Operations Management Report: Resource Management at IKEA

This report provides a comprehensive analysis of IKEA's operations management, focusing on resource allocation, risk assessment, and strategic planning. Task 3 explores resource allotment programs, evaluating the Resource Based View (RBV) and VRIO model to identify valuable, rare, inimitable, and organized resources. The report examines resource allocation plans, including financial, employee, and technological resources, and evaluates the benefits and drawbacks of various resource management schemes. Task 4 delves into risk management through a Strategic Risk Assessment (SRA), contingency planning, and the relationship between stakeholders and risk. The report also defines McKinsey's model and its application within IKEA, demonstrating how it supports the organization in achieving its goals. Techniques such as Just-in-Time and Total Quality Management are discussed to minimize costs and improve efficiency. This report offers valuable insights into operational strategies, resource management, and risk mitigation within a global organization like IKEA.

PRINCIPLES OF OPERATIONS
MANAGEMENT

Table of Contents
Introduction .....................................................................................................................................3
TASK 3 ...........................................................................................................................................3
1P7 create a resource allotment program to meet special operational necessitate for an
company.................................................................................................................................3
2M3 Evaluate and utilise the most suitable scheme in assistance of the resource allotment
programme..............................................................................................................................5
3Resource Based View and VRIO model..............................................................................5
4VRIO Model.........................................................................................................................5
5D2 Analyse the benefits and drawbacks of various resource management scheme in the
meaning of rising activity flow and outcomes.......................................................................8
6 Definition of McKinsey's model and its postulation in IKEA and about the mode that how
will they support the organisation in accomplishing their aims and target..........................8
TASK 4............................................................................................................................................9
1P8 Contrive and conduct an SRA of an company using risk identification and mapping.. .9
2M4 Create eventuality program and scheme to decrease the peril highlighted in the SRA. 9
3D3 Give the reasoned Explanation for suggested schemes at an functional, tactical and
strategic level........................................................................................................................12
4Relationship between many shareholder and threat...........................................................12
CONCLUSION..............................................................................................................................12

Introduction
Operations management is an orbit of direction obsessed with designing and managing
the activity of manufacture and redesigning organisation transactions in the manufacture of
products and services . Operations management is generally use to control and analysis the
functions of the organisation. IKEA is a international corporation that produce and trade ready-
to- collect furniture, kitchen gadgets and domestic auxiliary, among other and some others
products that is useful for home services. IKEA organisation established in Sweden in 1943 by
Ingvar Kamprad, IKEA has been the global largest furniture merchandiser since 2008. This
report shows the applicable and suitable origin for operations management, the several planning
of management of materials. It also justify several models that could be choose by the individual
company in order to raise its operational functions and activities. Several modular and reference
points are also declare in order to maintain the risk factor in the organisation. The report also
explain the kinship between the many shareholders of the organisation and risk(Gold and
Schleper, 2017)
TASK 3
P7 create a resource allotment program to meet special operational necessitate for an company.
Resource management explained as the procedure of applying the sources and material
gettable with the company in a productively and expeditiously way. Manufacture natural
resources, individuals acquirement, stock list, financial materials, earthy and IT origins could be
mentioned as illustrations. Resource management is an essential feature in operations
administration as it render an summary of the individuals that are include in a specific task of the
organisation and create the procedure of designing and speculate scheme limpid. It also assist in
to distinguishing issues and maintaining them on a particular time period. Resources is
management is the method to provide great and high production and output from the
manufacture. There are some resources that is very essential for the organisation. Several
scheme of resource administration are defined below -
Processing a strategic breakdown framework – For the organisation it doesn't concern for them
that what kind of business and organisation they have , every business take time for making
the breakdown framework of strategies for that will help the company to line up all its aims
and objectives and measure them(Kandampully, Zhang and Jaakkola, 2018) . Developing a

