A Detailed Analysis of Operations Management within IKEA

This report provides a thorough analysis of IKEA's operations management, examining key aspects such as its business strategies, process models, and the importance of operational planning and control. The report begins with an introduction to operations management and its significance for IKEA's business success. It delves into an operational analysis of IKEA, exploring the company's approach to store design, employee management, and performance evaluation. The report also discusses the process model of operation management used by IKEA, including the elements involved in production. Furthermore, the report analyzes the importance of three Es (economy, efficiency, and effectiveness) within IKEA, and it explores the concepts of cost minimization and quality maximization. The report also examines the significance of performance objectives, linear programming, critical path analysis, and the need for operational planning and control. The report concludes with an analysis of how management techniques are applied to improve operations in IKEA.

OPERATION
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Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ..........................................................................................................................................1
1.1Operations management is important for IKEA’s business success......................................1
1.2 The operation analysis of IKEA............................................................................................2
1.3 Process model of operation management of IKEA ..............................................................3
TASK 2 ...........................................................................................................................................5
2.1 Importance of three Es within IKESA..................................................................................5
2.2 Cost minimisation and quality maximisation in
organisations..............................................................................................................................6
2.3 Significance of performance objectives...............................................................................6
TASK 3............................................................................................................................................7
3.1 Linear programming give value to production process ........................................................7
3.2 Critical path analysis and network planning.........................................................................7
3.3 Need for operational planning and control ...........................................................................8
TASK 4............................................................................................................................................9
4.1 A defined operational outcome for IKEA.............................................................................9
4.2 A network plan and indicate the resultant critical path.........................................................9
4.3 Management techniques are applied to improve operations in IKEA ...............................11
CONCLUSION..............................................................................................................................12
REFRENCES ..............................................................................................................................13
.......................................................................................................................................................14
.......................................................................................................................................................14

INTRODUCTION
Operation management is a process of designing, executing and controlling of business
operations as well as productions. The major purpose of operation management is to keep an eye
on business practices to make highest level of profit and growth which is possible for an
organisation. Its basic objective is to collect raw material and human resource for converting
labour and material into finished goods and services (Baziar and Kavousi-Fard, 2013).
Operation management is widely used by every business organisation in order to manage their
operation and production function in effective manner. The major work of operation
management department is to balance and control cost or revenue to attain possible high level of
net operating profit. IKEA is big furniture organisation, which is founded by Ingvar Kamprad in
1943. its focuses towards providing best and quality services to their customers for better every
day life. They offers variety of well designed furnishing goods at very minimum and affordable
price.
TASK 1
1.1Operations management is important for IKEA’s business success.
The every business organisation including small, medium and big firms are widely used
operation management for controlling and managing their business operations. It is a
fundamental part of any firm. People have a common belief that operation management is
important only in production industry. This norm has concern with the fact that production
industry had to considered more than one processes and operations. Operation management is
refers to the process of collection of raw material and convert them into final goods and services
with the use of production function. Operation is starts from obtaining material for goods and
services and sold them at right place with right and reasonable price. Along with it is considered
that operation management is important for manufacturing industry. IKEA is a service industry
which is focuses rendering quality services to their buyers. In service industry various elements
are involve that are starting from identifying the needs and wants of customers. After rendering
services they get feedback form customers and work on some points which are needed to be
changed for better growth and success. The service industry tells identified changes to
manufacturing industry (Brandimarte and Villa, 2013). Marketing team of IKEA play a vital
role in understanding needs and wants of customers. The team of marketing put their all affords
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for collecting more and relevant information from customers and apply those data as an input of
designing goods and services for buyers. IKEA is a well established company which sells ready
to finished furnitures home decorum accessories and appliances. Operation management is play a
significant role in manufacturing and production process of firm. IKEA is most popular and
biggest furniture business across the globe.
1.2 The operation analysis of IKEA
(Source: Operation management, 2017)
IKEA is a well established furniture company which render high quality furnished goods
and services to their potential customers. The company is mainly focuses to design a store which
2
Illustration 1: Operation management

is placed near to market, so it is easy for buyers to buy products easily (Haimes, 2015). These
stores having smooth and effective flow of goods and services.
