Critical Analysis of IKEA's Revenue Loss Due to Customer Complaints

This report provides a comprehensive analysis of IKEA's revenue loss in 2011, specifically focusing on the impact of numerous customer complaints. The study begins with an introduction to corporate governance and strategy, highlighting the importance of customer satisfaction. It examines the background of IKEA, its organizational structure, and the rationale for investigating the issue of customer complaints. The research aims to identify the causes of these complaints, assess the importance of customer service as a competitive advantage, and determine the impact of these issues on IKEA's revenue and profitability. The report includes a literature review exploring the issues behind customer complaints, the significance of customer service, and its impact on IKEA's financial performance. The methodology section details the research approach, design, philosophy, data collection methods, and ethical considerations. The critical review of results analyzes both secondary and primary research findings. The report concludes with recommendations and an action plan to address the identified problems and improve IKEA's customer service and overall business performance.

Corporate
Strategy and
Governance

Table of Contents
Title: “A Critical analysis of revenues loss in 2011 due to numerous customer complains”. A
Study on IKEA. ..............................................................................................................................3
CHAPTER 1: INTRODUCTION...................................................................................................3
1.1 Overview and background of the research...........................................................................3
1.2 Overview and background of the organisation....................................................................3
1.3 Rationale of the research......................................................................................................3
1.4 Research Aim, objectives and questions..............................................................................4
1.5 Structure of report................................................................................................................4
CHAPTER 2: LITERATURE REVIEW ......................................................................................6
2.1 Issues behind numerous customer complaints in IKEA......................................................6
2.2 Importance of focussing on customer services as a competitive advantage........................7
2.3 Impact of issue on revenues and profitability of IKEA.......................................................8
Chapter 3: RESEARCH METHODOLOGY ...............................................................................10
3.1 Research approach.............................................................................................................10
3.2 Research Design.................................................................................................................10
3.3 Research philosophy..........................................................................................................10
3.4 Data collection...................................................................................................................11
3.5 Sampling............................................................................................................................11
3.6 Ethical consideration..........................................................................................................11
CHAPTER 4 : CRITICAL REVIEW OF RESULTS ..................................................................14
4.1 Critical review on the basis of secondary research............................................................14
4.2 Critical review on the basis of primary research................................................................15
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN...................................................22
5.1 Recommendation................................................................................................................22
5.2 Action Plan.........................................................................................................................22
CONCLUSION.............................................................................................................................25
REFERENCES ............................................................................................................................26

Title: “A Critical analysis of revenues loss in 2011 due to numerous customer complains”.
A Study on IKEA.
CHAPTER 1: INTRODUCTION
1.1 Overview and background of the research
Corporate governance has become a buzz word in the corporate world. All types of
organisation and business owners applying the concept of corporate governance in order to meet
out the customer needs and ethical environment within workplace. This process involves the
proper structure or procedure designed for roles and authorities. Corporate strategy plays an
important role in an organisation to gain sustainability and managing business. Therefore, it is
essential for each and every company to formulate corporate strategy as it determines the scope
of a operational activities and the manner in which a processes support the goals as well.
1.2 Overview and background of the organisation
Present research will be based on corporate governance for which study will be taking
IKEA which is the furniture retailer company that spread at wider level. It is a private limited
corporation that was founded in 1943 by Ingvar Kamprad. The headquarters of this retailer is
located in Leiden, Netherlands. The present revenue of this organisation is $40.906 billion.
There are 194,000 employees are working for proving effective services to customers. The focus
of firm is one managing innovation in wood according to customer expectation and
requirements (Amran, Lee and Devi, 2014). As a company cannot run without contribution of
stakeholders, therefore, it is essential to take their participation for developing corporate
strategies. In this regard, these stakeholders concerns more on developing fresh and new
furniture designs to transform lives of buyers. The vision of the company is to create a life better
for many people by offering innovative and well-designed furniture and home appliances at low
price which become easy for all people can afford it. The mission of the company is to
maximise the level of stakeholders and communicate the objectives and goals of company to
them.
1.3 Rationale of the research
Present study based on to issues behind increasing complaints of customers under IKEA.
Due to this issue, it has faced various problems related to generate revenues and gain