strategic breakdown framework help IKEA organisation to calculate its outcomes and
modify their strategies and plans accordingly. This framework also support the enterprise
by directing its activities.
Preparation for uncertainties – In the organisation sometimes certain cases and opportunities
are rises at the terminal point that cases might be needed help and support and can airs as a
demand. These challenges and situations can weaken the accomplished activity and efforts
of the company suddenly. So, for that moment the enterprise should keep definite resources
as a substitute for these situations.
Proceeds the time to gathering task requirements: Taking the content and information about the
task Before it create a mass between the group and for doing a task support to the team to
plan and maintain the strategies according to project. For the best outcomes IKEA
company should concentrate on the end goal of the task that a company want to complete
and goals are: budget , task objectives and poetics of success, applicable points and
juncture , learning outcomes , principles, primal competitors and formulation.
Create your precedence methodology: There are various methods to prioritize the task
according to aims and objectives of the organisation, opportunities and threats, budget,
competitors. It is very good way for IKEA to prioritize their work and consider them .
Modification is difficult : In the organisation any modification is creating by the IKEA then
they have to maintain their requirements and needs and the mindset of the employees
accordingly because modification is very hard to accept. So , there are some tips that is
explained to steer the change procedure:
Communication: Define the changes and modification according to the employees . Do not
explained entire modification at one time tell the employees that these task are done
differently(Sheng, 2018).
Model: Create a particular structure for prioritize the work and allocation of resources.
Benefits of resources management: Enhance perceptibility into group member employment of
the IKEA.
Much capable to create changes on the fly
Enhance task uncertainties consciousness
Built engagement spirit of IKEA.

Resources Planning: In resources planning a company can identify the essential
resources for the task . Prediction the resources involve considering what and if script. This
would be assuring the precedence and timelines that affect the structure. When they commute the
resources according to the planning then it will help them to obviate moving budgets, conflicts ,
and the behaviour of the team(Bell and Harrison, 2018).
Resource allocation plan
Resources Cost Problems Impact Outcomes
Financial
resources
$20000 Changing market
situations
It will assist IKEA in
improving their
management &
structures.
New
opportunities
in market will
be accessed
easily.
Employees $35000 High demands IKEA turn over rate
is increasing due to
low employee pay
wages.
Allocating
employees
with higher
wages results
in better
productivity.
Technology &
information
system
$48000 Advance technology
but low skilled
employees
Adopting of updated
technology results in
dealing with uncertain
situations effectively.
Technology
and
information
system is will
increase the
effectiveness
of brand
strategy.
Other
operations
resources
$10000 Political issues These resources
affects at moderate
level within business.
Using of
these
resources will
help

organisation in
achieving of
objectives.
From above paragraph, resource allocation plan has been implemented which depicts that
planning is needed so that every resource is allocated within their proper place.
M3 Evaluate and utilise the most suitable scheme in assistance of the resource allotment
programme
Resource Based View and VRIO model
Resources based view model is used to achieve agonistic rewards. According to this
approach it is very sustainable to feat outer opportunities using existing materials and sources in
a fresh method instead of trying to take new knowledge for every contrasting opportunities.
Resources based model is helping the company IKEA to achieve their objectives and goals and
also support them to develop more growth. There are two kind of resources that is tangible and
intangible.
Tangible resources: Tangible resources are the physical holding that can be touch by the
individuals just like land, buildings ,equipments and some more. Tangible resources are easily
available in the market and purchase by the person. so they consult midget rewards to the
organisations in the extended run because challenger can shortly assume the same resources.
Intangible resources: Intangible resources has no physical availability but still can be
purchase by the individuals and the organisation just like trademark, patents , reputation ,
services and some more. Brand reputation and some more intangible resources improved over a
huge period and it is not possible for the other companies to opt this reputation and other
services. Resource Based View is a model that acknowledge the particular elements for the
system to acquire broad execution. The strategy explain that a assets within an system showing
concept of this model so, it will alter it in increasing a agonistic rewards,carry on in a emulous
surroundings.
VRIO Model