The company hire well skilled and educated people for growth and success. IKEA ensure
that the jobs of all encourage their contribution to industry success. They mainly hire
experienced and talented people in their firm who can put their all potential for growth and
profit. Company placed well skilled people in their retail stores to convince customers for
buying their products.
IKEA is focuses on evaluating the regular performance of employees as well as
production function (Hatziargyriou, 2014). They try to make improvements at regular basis for
better and high production. Firm examine the current performance of operation practice and
make innovation and improvement which are needed for manufacturing process.
In today's scenario every customer want high quality product at very minimum price.
Company is focuses towards producing high quality products at very less cost. The management
department is keeping an eye on production function and monitor the function in right direction.
So that customers can get quality products at very affordable price.
Firm is more concern on replenishment of products. IKEA produces goods and services
as per customers demand and need, they arrange products at right direction for fast development
and making high sales.
IKEA having its own area or products storage in which they keep finished goods and raw
material safe and secure. Customers want perfect goods as per their own interest and
organisation need to deliver right good at right place without any damages.
Firm need to select right location for their store, so that they can make effective sales for
earn profit. They focuses on size of store because most of the customers are attract towards
decorum and size.
IKEA put its all affords for producing new designed products which are easy to pacjed in
very efficient manner.
1.3 Process model of operation management of IKEA
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(source: Process model, 2017)
IKEA is a big organisation which render best and high quality products to their customers in
given period of time. They concern about delivering products and services as per demand and
need of customer. The above process is used by company in very wide range. Firstly firm need
some raw material for creating finished goods and services. Company take raw material as an
input for production function (Keulen and Kroeze, 2012). For manufacturing better out put
company need some major elements which take active part in production function. These
elements are described as below:
Workers: Theses are most required elements of organisation because total operation is
based on labours affords.
Manager: He or she is the person who provides right direction for operation function.
Equipments: These are the things or technologies which are used by workers for making
better production. For example plant and machinery.
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Illustration 2: Process model

Facility and material: IKEA provide a wide area for making effective production,
because manufacturing is important for firms growth and success. Company need to collect right
material for goods and services (Ming and et. al., 2013).
Land and energy : For manufacturing concern company provide land and labour for
production. Every firm need an area for set up their operation system and equipments. Energy is
also required for manufacturing function.
Information: It is also an important element for operation process, the total work of an
organisation is based on data and information which is rendered by top management.
After following all steps in direction company can easily get finished goods and services as an
output.
M1 Analysed the link between core operation function ans support function.
Core operation function: Operation management is a combination of various activities of
handling data and resources that produce, offers and deliver goods and services as per different
requirements of customers. Organisations are focused on effectively manage the prospectus to
meet with its various users. Core operation function are the important unit of firm which are
responsible for each and every task which are held in organisation.
Support function: It is describes as a broken-backed function which helps in dividing
the whole work into sub parts for effective completion of work. This function is based on
geometric functions in which scaling, rotation, translation and addition are included.
These two above mentioned functions are linked with each other for effective operation of
business activities in order to maximise profit and revenue. Support function are helpful in
providing support to core function to increase their production for fulfilling the needs and wants
of customers. Effective and fast production helps in giving fast services and products to their
potential buyers.
TASK 2
2.1 Importance of three Es within IKESA
Economy, efficiency, and effectiveness are play a vital role in this competitive world.
These are the fundamental drivers who drive company in a right direction. The correct balance of
these three E's allows an organisation to be more flexible and faster to face any future challenges.
This three E'S play a significant role in IKEA'S operation function. For improving their overall
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performance company focused towards making long term strategies. The compnay need to
develop these three in right and accurate balance.
Economy: IT tells the financial position of an organisation in which they work and
achieve their activities. In our living area economic parameter play an important role in our life.
The firm focuses towards right balancing of resources and material for attaining goals and
objective at very affordable and reasonable cost. It is important for ILEA to use money and
resource at right place and direction.
