Business Report: Analyzing Innovation Management at IKEA

This report provides a comprehensive analysis of IKEA's innovation management strategies. It begins with an executive summary highlighting the importance of innovation in a changing market and how IKEA has adapted to meet customer demands through flat-pack furniture, new shopping experiences, and sustainable materials. The introduction defines innovation and its role in organizational productivity, followed by an overview of IKEA's business model. The report then assesses IKEA's capabilities and blockages using the VRIO model and Porter's Five Forces, evaluating resources, competitive rivalry, and market forces. Key drivers of innovation, such as competition and consumer needs, are discussed, along with leadership and planning for innovation. The report concludes by summarizing IKEA's innovative approaches and their impact on business performance and competitive advantage. This student report offers valuable insights into IKEA's business strategies and how they can be applied in the real world.

Managing
Innovation in
Business cw2

EXECUTIVE SUMMARY
This report summarised that innovation is vital for all and organisation as environment is
continuously changing where demand of people are also changing, it is important for
organisation to focus on needs and bring the changes accordingly. This report is prepared on the
basis of innovation which taken by IKEA organisation such as kick starting a flat pack furniture,
changing the shopping ways of people, creating desirable and affordable furniture according to
customer's demand that will attracts the more customers and attain the competitive advantages.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................1
CONCLUSION................................................................................................................................9
REFERENCE.................................................................................................................................10

INTRODUCTION
Managing innovation is the process of running a business and increasing the
organisational productivity. Innovation meaning to introduce something new and attractive in
market which is not come yet in the market. To bring changes and challenges in organisational
performance can be opportunity for business to attain the goals and objectives. In other words,
innovation is the combination of management of innovation processes and change management
that are important to increase the organisation productivity and profitability (Kennedy and
Bocken, 2020) (Kok, 2020). This report is based on IKEA that is multinational group situated in
Netherlands that design and sells ready to assemble furniture, kitchen appliances and home
accessories to customers. The chosen organisation bringing innovation such as Kickstarting a flat
-pack furniture revolution, changing the way people shop, and offering products made from
recycled material that helps to attract the large number of customers and increase the
performance. This report capabilities and blockages, drivers of innovation, leadership and
planning for innovation and roadmap that cab help to attain the competitive advantages
effectively.
About introduction
IKEA is a large size furniture retailing company that sells different design of ready to
assemble furniture and home accessories. This is well known brand that is managing their
business regularly by operating business and increase the performance that increases
performance. This was founded in 1943 by Jesper Brodin with the aim of operating business in
furniture retail company. The management of organisation managing innovation and new
technology on their business which can help to increase the sales and profitability. New products
and services are introduced by management who evaluate market and get what people wants that
can help to increase the performance (Pieroni, McAloone and Pigosso, 2019). The purpose of
report is to understand how to bring changes or innovation in their organisation that can help to
increase the business performance and profitability.
Assessment of capabilities and blockages: VRIO and Porters Five Model application
Capability means the power and ability to do something which can help to take the
competitive advantages. In organisation it is important to have good knowledge and skills to
handle the complexities and manage the task accordingly. In other words, ability is the way of
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choosing and selecting the best way as per people perspective and make decision to improve the
existing performance. On the opposite side blockage is defined as obstruction that makes
movement and flow difficulty to impossible (Ottosson, 2019).
VRIO Model – This is a framework which uses by organisation to analyse the internal
position of company by considering internal resources and capabilities which supports to attain
the competitive advantages. This is important for organisation to analyse their business position
by focusing on resources that can help to maintain the good performance by completing task
effectively. The management are responsible to analyse the situation and resources then make
judgement to attain the goals. The VRIO model in context to IKEA company are as deigned:
Resources Valuable Rare Inimitable Organised
Financial resources Yes No No No
Skilled employees Yes Yes No No
Designed furniture Yes Yes Yes No
Research and development Yes Yes Yes Yes
Valuable – In IKEA, number of resources are available that are helping to run and
operate the business regularly which increases business performance and internal position. The
list of resources are financial resources, skilled employees, competitive design furniture and
research & development that all are managing properly as they are valuable (Pieroni, McAloone
and Pigosso, 2019).