Resources Valuable Rare Inimitable Organised
Products Yes - - -
Financial Sources Yes Yes - -
Employees Yes Yes Yes Yes
Patents Yes Yes Yes Yes
Valuable – It advert the sources that support the system to achieve its aim and objectives. The
several precious origin for IKEA are defined below -
Products : Products are more precious because its support the company to pull in consumers and
make earnings.
Financial Sources : Financial sources supply finances for carrying out different states in IKEA
and these activities of the company carried out with fine-textured.
Employees : Employees are valuable because they support the company in accomplish its
objectives and targets for more growth and for the reputation of the company
Patents : Patents is much precious resource because its support in making a grace for the
organisation in the industry(Pride, Ferrell and Casidy, 2017).
Rare – Rare resources are those that support a organisation in increasing agonistic rewards
against competitors in the industry. There are definite assets that is not rare for IKEA, like
furniture, products because there are some other competitors in the trade market who
offering same products as IKEA. There are some more resources that is rare for the
company or not.
Financial Sources : IKEA has very good financial origins that support the company to
accomplish the orientation of a market mortal in the Sweden market.
Employees : The IKEA organisation has employees that are honest and potential and also
extremely skilled and knowledgeable , that is why they are rare for the company.
Patents : IKEA has patents that are limited for their goods and technology which form these
patents as rare.
Inimitable – Inimitable resources are those resources that cannot be copied by anyone they are
unique. But in IKEA company products can be imitated by any other company because they
use common material and resources for creating furniture .

Financial sources: financial sources could be copied anytime either lawfully or unlawfully.
Employees : Employees are inimitable they can not be copied by anyone they are unique
because every employees has different skills and knowledge that are controlled by the
employees of IKEA and theses skills and knowledge might be not present in the employees
of other organisations.
Patents : These are inimitable because they are legally registered by the government and they are
unique no can can copied the patents of the IKEA company(Greene,2018).
Organised – Products: products are not organised in the IKEA company as well as financial
sources are also not organised according to the company.
Patents and employees : Patents and employees are organised for the company because they have
to regenerate its patents frequently in order to assure that the other companies do not imitate
the similar.
Mentation of these techniques Lean, Just-in-time ,Total Quality Management techniques and
how these techniques support the company to minimise values in IKEA company
IKEA company used many techniques for maintaining their business operation. There are some
techniques that are mentioned below:
Just in time : This technique is much administrative which is configured to raise skilfulness,
minimise values and destroy waste by exploit products and facilities exclusive when they
required. Usage of the scheme in IKEA going to support them to destruct waste in their
company to assist its dealings and whole potency of organisation . It has a amount of profit
and welfare in the organisation such as it has tiny infinite for in correctness and also support
companies to trait and find the solution of their issues with satisfaction of orders.
For example, IKEA should supply a broad prime and quality of goods and services that will fulfil
the consumers desires and requirement. It will gradually leads to gain in functional ratio and
efficiency and that is why, outcomes of hope in bringing period and Just in time can be
utilized to cut down wastes so the advanced quality of goods can be formulated with
ablated cost operations.
Total quality management: This techniques is trenchant conceptualisation for the direction of
whole company. Leading target of the method is , raise the attribute and qualities of
outcomes and also products and services by substance of constant transformation of inside
operations. This could be acquired in several organisation for assuring the attribute and

qualities of goods and service(Shahivandi, 2017). For example, TQM can be applied in
IKEA for cut down enterprise mistake, Expenditure of the dealings will gradually minimise
the proportion of faults flexure. It support the organisation in constant transformation and
improvement of operations.
D2 Analyse the benefits and drawbacks of various resource management scheme in the meaning
of rising activity flow and outcomes.
Definition of McKinsey's model and its postulation in IKEA and about the mode that how will
they support the organisation in accomplishing their aims and target.
This is the structure for potency of company that speculate them. there are many assorted
internal component within an system which are essential to assembled and raise,straight for
attainment of organisation .Seven components are construction, method, scheme, skills, style,
staff and shared. These component beliefs plays very essential character in achieving mark ,aims
and objectives. IKEA McKinsey's framework influence relation between seven inside
component of company in order to raise whole ratios and efficiency. According to this structure,
an organisation normally have squeezable and sticky and strong components along with mutual
beliefs which create a leading effect on worker execution and behaviour. Strong and tough
components of IKEA consider its cost leadership scheme(Szelągowski, 2017). Organisational
composition of IKEA is stratified which belongs to several secular of management which
support them to present and innovate escaped flowing of knowledge that will gradually support
the organisation to accomplish aims and objectives. In order to preserve their functions, IKEA
reckon on a broad scope of group and method. Steering wheel execution management scheme is
the perfect judgement example for heighten performance of organisation and resources. fresh
management procedure has been track by their managers and administrators of the company that
create a plans for modifying structure of company in order to accomplish marked and pointed
aims and objectives. This structure can be utilized in some company for checking the potency of
business functions. It analysis how to conform and adapt an company for encouraging a new
strategies.
Cost Benefit model
This theory defined the procedure that modify the company , determine several method,
judgement and some more. The theory is formulated and distinguishing the different profits and
costs connected with pickings an activity .it is used to analyse the decision. This managers or

