Organizational Structure Design Report: IKEA and Market Analysis

This report provides an in-depth analysis of organizational structure design, focusing on a functional top-down hierarchy model and its application. The report begins by outlining the roles and responsibilities within a hierarchical structure, from the CEO down to various managerial positions across departments like Finance, Marketing, HR, and Operations. It then delves into a case study of IKEA, examining the reasons for its delayed entry into the Indian market, its market strategies, competitive advantages, and the challenges it faced. The analysis includes IKEA's business model elements and how they adapted to the Indian market. Furthermore, the report incorporates recent news regarding international business, specifically the waiver of trade tariffs by China on US medical imports during the coronavirus outbreak, highlighting the impact of such collaborations on global economics and market access. References are provided to support the information presented.

Running head: ORGANIZATIONAL STRUCTURE DESIGN
ORGANIZATIONAL STRUCTURE DESIGN
Name of the student:
Name of the university:
Author Note:

1ORGANIZATIONAL STRUCTURE DESIGN
Organizational Structure Design
A functional top –down hierarchy chart is drawn. This type of structure performs best
with the hierarchy maintenance from top down management of higher positions to bottom
level positions moving down gradually (Smartdraw.com, 2019). The structure follows the
ranking of positions as per the high to low designations from director to manager levels
within the same functional department. All the functions are structured in the similar
category.
Positions with roles and responsibilities
Firstly is the CEO who as a high ranking executive and senior officer taking all the
major and strategic decisions at the top most level (occupationalinfo.org, n.d.). The next
person reporting to the CEO is the President who is answerable to the execution of the
strategies and the setting of goals as per the vision and mission of company. The next person
reporting to President is the managing director who oversees the main operations of the
company and prepares an annual report and send to the President. The next people in the
position to report to the managing director are the managers. In the functional area:
a. Finance
1. Chief Financial Officer who plays the role of overseeing the main daily operations of
the finance department as a whole and perform the decisions to take at critical
situations.
2. Finance Manager- The finance manager is responsible for the finance unit roles and
targets meeting objectives and the daily reports.
b. Marketing
1. Chief Marketing Officer plays the role of overseeing the main daily operations of the
marketing department as a whole and perform the decisions to take at critical
situations.

2ORGANIZATIONAL STRUCTURE DESIGN
2. Marketing Manager is responsible for the marketing decisions in the department and
the revenue earned with the promotions side in the company.
3. Sales Manager is responsible for the sales and territory –based decisions on the
company as per the individual sales person in the company.
4. Research and Development Manager is responsible for the research area and the
technological field issues revolving in the company with respect to the IT field
interlinked with this department in terms of product testing and product launch.
c. Human Resource
1. Chief Human Resource Officer plays the role of overseeing the main daily operations
of the human resource department as a whole and perform the decisions to take at
critical situations.
2. Human Resource Manager is responsible for the daily operations of the department
with regards to compensation structure, training design, human resource audit, and
recruitment as well as selection decisions.
3. Administrative Manager is responsible for the basic operations in the back office and
front-office desk operations relating to daily monitoring and update of databases.
4. Legal and Risk Manager is responsible for the legal issues and the risk assessment
procedure and policies taken in the company for audit purpose and legal rights
protections.
d. Production
1. Operations Manager is responsible for the daily decisions and report preparation with
monitoring of the production with the production techniques and the production
technologies used.
2. Logistics Manager is responsible for the supply chain process and the maintenance of
the transportation along with the delivery of goods and services in the company.

3ORGANIZATIONAL STRUCTURE DESIGN
3. Procurement Manager is responsible for the procurement of inventory within the lead
time and the stock maintenance with proper storage keeping duty.
Figure: The functional top-down model chart of an organization
Source: Created by author
CEO
President
Chief Finance
Officer
Chief Human
Resource Officer
Chief Marketing
Officer
Chief Production
Officer
Finance
Manager
Human
Resource
Manager
Marketing
Manager
Sales Manager
Operations Manager
Logistics
Manager
Procurement
Manager
Managing Director
Legal and Risk
Manager
Administration
Manager
Research and
Development
Manager

4ORGANIZATIONAL STRUCTURE DESIGN
Case Study answers
Question 1.
The reasons for IKEA’s delayed entry are the highly imposed restrictions on the
business model on not opening any other business outlets in retail, clothing and food sector.
The restrictions on selling the used furniture models to SME’s and purchasing from them was
prohibited. The various regulations by the foreign business authority delayed the entry
Question 2.
The market strategy for Indian market is cheap price for furniture and no do-it-for
yourself strategy with after sales service in setting up the furniture in customer’s home.
The advantage of adopting the wholly subsidized route to enter the Indian market is
the wide range of customers and the profit aspect for the population and purchase from small
enterprises. The disadvantage of adopting the wholly owned subsidiary to enter the Indian
market is lack of store room space and the excessive regulations in Indian market.
Question 3.
The key elements of IKEA’s globally successful business model are wide
operations in other sector like retail, food and clothing. The value chain with high
suppliers and the customer segment are the three key sources. The 3 sources of IKEA’s
competitive advantage are Hindware, Godrej and Future Group.
Question 4.
The challenges IKEA faced in establishing the store in Indian market are the
limited retail space, the location of the stores on the outskirts of the cities with less
availability of public transportation and the customer mindset of getting done everything
from the store itself.

5ORGANIZATIONAL STRUCTURE DESIGN
The steps taken by IKEA to succeed in the Indian furniture market are :
a. Provide after sales service of setting up furniture in home
b. Build stores in sub-urban areas with public transport metro facilities for customer to
travel to the store and have visibility
c. The pricing of the services should be low.
Recent news about international business
The recent article being the outbreak of corona virus made China waives the trade
tariffs on certain imports from the medical equipment products coming from United States
for the emergency period of protection of health of citizens. Equipments like in the blood
transfusion area, blood pressure measuring instrument and the monitoring systems are to be
purchased from United States for arise of inadequacy of resources. This type of agreement
signed by both the countries that were previously banned from exchange of business
transactions are seen to be supporting each other in the times of epidemic disease. This type
of business collaboration of international business agreement for a certain period will help in
boosting the economy and the US equipments will gain access to the China market with more
positioning and targeting of China consumers raising the profit. The provision of new market
to United States will extend the market reach and the medicine equipment market of China
will have a new product line. (China to waive tariffs on US medical imports amid virus
outbreak, 2020)

6ORGANIZATIONAL STRUCTURE DESIGN
References
Occupationalinfo.org. (n.d.). 0/1 - Professional, Technical, and Managerial Occupations -
DOT Dictionary of Occupational Titles.
China to waive tariffs on US medical imports amid virus outbreak. (2020). The Economic
Times. 18 Feb.
Smartdraw.com. (2019). Four Types of Organizational Charts: Functional Top-Down, Flat,
Divisional, and Matrix.