sustainability at marketplace. For this purpose, an analysis on customer services to gain
competitive advantage id done, which might be helpful to get over from the corporate issues
(Filatotchev and Stahl, 2015). The main purpose of this present study is to evaluate the solution
to keep customer focused on the product or services of IKEA. The reason for taking this issue
further, it helps to take the long-term goals and make it more effective and influencing.
Customer service is very significant issue for the IKEA which is important to be reduced in
appropriate manner. Overall, it helps to take the new managing successful business growth.
Overall, company needs to take some strict action to get over from this issue as soon as possible.
1.4 Research Aim, objectives and questions
It is considered as most important part of research which defines aims and objectives to
carry out entire investigation. By formulating the same in appropriate manner, a company gain
opportunity to make improvement in its services and gain high profitability in business. In this
regard, for minimising the rate of customer complaints under IKEA, aims and objectives are
given as beneath:-
Aims: “A Critical analysis of revenues loss in 2011 due to numerous customer complains”. A
Study on IKEA.
Objectives
 To identify the issues behind numerous customer complaints in IKEA
 To determine the importance of focussing on customer services as a competitive
advantage.
 To identify the impact of issue on revenues and profitability of IKEA
Research questions
 What are the issues behind numerous customer complaints in IKEA?
 What is the importance of focussing on customer services as competitive advantage?
 What is the impact of issue on revenues and profitability of IKEA?
1.5 Structure of report
This is being considered as one of crucial section of a research which shows blueprint
that consist with every single activity which researcher is going to do in order to conduct the
investigation. In present report, where the issue on which whole research will rely i.e. customer
service that has been very significant issue for IKEA, is going to carry 5 different chapters and
these are comprehended beneath:

CHAPTER 1 : INTRODUCTION – This section of the research report prepares the
base of overall investigation because, it basically stays enclosed with the aim and objectives on
the chosen topic. Apart from this, introduction can be defined as an overview or background of
research that basically delivers right information related to the topic which helps in improving
understanding of the topic. Including this, it may also carry significance of research as well.
Thus, this section includes objectives, aim and background of the topic and shows that why the
research is going to get conducted.
CHAPTER 2 : LITERATURE REVIEW – This section of the research is going to
focus on a range of research questions that has been developed by investigator (Khan, Muttakin
and Siddiqui, 2013). Basically, this section stays enclosed with answers of selected questions
and here researcher takes help of articles, scholar books, journals and other online sources.
Away with this, section includes different theoretical aspects which would aid investigator in
improving knowledge related to the topic and here customer service given by IKEA will be the
base of questions.
CHAPTER 3 : RESEARCH METHODOLOGY – This chapter is going to be
enclosed with a method that could basically help in conducting overall investigation, Along with
this, section also stays enclosed with different data collection and the techniques as well of
overall investigation. Overall primary and secondary are the two different data collecting
methods and are going to be enclosed with respondents as well.
CHAPTER 4 : CRITICAL REVIEW OF RESULTS – Overall results which has been
carried out by the investigator, this section will analyse them with the help of an analysis data.
This would basically consist of questionnaire methods, objectives developed in the research
report are reviewed in order to identify all the results which can conclude the research objectives
and results.
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN – In this segment of
research, recommendations for the proposed research are developed. A number of advises that
has been given for a company i.e. IKEA, so that it could basically improve strategies linked with
CG. This sub sector of research is going to rely on a proper action plan. All the activities
basically going to get recorded under present investigation's action plan.

CHAPTER 2: LITERATURE REVIEW
Literature review is a summary of previous research on any topic. It is a review of article
regarding the current knowledge and it also includes theoretical and methodological finding on
the topic on which it is being written. An area is determined and selected and report is prepared
on the same (Fernando, 2012). The Best articles and journals are used to make a review on the
topic on which research is being made. All the key findings and important things are highlighted
in Literature review so that major highlights can be find out. Thus, Literature review makes it
easy to understand the topic in detail and find out the key areas of the entire research so that
further research can be conducted easily and effectively.
2.1 Issues behind numerous customer complaints in IKEA
According to Adnan Miski, it has been analysed that IKEA which deals in international
furnishing industry, mainly concerns on creating a better life for people at affordable price rates.
It offers a wide range of ready to assemble furniture at international marketplace to attract and
customers towards it business. This company is also known for modernist designs of furniture
and interior theme of stores also based on eco-friendly simplicity. But as per reported in 2011,
IKEA in one of its international branch has faces issues related to high revenue loss (Improving
Customer Service at IKEA using Six Sigma Methodology, 2014). This issue is mainly associated
with sales which seems to decline because of ineffective customer service. The main reason
behind this substantial loss is attributed due to numerous complaints. With this assistance, it has
been analysed that dissatisfaction of customers is associated with delivery of products, in terms
of – delay in product-delivery and condition of the same (damage or defects in items). All these
process lead to move people towards other companies for satisfying their needs.
It has evaluated from this article that there are various factors present within IKEA
which leads towards dissatisfaction of customers. When a customer put order for a new item or
wants to repaired old one, then process of delivery includes numerous activities which are done
in systematic manner (Tang, Hull and Rothenberg, 2012). It starts from packaging, sorting item
into different categories and more, for providing effective service to customers. In this regard, if
company fails to monitor any activity before delivery of furniture i.e. quality of products,
inbound damage by vendor, inventory accuracy, total cost of labour, turnaround time,
communicate with customers, etc. will drastically affect sales of branch. As undue demand of

