. For example, when you need to turn on the tv, we can clap on and when we need to
turn off we be two claps.
Total Quality Management (TQM) is describing a management approach to long
term success to fulfil customer satisfaction. When we catalogue TQM effort we can include
all the organisations who can participate: services, products, processes and culture where they
work.
IKEA create all de different furniture designs to satisfy a lot of customers category.
They start with the simplest design and finalise with the sophisticate one. They detain a big
area of different typology of customers.
When IKEA stared the business was very popular because they have a lot of different
products. After that they improve annually the service quality: how the customers are treated
in the shop, by phone or email. They improve the quality and services every year. The HR
department checking all the time the feedback from customers and employees.
M2 Analyse the effectiveness of a continuous improvement plan using appropriate
theories, concepts and/or models.
There are various model, theories and concept which an organisation can adopt in
order to identify effectiveness of continuous improvement plan. In respect of IKEA their
management adopt Performance measurement model which will help them in developing
proper plan which help in developing proper 58 inches television. Along with this through
respective model, company management also abler to develop strategies for promoting their

products effectively. Through which IKEA able to attain their objective to increase sales of
new product i.e. 58 inches TV.
D1 Apply appropriate theories, concepts and/or models to justify strategies of a
continuous improvement plan for achieving improved efficiency.
Through continuous improvement plan an organisation able to improve their process,
products, system, resources and many others. For this they may adopt different operational
management principle such as accountability, organising, planning etc. Along with this they
can also adopt Gemba Walks strategy which help them in identifying that procedure of
promoting 58 inches TV is done properly. They can also adopt six sigma and lean principles
for ensuring effectiveness of products.
LO3 Apply the project Life cycle:
Business Life cycle is the progression of a business, usually includes its incorporation stage
and is divided in 5 steps:
1. Launch: Usually a company work by launching new service or product. The launch is
important for any company in the world because when a new product has a good start,
after all the good things will start. It is perfectly normal for sale to be low in the first
term and slowly the sell will increase. What IKEA has to do after this launch is to do

some advertise with their new product by comparative the advantage they have
instead of other similar products.
2. Growth: the popular companies will have a quickly sale, not because their product is
the best, but because they have a well-known name on the market. After the previous
step “Launch” if the sell will be quickly, the company will increase rapidly the profit.
3. Shake-out: When we speak about “shake-out” process we can refer to the company’s
sell, how will be increase but of course with a slower rate. The product can be of
marketing saturation or can entering a new competitor on the market. In this stage if
the sales will continue to increase, the company’s profit will start to decrease in the
shake out stage.
4. Maturity: When a company wants to approach the maturity of major capital who was
spend, will be all the time behind the business and after this process the cash
generation will become higher than the profit on the income statement.
5. Decline: this is the last step of business life cycle and here the usually sales, cash flow
and profit are decline. In this step all the companies have to accept the failure and
extend the business life cycle by adopting the changing the business environment.
Project manager tools:
The project manager tools are also important in any business because they will help
the business to grow up and protect it from the competition on the market. Also, these tools
are applicable on IKEA’s company. I’ll write below some important tools:
 Asana:
Any company has a temple and “Asana” tool help the company to using them temples and
add a new workflow or they can create a list of tasks for themselves or for member for their
team. This tool helps the companies to create a lot of project and in the same time to
distribute them easy by posted, share boards or just covert the task into a project which can
become too big for them.
 Trello:
This tool can be used for who are not familiar with Gantt charts. Has a specific design and
easy to understand for everyone. A lot of organisation uses this tool because is easy to
understand and become quickly familiar tool to card-based design.
 Casual:

This in an online tool, visual and one of the simple tools by turning them into an easy-to-
navigate workflow. What is interesting with this tool is that can be use without a project
management background for who has a visual thinker.
Project Life Cycle is determined by the management and various other factors like what an
organisation needs can involve in the project or the nature of the project. The PLC can be
defined and complete as needs and aspects of the company.
Project Life Cycle can contain from predictive approach to adaptive approach. When
we are speaking about predictive life cycle, the specific is detailed from the start of the
project. For example: when IKEA wants to start a new project, they need to be specific: how
the project will follow all the steps, how long will be, etc. In an adaptive life cycle the scope
or the goal need to be defined for iteration as the iteration begins. Explanation of project life
cycle in the context of IKEA is given below:-
 Project Initiation- At respective section of project life cycle project manager of a
company will conduct proper research so that they can identify issues that they need
to overcome for their attainment of goal as well as target. In context of IKEA, they
want to expand their product line with 58 inches TV which they will sell to stadium
and park. So it is issue for respective company to sell or promote their new product so
that they can attract more customers.