leader add the profit of the condition and activities then less the cost that is related with gaining
that activity. IKEA can trust on the cost benefit structure as it will give and supply a observation
of the condition that is being assess. Before taking the new projects and task managers direct the
cost benefit model. This structure asses all the expected cost and locale that a organisation might
be create from the task. The result of the investigation will identify that this task is financially
sustainable or not. Cost benefit model can also consider abstract profit and costs and impacts
from a judgement such as worker morale and consumer gratification(Karatza, 2019).
TASK 4
P8 Contrive and conduct an SRA of an company using risk identification and mapping
Standards and Benchmarks for Managing Risk
ISO 31000 is a standard that was printed multinationally in the year 2009 and gives
many, several guidance and rule and laws for maintaining risk Potentially . The modular outlines
for generic concept to maintaining risk and can be formulate to various variety of risks like
program, safety and fiscal risks and can be utilised by any organisation. The standard give rules
and laws and guidance that support the company to initiate a opinion of its risk management
procedure fault-finding. The standard is cut up into 4 stages that is distinguishing the risk,
examine, assessing and treating it. This standard did not give any detailed information and needs
on how to maintain a particular risk and also did not provide any guidance that is related to
particular area.
The risk management procedure defined in the ISO 31000 standard involve the following
activities that is
Risk Determination: it used to analysis the uncertainties and find the opportunities that will help
IKEA to achieve their goals and objectives.
Risk investigation: identifying the consequence and uncertainties of the given project and
analyse that how to overcome these uncertainties.
Risk evaluation: by analysing the uncertainties they identify that this risk is bearable or not for
the company.
Risk Handling: modify the ratio and probability of the consequence that is might be positive and
might be negative to achieve its benefits(Yadav, Mzittal and Jain, 2018).

Communication and conference : This standard support investors problems and issues to identify
the uncertainties management procedure is concentrating on the correct component.
Risk assessment matrix is important concept which is needed to be used so that risk are
mapped as well as identified in proper manner. So, in case of IKEA this framework is further
discussed as follows-
Risk Matrix- Impact
Minor Moderate Major Critical
Technical risk Financial risk Operational risk Market risk
Strategic risk Operational risk Financial risk Operational risk
Financial risk Operational risk Technical risk Strategy risk
Likelihood
Technical risk- 10-20%

Financial risk- 30-40%
Operational risk- 50-80%
Market risk- 70-95%
From above shown table, it is seen that risk identifying is critically important so that
strategies are implemented accordingly. So, risk assessment matrix has been used in order to
examine the level of risk within business.
M4 Create eventuality program and scheme to decrease the peril highlighted in the SRA.
SWOT of IKEA and how it will support in extenuate hazard and processing eventuality
Swot analysis is used to identify the internal factors of the organisation that what are
strength ,opportunities , threats and weaknesses of the organisation. This analysis is used to
focus on more opportunities and reduce the uncertainties and threats for the company. SWOT
analysis is very beneficial for the organisation because it leads for growth and more
achievements because it reduce risk factor for the company. The goods that is sold by the
organisation are generally ready to use and can be collect by the consumers themselves. The
company has a occurrence in the online globe as well and the entire trade from its online
marketplace and offline trades are further than a Billion Dollars per annum. The tactical
operator of IKEA’s achievement is it’s no rubbish loom to trade that has compensated wealthy
premium for the organisation and its investor achievement. IKEA is reputated company around
the globe and trading low-cost products for your home services and requirements. This is the best
company for lower people who cant afford expensive things for the home purpose but they want
designer and innovative products for their home so IKEA provide them and fulfil their needs and
desires(Kwon, Kim, and Martin, 2016)
Strengths of IKEA:
IKEA is very reputated company and they provide very good and innovative products at lower
cost that is affordable for middle class people. Thi strategy create more customer base for the
organisation. They have several types of design in their stores and these designs attract more
customer. They create very stylish and fresh innovative products for home. The goods are
established for easy to carry means easy to transport and collect. So its become easy for customer
to take finished and ready product. The products that are create by the organisation is very easy
to put in the car and take home for the customers. They produce very cheap product and the
maintenance or products at same level. So it create very effective strategy for the company to