 The financial resources of IKEA is highly valuable as this helps to operate all functions
and investing in external opportunities that arises while working. These resources are
uses in manufacturing, buying raw material, giving design, remuneration to employees
and further activities that is important to run business (Nyawu and Schultz, 2020).
 The another resource of IKEA is skilled and talented employees who understand the
goals of organisation and work accordingly that supports to provide productivity. If
organisation does not have such resources then it be difficult to operate.
 Designed furniture is a speciality of chosen organisation that helps to manufacture and
design of furniture which is valuable and helps to increase the sales that maintain good
performance (Pieroni, McAloone and Pigosso, 2019).
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 Research and development are also valuable which is managing by marketers by
conducting proper research and bring innovation time to time. This can help to manage
the task and increase the performance.
Rare – This means resources which are not available easily in the market and create a
goodwill of existing organisation that is selling the kind of products and services. In other words,
resources that are acquired by one and few organisation for the purpose of running and attaining
the competitive advantages is considered as rare (Long, Iñigo and Blok, 2020). In IKEA, there
are many resources which are rare available in other organisation that are as explained:
 Financial resources in IKEA and other organisation are not rare as it can be
arrange by any other who are competitor by taking loans, selling of assets, merger
and other option which may support to operate the business.
 For every organisation it is difficult to get and hire the skilled employees who can
easily understand goals and manage the task. In IKEA, whenever management
brings new changes in products and services then such employees are working
well that helps to take competitive advantages because in other organisation it
become difficult to find talented employees (Fernando et.al., 2019).
 The design and structure of furniture which is providing by IKEA is adorable that
is rarely available for other firms to offer such type of products.
 Mainly other organisation are not focusing on research and development as they
uses secondary data to offer products. IKEA is benefiting from such resources
that is rare for other companies.
Inimitable – This means resources which are difficult to imitate and to create
substitution. If products and services which are providing by company are inimitable and non
substitutable then it become opportunity for company to grant competitive advantages for long
term. The inimitably of resources in context to IKEA are as defined:
 In IKEA, marketer ha analysed the market and states financial resources and
skilled employees for other organisation are not inimitable that means they can be
get by other organisation as they are not higher costly to imitate. The other
companies who are operating business in business world can easily arrange and
and trains the employees which can threat for IKEA to manage the performance.
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 Design of furniture and services which are providing by IKEA are inimitable
resources that means it cannot be imitate by others. There is need to use
innovation and new technology which is difficult for competitors (Kremer, and
et.al., 2019). For example, IKEA analysis market and bring innovation of Kick-
starting a flat pack furniture, changing the way people shop and providing
affordable furniture for young city dweller that helps to attain the temporary
competitive advantages.
 Moreover, management are spending money more on research and development
in IKEA that can help to manage the innovation and bring the different activities
for increasing sales by delivering better quality of products and services.
Organised – This means final criterion that states all resources which are available in
organisation are properly organised so it can attain the competitive advantages. This stage is
defined how all resources of IKEA are organised:
 The financial resources, skilled employees and design of furniture which are
providing by organisation are not properly organised as management are not able
to arrange and utilise all resources effectively that can be challenging point and
may affect the sale as well as profitability (Gasparin and et. al., 2020).
 Moreover, research and development resource of IKEA is organised as
management bring innovation in distribution channel, design and manufacturing
process that can help to deliver the better quality and unique design of furniture
by using online channel that increases sales and performance.
Porter's five forces: This is simple tool and strategy which uses to analyse the business
position and know about competitors which can help to operate the business and increase the
profitability. The management of IKEA are using this model to analyse competition such as:
Competitive rivalry: This forces looks at the strength and number of competitor that are
available in market. From the study of competitor it has defined that IKEA has many rivals such
as Amazon, Way fair, Walmart, Sears and American wood mark that are selling variety of
products in relation to home accessories, furniture and other items at retail prices that create
competition for chosen organisation and affects sales (Pieroni, McAloone and Pigosso, 2019).