 Project Planning- In this stage, management of an organisation will develop
strategies and action plans in order to resolve issue which lead to attainment of
objective effectively. In context of IKEA they have to promote their new 58 inches
TV and for that they may develop strategies related to advertisement and for this they
may adopt various methods. For example social media, print media, website update,
posters, advertisement on TV and many more.
 Project Execution- At this phase management of an organisation need to create plan
of action in order to carry out whole plan or strategy effectively and impressive. In
respect of IKEA, their project manager will execute strategy i.e. advertise their 58
inches TV on the different media of promotion which help them in attracting more
and more customers effectively. This will also encourage users to purchase their new
launched product.
 Project Closure- in this stage company's project manager will do monitoring,
controlling and reviewing its plan or procedures. Through this they able to identify
requirement of improvement or changes according to requirement. In respect of
IKEA, their manager will conduct analysis on continuous basis which help them in
identifying proper requirement and need of customers or market.
M3 Analyse the rationale for the project methodologies, tools and leadership within the
PLC for the given project.
While implementing project life cycle, methodologies, tools and leadership plays an
essential role which leads to attainment of goal in effective manner. This is so because by
using effective methodologies, tool and leadership style IKEA management able to develop
appropriate strategies or plan of action which help them in effectively manufacturing of 58
inches TV and promoting it effectively in order to attract more and more customers.
LO4: Review:
Monitoring and Evaluation is a process that helps improvement performance and help
the company to archive the results. The goal of this process is to improve current and future
management of outputs.
IKEA decided to develop a new product on the market (screen 58 inch). They started
with an idea “what they can do new?”, and after that they prepare a plan: how they will need
to do the screen, which material, which employees they can use, because they already are on
the market with other products. Was not necessary for them to start from 0 because they

founded this company in 1943. They have experience in marketing, they know how the thinks
works in this moment. What they don’t have is the experience in tv, which they try to learn
from the biggest competitor at the moment “Samsung”.
IKEA already planned for the next five years. They want to create a biggest screen
with some unique function as voice control or by phone and in this case will not need remote
control.
Key performance indicator: is a measurable value to help the organisation their progress
business goal. This process helps the organisation to see specific time frame. Below I’ll give
some example of key performance indicator:
 Monthly sales growth: here the company, in our case IKEA has to see if their sales
are rising or not. They have to critical evaluate this process to see what is works or not
for their product.
 New customers: Is important for every company to see if every month they have new
customers. A lot of them create a card and online register page and there they can see
how many customers register every month.
Targets: IKEA said that the target with this screen is to sale in first term more than 1000
screens. They are attending to every feedback from customer and they already start to prepare
the next model of screen. They’re waiting to see the sales for their statistic but they also work
for other models to improve the sales.
For reviewing and critique analysing an organisation can implement several methods
which help them in identifying effectualness of project life cycle. In context of IKEA their
management may adopt Waterfall model in order to evaluate it, which explanation is given
below:-
 Requirements- At respective phase of waterfall model, IKEA management will
conduct evaluation which help them in identifying resources that they will need
during promoting their 58 inches TV. Along with this, it will also help them in
developing strategies as well as plan according to target.
 Analysis- In this stage respective company project manager will do evaluation for
determining feasibility and reliability of procedure that they may adopt for attaining
their objective of promoting TV. This is based on several aspects for example
technical, financial, potential, resources and so on.
 Design- In respect of this phase of waterfall model respective company manager will
design strategies for adopting different type of promotional channel which help firm

in promoting their 58 inches TV. For this they may adopt social media, print media,
digital media and so on.
 Coding- In this stage respective organisation management will conduct coding
according to their requirement for promoting 58 inches TV.
 Testing- At this stage, IKEA project manager will do testing of procedure that they
decided in order to promote their 58 inches TV. In this they will also able to check or
test their plan of action for promoting their new product.
 Operation- At respective stage IKEA manager will do effective analysis for
identifying changes in their operations that help company in promoting TV and
selling it at huge range.
 Maintenance- In this phase IKEA management will do proper changes accordingly
to the requirement so that they can promote their 58 inches TV and increase their
sales at potential marketplace.
M4 Critically analyse how the use of appropriate theories, concepts and models in the
PLC will differentiate between large and small-scale projects.
PLC is effective for every organisation because it will help company in attaining goal
and objective in effective manner. Along with this, during adopting this it is essential for
management to identify appropriate theories, concept and model. Such as for large project
water fall model is used because it proper guidelines to management which help in attainment
of goal. On the other hand for small project a firm can adopt agile methodology.
D2 Critically evaluate the PLC through a practical and theoretical exploration of its
effectiveness.
The project life cycle is effective for every organisation because it help enterprise or
management in launching new products in effective manner for attaining more and more
profitability. Along with this it is also effective for all large as well as small organisation and
it will also help management in developing appropriate strategies according to requirement
by adopting effective methodologies, leadership style, approaches and so on.
Conclusion:
In this assignment Operation and Project Management I wrote about IKEA. I
explained with relative examples how important approach and tools are and how they can
manage the organisation activities more efficient.

Reference:
https://www.scoro.com/blog/key-performance-indicators-examples/
http://web.undp.org/evaluation/handbook/documents/english/pme-handbook.pdf
http://web.undp.org/evaluation/documents/handbook/me-handbook.pdf
http://library.cphs.chula.ac.th/Ebooks/ReproductiveHealth/A%20UNICEF%20Guide%20for
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