attract more customers base as well as they provide very good service to customers so they feel
more satisfied with their products and services. IKEA is capable to produce bulk quantities of
goods because to maintain long lasting connection with the consumers as well as suppliers.
Buying bulk quantities of products is much cheaper then buying few products so customers think
that this is very good opportunity for them to save money and its also create a benefits for the
organisation. They have very large stores and warehouse to keep their products save. IKEA is
very recognizable organisation as well as furniture brand. They have more than 600 million
customers base per annum(Brooks and Farrell, 2019).
Weakness of the IKEA:
IKEA face some very bad situation in their times because of their damage furniture. They
also face some situation and complain like because their products customers children are hurt by
furniture so Its become cause for them and decreasing the customer base. As they are more
concentrating on the creating of products but they are no taking care of the future issues related
to their products. They produce very innovative products with low quality so in earlier the
customer are happy but after some time they complaining about the products that are created by
the organisation. The goods of the organisation are known for the bad quality. These
disadvantage of the company causes less customer base and more threats for the organisation and
other companies take advantage of these issues and provide the much better quality to attract
more customer.
Opportunities of the IKEA
IKEA is multinational brand and expanded in 38 nations across the globe. But this very less
number of the according to the brand name so they have opportunity to create more branches in
the other nation and create more customer base. They sell their product online also. From few
last year online marketplace is become very beneficial for the companies to make more money
especially like holidays like black Friday where people do not want to stand on in the lines for
the sales. With the increasing demand in the food lines IKEA should push them into grocery
stores as well as(Henderson, Wersun and Wilson, 2019).
Threats of the IKEA:
Some weakness of the company become threat for the organisation. In the market there are very
fast competition and the competitors are take the advantages of the brand weakness. Because of
social media a angry consumer create more tinkle and bad reviews for the company. So theses

things become threat for the organisation. The lifestyle of the customer also create impact on the
company because of their good disposal income they want more branded and expensive product
with high quality. IKEA create cheaper products so their quality of product are maintain
accordingly so it is very major reason to create more threat for organisation and loosing for the
customer side.
So , The analysis of internal factors can support IKEA in distinguishing their capability and
imperfection as well identifying the uncertainties and threats that made to be as demand for it
supporting it in justifying the similar.
threat mapping can be distinct as the procedure of inventory losing all the potential
uncertainties that create collision the functions within an company wherein every threat is put on
a 2D gap which involve its prospect of incidence and collision. A risk map will support the
organisation to recover its threats.
D3 Give the reasoned Explanation for suggested schemes at an functional, tactical and strategic
level.
Relationship between many shareholder and threat
The relationship between different shareholders and Threat is define below -
 Investors and risk – The connection between investor and risk can be defined through
discreating connection which says that superior the revisit of an venture, upper is the risk
and inversely
 Consumers and risk – The connection of consumer with danger is far above the ground
as they require hip goods that are in drop with the market. But there are some belongings
wherein the company has already formed goods but as they are not in fall with the
marketplace so, they are considered dissipate dues to risk..
 Suppliers and risk – A company have various suppliers and they provide raw materials
to them. But there are less probability that unrefined substance does not equivalent with
the goods desires because a company do not want to bear a loss. So, hazard factor is less
with the suppliers(Mohammad, 2017)..
CONCLUSION
From the upper context , it has been analysed that operations management is very
essential elements for the company because for it is capable to perform its entire functions in

very valuable way. This also support the company to enhancing its whole efficiency as well as
presentation and develop itself in many untouched industries. In order to accomplish this, it crate
usage of different plans and functions for supply management and execute technique and
approaches like whole quality management, just-in-time and McKinsey's model and some more.

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