Bargaining power of buyers: This is another forces which state how easily buyers thrive
their prices in order to buying products. In UK, there is large number of population where people
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are demanding different design and affordable products which are providing by IKEA. The threat
of buyers in this case is low as chosen organisation already sales its products at low prices than
others by maintaining quality and design that attracts customers and get ready to purchase
(Presenza and Petruzzelli, 2019).
Bargaining power of suppliers: This determined as how easily for suppliers to increase
their prices. Having large number of suppliers in UK can be opportunity for organisation to buy
raw material at less prices. But out of many only some suppliers are providing better quality of
products that influence retailer to buy. Therefore, there is moderate threat of suppliers who can
charge the little bit high price of their raw material and products so customers continue their
shopping and manage the good performance (Kremer, Villamor and Aguinis, 2019).
Threat of substitution: This refer substitution of products and services which can be
available in market and create a threat for existing organisation to operate the business. In
context to IKEA, high threat of substitution of product if cost of products are high then
customers will choose other products which looks similar to expected product and services at
low cost that create challenge for organisation (Leminen, Nyström and Westerlund, 2019).
Threat of new entry: This factor stating the ability and position of people to enter in to
new market by formulating strategies. In context to IKEA, operating business in UK furniture
and home decorative industry where there is easy entry for new comers to establish their
business as there is no need to make high investment that create challenge for organisation
(Ottosson, 2019).
From the above it can be defined that IKEA is taking competitive advantages by
managing innovation in their products and services which are different from other and managing
all performance effectively.
Drivers of innovation
Drivers of innovation: Innovation is mainly defined as “carrying out of new
combination” that include “the introduction of new goods”. IKEAS is multinational furniture
retailing company that bring innovation as flat pack furniture, changing the way of shopping, and
providing affordable furniture which are suited for homes with limited scope (Gasparin and et.
al., 2020). The key drivers for innovation are as:
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Competition: The management of IKEA uses this driver for analysing the competition.
Such as managers gather information how many competitor of chosen organisation are in market
and how they are selling products.
Consumer needs and feedback: In this, management of IKEA has analysed that people
are become more digital and moderns who demands new design and affordable products that are
offering by chosen organisation. Moreover, feedback is taken by management in regard of their
selling products that increases insight to bring more innovation.
Resources and Competences: In this, management of IKEA analysis the resources that
are available in organisation and focuses on competition which can help to increase the sales and
performance in changing environment (Ottosson, 2019).
Organisational knowledge: This is another driver which uses to bring the knowledge in
relation to innovation as customers are demanding and increase the sales which cab help to
manage the all activities and increase performance.
Knowledge transfer and cross functional cooperation: This means organisation should
focuses on transferring the knowledge and creating cross functional cooperation which can help
to manage the activities and performance by delivering competitive advantages (Pieroni,
(Nyawu and Schultz, 2020).
Leadership and planning for innovation -
In a global environment, it is important to conduct the research and analyse market which
can help to introduce the kind of products and services. The management is a person who
identify the market regarding people needs and share with leaders that can help to bring the
changes and by formulating effective plans and managing information. It is obvious that
innovation has always been heart of business in which new products and services are introduced
by management and create the advantages of operating business. For instance, a new service is
provided by management of IKEA company by launching first Augmented Reality that is mobile
app called IKEA place. In this, chosen organisation promised to bring innovation to the market
soon and let users buy furnitures through an app. This app place can display the furniture and
home décor accessories through a smartphone camera (Long, Iñigo and Blok, 2020).
In this, leaders are playing a vital role who get goals and objectives of IKEA and manage
the task as well and innovation effectively. Whenever, new innovation introduced by
management then is required to share with leaders that helps to get ready the employee for
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accepting challenges and increase the business performance. In this, leaders make plans, organise
function, provide direction to employees, monitoring performance and controlling the activities
which can help to attain the competitive advantages and maintain higher performance (Gasparin
and et. al., 2020).
