Management Functions at IKEA

Authors Avatar by mishmash07 (student)


IKEA is a company with stores all over the world. While IKEA’s corporate structure is one where some stores are franchised through Inter IKEA Systems B.V by INGKA Holding Group which operates the stores in Europe, North America and Australia, others are franchised independently, they all share the same uniform traits as is expected of an IKEA store.

The large number of stores worldwide requires a management team to ensure products are delivered exactly where and when it is needed. The flow of information and coordination needed to ensure this needs to be handled in a way that results in the most efficient and effective way of operation.

The four management functions typically undertaken by an organisation to progress in its line of business, for IKEA it’s to get its products out into the market on a global scale :

Planning Function

In any organisation there is a need to set goals for growth. In addition to identifying and setting goals, there is also the need to decide what line of action is to be taken and the allocation of resources needed in order to achieve those goals.  (Daft & Lane. 2010, p.6)

Planning falls into 4 categories, namely Strategic, Contingency, Tactical and Operational.

In order to plan effectively, management have to be aware of the ever-changing business environment in areas that would affect them and also be able to forecast future conditions.

For IKEA, this function can be utilised in managing the production of its goods from the raw materials stage until the end finished product. Coordination is extremely crucial as it has over 1,600 suppliers across 55 countries. Taken into consideration it’s large catalogue of over 10,000 items, clear and careful planning is important to ensure that it’s supply chain is running efficiently in order to meet supply demands.

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When planning for a production, a demand forecast is needed so as to be able to plan as close to the volume that is needed when it is needed. Poor or insufficient forecasting would affect the planning and IKEA would be effectively flying blind. A result would be that retailers would constantly be met with extremely volatile inventory where there would either be an over supply of product or insufficient supply. Both scenarios incur cost and loss of revenue.

Long term or strategic planning for the growth of the company may involve decisions on new ...

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