targeted audience could lead them to spend their money in other furniture retailing shops. Thus,
all these causes leads to affect international reputation of IKEA at marketplace (Rao and Tilt,
2016). This company fails to deliver items on time to its domestic and international customers
on time. In addition to this, as per customer feedback it has ascertained that their complaints are
mostly related to get damaged products after delivery. Labours of IKEA are much inexperienced
and therefore, they didn't know the way in which luxury furnitures could be handled and
delivered.
2.2 Importance of focussing on customer services as a competitive advantage
According to Peppers and Rogers, (2016) focussing on Customer service refers to the
activities in which company focused on the customers and offered services as per the buyers
needs and wants. Each meeting of buyer helpful to reach milestone of the company. IKEA has
been faced many issues related cost and selection of products or services. Buyers criticising the
cost of selection which become very difficult for the company to full fill the needs of customers.
In order to keep sustain the profit, IKEA has launched their new sister company which is
Interred IKEA for sustaining the brand concept.
Communication with customers IKEA needs to adopt some concepts of customer
engagement that helps to protect the interest of customers and maintained the profit of the
company as well. Apart from that, it also helps to contained the effective work pressure and
helps to keep sustained the better environment growth. Communication is the best forming
results and growth (Customer engagement persuasion process. 2018).
Online customer communities: Online Customer communities is the best model or
strategy to get the customer attraction. Online customer communities by blogging, forums,
discussion boards and online community phenomenon have evolved to a new level of
pervasiveness.
Management of online customer communities: Rothaermel, (2015) Following engaging
with customers via online communities leads to another step of proactive and strategic
management of the range of online performing task. In order to take better implementing
process goals.
As per the IKEA must break the mould to overcome challenges, (2018) customer focus
is helpful key element which connects company directly with their buyers. For that, IKEA needs
to make innovative product or services to meet the client needs. Manager needs to select fresh

approaches and idea by measuring the market research, competitors’ position and their strategic
performance. Rothaermel (2015) that IKEA facing is sheer size through which company facing
issue of delivering the products to the end consumers. This is the reason for which company
fails to reach the customer needs in appropriate manner.
2.3 Impact of issue on revenues and profitability of IKEA
As per views of Marquis and Lee (2013), it has been ascertained that friction in the retail
process doesn't consider as a bad thing. In context with IKEA stores, customers seek to get a
particular feel which requires a certain level of engagement. When people put their feet in
furniture stores then they attracted more on design and presentation of such products. After
returning, they eagerly wants to build the same kind of furniture at home. In this regard, wider
point is that when such customers cannot remember a good experience. In that condition, they
cannot be loyal towards such retailers. Therefore, it is necessary for retailers to adopt
approaches which provide unique customer experience that differentiates them from competitors
(Sethi, 2012). As IKEA currently faces a high wave of problems under global competition due
to dissatisfaction of competitors. So, it directly impacts on image of business in international
retail sector. In this regard, some factors like low quality of customer service, untrained labours,
poor communication with consumers, delay in perfect deliveries etc. leads to reduce
effectiveness of business.
Therefore, due to increasing rate of customer complaints, sales performance of IKEA
reduces in high manner. This would directly impact on its reputation due to which, business is
not in condition to generate high profitability. Along with this, it also fails to gain sustainability
and stay in competition as well. In this regard, some strategies by which IKEA can improve its
customer services are given as beneath:-
According to Peppers and Rogers, (2016) Porters Generic strategies This strategy of
generic strategies can be used to determine the direction of the business. Michael porter uses 4
strategies that should IKEA needs to adopt in order to get the customer satisfaction outcomes
and growth.
Sihite and Simanjuntak (2015) Cost leadership: This is the best strategy which has been
offer the lowest possible price. Cost leadership is the best strategy to adopt the average prices
and market target. Overall, this strategy should needs to adopted by the company to take the
market growth. Company should try to keep the costs as low as possible.

Differentiation: It is the another strategy or market positioning system growth.
Differentiation defines the company unique from the different companies. This strategy helps
IKEA to make its product different from others.
As per the Moon and et.al. (2014) Cost Focus and lowest possible price is the niche
market where company chose customers to satisfy their needs and wants. Under which company
needs to ensure about the costs has to be remain low. This can help IKEA to keep the customer
focus towards the product and services and can easily meet the customer focus. This strategy
focuses to keep company brand loyalty sustained in the market as long which is very essential to
keep product unique.