Types of innovation strategy
Red Ocean strategy Blue Ocean strategy
The meaning of red ocean strategy is
competition as the market in relation to
business get more crowded where company
faces a high level of competition. This can help
to manage the business by sustaining in
competitive environment.
This means a strategy which is established for
determining product differentiation at lower
cost that helps to open a new market space and
create new demand for products which helps to
increase productivity (Nyawu and Schultz,
2020).
This Ocean represent all organisation in
existing today.
This represent all organisation but not existing
today.
The red Ocean strategy focuses on rules,
competitor, and market boundaries.
This create value of organisation by reducing
cost and offering new products and services
This may exploit existing demand. In Blue Ocean strategy IKEA can create and
capture new demand.
This make the value cost trade off. This uses to make the value cost trade off.
IKEA is focusing on Blue Ocean strategy that can help to bring the innovation and
manage the operation effectively. By using this strategy management of organisation can deliver
good quality and design of products in furniture and other home accessories that can help to
attain the competitive advantages and deliver the high brand image (Presenza and Petruzzelli,
2019).
Innovation roadmap and discussion
A innovation roadmap is like a timetable for innovation success that is uses by
management to know how changes can be accepted and how to improve the business
profitability. In other words, innovation roadmap is a visual representation of strategic goals and
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theme that state in how much time task will be completed and how to complete the goals and
objectives of organisation by managing all functions and abilities. For example, the goal of
IKEA is to capture the high market share and becoming popular in whole world as a best retailer
of assembling ready furniture and home ware products (Kremer, Villamor and Aguinis, 2019) .
The new services of IKEA is to bring new technology such as AR, chatbots and fast delivery by
using change management process that will help to capture large market and would give more
benefits. The key activities which is required for developing a business successfully through
adopting new services are conduct an innovation, audit programme, check the product, checking
customer's review and then introduce services which can help to make easy way for buying
(Gasparin and et. al., 2020). In this leader and management set a road map which can help to
analyse the change and select the ways that can be used to achieve the goals such as:
Illustration 1: Innovation Roadmap. 2020.
Source: Innovation Roadmap. 2020.
Timeline: The management of IKEA has decided to bring innovation in their service as
expansion of product by using new design and quality, entering in to new market, bring changes
in home décor product and uses of new technology in Argument reality that will attracts the
customers and manage task (Kremer, and et.al., 2019).
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FSNP: This is the process of introducing changes by organisation for the purpose of
managing expectation such as:
 Forming: In this stage, the team members of IKEA behaving as positive and
polite as they understand organisation needs a change for running and sustaining
in competitive market (Presenza and Petruzzelli, 2019).
 Storming: in this, all team member of IKEA, thoughts collectively about what
changes are required to attain the goals. Therefore, management of chosen
organisation has decided to bring AR, VR, AI and new process in manufacturing
that can help to reach the potential customers.
 Norming: This is another stage in which team moves in this stage by resolving
their difference, appreciating colleagues by leaders and accepting the changes
effectively which can help to develop the strong commitment goals (Fernando,
Jabbour and Wah, 2019).
 Performing: In this stage, leaders and employees perform their action after
introducing changes and managing their role effectively which can help to attain
the goals.
KPI Stream: This is kind of strategy which uses by management of IKEA to evaluate
the roadmap by selecting a appropriate way that helps to increase the performance. Management
of IKEA focuses on financial and non-financial performance that can help to make the right
business decision and increase profitability (Nyawu and Schultz, 2020).
Theme stream: In this IKEA is adopting Blue Ocean innovation strategy which uses to
get new platform by managing all task and activities effectively. This can help to increase the
sale and business performance by using a platform and delivering right products.
Threat stream: While focusing on project and operation management analysis the threat
that arises in working. The management of IKEA find out threats and problem which occurred in
activities and get the solution which can help to manage the task and attain the business goals
(Pieroni, McAloone and Pigosso, 2019).
Therefore, a innovation roadmap is uses by IKEA by analysing the internal position and
formulate plans which can help to deliver the better quality of products and services in changing
environment. This bring the changes in existing performance and create brand image more by
using new technology and process that drive competition effectively.
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