Effectiveness: It can be evaluated by effective achievement goals and objectives. IKEA
mainly concern towards rendering high quality service to their customers in very effective
manner. A good performance lead to effectiveness of an organisation. Top management and
directors taking responsibility for making effective performance of an organisation to achieve
goals and objectives. Effectiveness has an impact on IKEA business condition (Modrák, 2011).
Efficiency: It is directly consist of utilisation of resources to accomplish a task and job.
As most popular organisation its design and planning is very effective, so its performance and
efficiency is increased. Company improve their efficiency in order to reducing wastes and
consuming less to render equal range of value.
2.2 Cost minimisation and quality maximisation in
organisations.
The major purpose of every organisation is to minimise the cost and maximise the
production. Cost minimisation and quality maximisation play an important role in stability in
competition among market. There are various cost benefits available for IKEA , prevention cost
is used by organisation to enhances the philosophy of doing it first time to maintain the cost.
Operation management of IKEA took right step towards preventing issues and conflicts among
the firm. Another way to balancing the cost, is testing of goods and services or process to check
the quality and feature of products that are required to meed with customers demand and need.
There is a huge tension between cost minimisation and quality maximisation. These two
variables are based on each other, the quality of products is depend on the cost which is incurred
by firm. Maximising quality of goods refers to high manpower, material and overheads.
Every customers want high quality products in very low price. IKEA is focused on
providing best services to their customers in order to provide best and high quality services in
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very less price. If company focuses on cost minimisation than it directly affects the quality of
products because with low cost the quality is decrease . If company focuses on high cost than
better and high quality products are introduced at market place with high cost. Quality and cost
are based on each. If cost is low than quality automatically goes down and if cost is high that the
quality of product is also high.
2.3 Significance of performance objectives
Quality: It plays a significant role in achieving long run benefits for an organisation. In
today's scenario people is more concern about quality of goods rather then the price. If customer
is not satisfied with quality of product then they can easily switch to the other brand. The
department of operation management needs to take responsibility to maintain high quality in
their production.
Cost: IKEA is focuses towards invest less price in production function in order to keep
low cost of products. The major purpose of this organisation is to generate high profit and
compete with available competitors across the globe. If firm put right affords to manage quality
of goods then it is possible for organisation to reduce tension among cost minimisation and
quality maximisation.
Dependability: Every customer having their own set of choice and interest and they want
goods and services as per their choice (Mohammadi, Soleymani and Mozafari, 2014).
Dependability directly consist of keeping promise. Customers are very much punctual towards
time factor, if company deliver high quality goods in giving period of time. Then customers are
automatically encourage to buy more form particualr organisation.
Flexibility: According to today's changing market environment, IKEA needs to be
flexible enough to handle new and changing need and demand of customers. Company always
try to innovate process and technology for better and high quality of production.
Speed: Firm is mainly focuses to fulfil the demand and need of customers in giving
period of time. Speed is one of major element in this competitive business. The major
requirement of customer is that they want goods and services in very less period of time.
M2) The impact of tension between cost and quality.
The cost has directly impacted on quality. Mostly customers are attract towards low
prices. They want high quality goods at very low price. IKEA adopt various strategy to attract
people towards their firm in respect of maximising profit. High quality of products are based on
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the high cost. If organisation sale their goods at very low prices than quality is not considered.
IKEA is not trying to reduce manufacturing cost of furniture either company feels to decrease
quality of produced furnitures. This situation is arise in short run business plans. In long run
business has large number of clients and customers to handle all products with higher rate of
profit because in long range firm concern towards high quality than cost.
Economy, effectiveness and efficiency are important element in every business
organisation, they play a significant role in overall performance of IKEA. These three are
directly impacted on operation of firm in order to earn more profit and increase their economic
position. They focused on adding some innovative and effective features in their products just to
getting attention of consumers.