Chapter 3: RESEARCH METHODOLOGY
3.1 Research approach
Research approach based on the philosophical concept which relevance of hypothesis to
the research topic. It is the plan or a procedure which consists steps of broad assumptions in
order to evaluate topic in detailed manner (Taylor, Bogdan and DeVault, 2015). There are two
types of research approach deductive and inductive research approach. Inductive approach starts
with observation and then comes to the end process. Besides, Deductive approach has been
based on developing hypothesis. Present study will be based on inductive approach to identify
the issue of focusing on customer meeting. This approach helps to identify the new approaches
and new managing resources. In order to meet out the needs and managing task full sources to
identify the effective problem identification sources.
3.2 Research Design
Research design is the different textbooks place different meaning on research design.
Research design divides into two parts exploratory and conclusive. Exploratory research helps to
explore the research topic to identify the proper solution to existing issue. On the other hand,
conclusive approach method helpful to generating findings for making right decision-making
step (Taylor, Bogdan and DeVault, 2015). Present research will be use exploratory research
design in order to explore the reason of customer issues in terms of dealing with profit
outcomes. Exploratory research can easily explore the new managing successful business
growth. This approach helps to explore the problem issue and can easily determine the new
ones.
3.3 Research philosophy
Research philosophy is the most crucial element of methodology which discussing the
research topic in detailed manner. Every researcher requires adopting their one philosophy of
the study to conduct the research approach out of two methods Positivism and Interpretivism.
Positivism philosophy based on real things or on the facts which has been existed. It helped
researcher to collects number of data and information through observation. On the contrary,
Interpretivism adopt approach which taking the involvement of human interest. Present study
will be using Interpretivism approach style to conduct the best services or goals.

3.4 Data collection
Data collection is another significant element in research process which is more helpful
to create deep understanding of study topic to the end results. Data collection is the process
where researcher collects data through two methods primary or secondary collection.
 Primary data: It has been collected by two methods qualitative and quantitative.
Qualitative method based on words, emotions etc. those which are not quantifiable. On
the contrary, quantitative method based on numerically or mathematically term from
mean, median, mode. Present study will be taking qualitative primary method of data
collection. This approach is easier and more flexible to understand and conduct the
study.
 Secondary data: It includes collection of techniques which collect data through books,
journals, internet with the help of collecting data from interviews, observation,
questionnaire etc.
Present study will be taking primary as well as secondary data collection tool, for
gathering data related to increasing rate of customer complaints under IKEA. This, thematic
analysis will help researcher to ascertain importance of effective customer service for getting
sustainable business performance of IKEA effectively and easily.
3.5 Sampling
Sampling is another significant process of research, sampling can be explained as a
specific principle used to select member population to be included in the study. Sampling can
be divided into two methods probability sampling and non-probability sampling method.
Probability sampling is the method in which every member of population gets a chance to
participate in research process. On the other hand, non-probability sampling under which
researcher restrict to select some group of members for the study. Present study will be using
simple random sampling for conducting survey with 20 employees. Simple random sampling is
easy to adopt and find out the best approachable results.
3.6 Ethical consideration
Ethics are very much crucial in research process to keep all activities safe and secure. It
helps to ensure ethical environment within the working atmosphere which needs to be followed
by researcher. It is very important that researcher should know the ethics before conducting the
research. It is vital part of the study in order to maintain the reliability and validity of the

research. Adhering to ethics is the first concern of researcher where the individual focus on
seeking consent of contestant of primary data collection for there involvement in data collection
process. The researcher in this present research has seek consent of contestant on paper where
terms and conditions of research will be mentioned in order to protect interest of participants.
Apart from this, secondary information will obtain by taking approval and permission from
responsible authorities.
Questionnaire
Name:
Age:
Gender:
Q1) Do you think providing effective services to customers will aid an organisation in
earning high competitive advantage at marketplace?
a) Yes
b) No
Q2) Is focusing on quality of service and products is important for international retailers?
a) Yes
b) No
Q3) What is the major cause behind pitfall of IKEA's performance at marketplace?
a) Dissatisfaction of customer with delivery of products
b) Product quality as per compared to price
c) Poor management
Q4) What is the main issue that attributed towards numerous customer complaints?
a) Poor communication within departments
b) Inbound damage by vendors
c) Misleading the customers when purchase
d) Low quality of customer service
Q5) What are the main factors that IKEA needs to concern while developing corporate
strategies to deal with customers complaints?
a) Benchmarking
b) Inventory Accuracy
c) Perfect deliveries