TASK 3
3.1 Linear programming give value to production process
As the cited company is looking to regulate TQM within their operation management
and business activities, it need to know the shortest way to produce the products. Liner
programming is a method of achieving best results and outcomes in mathematical model. It is the
technique for optimization of liner objectives. This can be also applied for various fields of
study. There are many business managers who are using the concept of liner programming in
their business and economics (Niknam, Golestaneh and Malekpour, 2012). This can be also
utilized for some technical as well as non technical problems. It is the method of operation
research and also helps in decision making process of business organisation. Linear
programming helps the company for minimizing the cost and maximization of profit. After that,
the IKEA will be able to use the method in order to reducing the cost and developing the sales
unit; this will also maximise company's profits and annual turnover as well. With the help of
liner programming, managers can easily improves the quality of their products and services; it
will be help them to achieve goals and objectives from target market. Therefore, company is
looking to implement TQM within its manufacturing supply chain unit.
3.2 Critical path analysis and network planning
Critical method : - It can be used by the manager of cited organisation in order to
scheduling project activities and operations. CPM is generally used in all forms of project
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management i.e. product development, engineering, plant maintenance etc. It is also accessible in
implementation of TQM within the company by evaluating the operations of chosen project.
Apart from that, CPM also helps to make the order in which the implementation will take place
along with activities which will be taken place followed by others (Niknam and et.al., 2011). It
is capable to calculate the longest as well as shortest path for planning activities to the end of the
project.
Network planning: It can be used to reduce the complexity of tasks and activities.
Network planning and designing is an iterative process that involves network synthesis or
realization and topological design. It prime aim to ensure that services and products are able to
meet the needs and wants of customers. Apart from that Network diagram will also give
variables and framework for trade off along with analysing the sensitivity of the company current
performance. There are 5 steps of network planning, that are as follow: -
 Need assessment and resource assessment
 Short term network planning
 IT resource
 long term and medium term network planning
 Operations and maintenance
This includes validations work sheet and finally evaluating the alternatives options via
cost analysis and intangible analysis which will help to implement the TQM
3.3 Need for operational planning and control
Operational planning can be used by the managers in order to complete all activities and
operations of business organisations. In IKEA, it is beneficial for owners as they can decide what
equipments are needed at the time of production. Operational planning is accessible for
developing the quality of products and services then managers can achieve vision and mission of
cited firm. It also establish flexibility and adaptability among tasks and activities of company as
they can be finished on certain time period (Niknam, Meymand and Mojarrad, 2011). Along with
this, it is the responsibility of production managers to verify that all activities are complete in a
legal manner. There are given some activities that are involved in operational planning process
of IKEA limited: - forecasting demand, assemble stock, cutting the wood, designing the wood,
checking the quality, inventory and logistics. For example- the demand of the particular furniture
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is forecasted by the organisation and quality controller check the overall quality of furniture by
assessing the weight and strength of the furniture (Sanseverino and et. al., 2011).
M3) Higher level skills to assess liner programming.
The manager of organisation is responsible for each and every task which are help at
work place. Company mainly hire well educated people in their firm for effective utilisation of
resources. Linear programming is the method of finding result and out come with the helps of
mathematical tools and techniques. The manager divide the whole task into sub parts and decide
a time to complete a task. This helps in solving problems related with technical or non technical
issues.
TASK 4
4.1 A defined operational outcome for IKEA
An organisation need to focus on operational outcomes of new and innovative tools and
techniques of marketing, firm should follows some techniques which are as under:
Attract high income consumers: It is important for an organisation to attract huge number
of buyers to maximise their wealth through generate profit. IKEA is mainly attract high income
people through applying various strategies which are helpful and useful for consumers. They
attract teenage customers to increase their selling process so that they could get more benefit and
success.
Attracting large number of customers: In market there is lots of competition available for
a single product. Firm use various tools and techniques for attract customers so that they can give
competition to their potential competitors. IKEA establish more and more outlets of their
organisation for rendering product and services at very wide range. They adopt new and
innovative tools for effective and fast production so that large number of customers are easily
attract towards them.
Easy availability of products: Company put its all affords to making goods available for
customers. They try to expand their business through establish number of outlets in different
location just to develop and increase their sales (Shabanpour-Haghighi and Seifi, 2015).
Customers are mainly attract towards those organisations who are provide fast and convenient
service and goods to their customers.
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