The Different International Markets Only Changing the Structures sample essay
“How Ingvar Kamprad succeed to adapt the different international markets only changing the structures?”
The evolution of Ikea’s organization structure changed through the years. First, it used to have an horizontal organization structure, with just one boss taking the decisions, Ingvar and the employees, manufacturing the products (Exhibit 1). Most businesses begin as simple structure with only two levels: the strategy apex and an operating level.(P79)This is an original Swedish model and it is normally used in small companies. A successful horizontal structure allows each employee to have and affirm his own perspective. Thus all the employees shape a society in their company. Eliminating the hierarchical structure deemphasizes the value of power, and accentuates the collaboration. It allows balancing the power in the structure.
The first problem appeared in the 1970s:growth in the Swedish furniture market was stagnating. Kamprad felt it was time for IKEA to expand internationally. Refer to the theory from class, one of the reason why restructure is the growing of organizations.(P89) Then, the structure had to be adapted since the horizontal one was now too simple. That’s the reason why it evolved from the horizontal form to a more vertical way (Exhibit 2). As noted, vertical coordination rests on top-down command and control. (P59
)As in the horizontal one, the boss is situated at the top. However, the management was split up into two different “departments”: the Swedish and the European management. This division will be the base of the Ikea’s successful future. Dividing the management into these two segments, gave them the possibility to keep on going with the traditional Scandinavian culture; and on the other hand, improve and innovate in the European market.
In the 1980s, Ikea wanted to start doing business not only in Europe but all over the world, in the USA, Canada and Asia, for instance. According to the knowledge we learnt from class,the reason why restructuring is that The environment shifts.(P89)At this time, the organization frame of Ikea had also got to be changed. In this case, the management was divided in geographical regions. Once this modification had been done, each Ikea store was able to satisfy the different consumer needs depending on the region they were located (Exhibit 3).
Furthermore, between 1986 and 1990, Ingvar Kamprad elected Anders Moberg as a president; they did not have the same idea about the management and the structure, and that is the reason why the company structure changed into a new one. The leadership shift had an impact on the company’s management style.(case,P10)The environment shifts is also a reason of restructure.(P89)
This new structure is divided into 3 levels: supervisory board (the top), executive board and staff. To our mind it is like Mintzberg’s structural configurations: “divisionalized form”. “Divisionalized form” is based on centralization and different divisions in the same company. We can say that it is like the way of thinking of Anders Moberg, the president, because he is more committed to systematization (as refer in the case study page 10).
From 2000, they opened more stores and they worked with a wider range of products, not just kitchen and garden products, but also office furniture and more traditional designs. This is the reason why new departments emerged, because of the need of specialized personnel. But the structure remain the same, this additional departments did not affect it.
To sum up, we would like to highlight the importance of Ingvar for the Ikea Company, since all the decisions he made were fortunately the best ones he could have taken. Each decision was taken at the right time. Even with many difficulties, Ingvar Kamprad knew how to turn problems in opportunities, for instance with the Ikea launching in the worldwide markets.
He was self-confident and believed in his company’s values and culture, and he never tried to change this but to improve it, through the combination of different types of organization structures. Many small companies may have Ikea as a reference; in the moment he wanted to enter to new markets (become international) it was forced to adapt its organization frame: evolving from a horizontal to a more vertical one. So that, we can conclude that if companies wanted to expand their business to new markets, it is necessary to change and adapt to what the moment requires.
He opted to rely on traditional values and strive to provide a better quality of life to consumers. The founder has always known how to analyse and follow the market surronding him. Each decision was taken at the right time. Even with many difficulties, Ingvar Kamprad has known how to turn problems in opportunities, for instance with the Ikea launching in the worldwide markets.
Through this case study, we wanted to show that the current state of Ikea is thanks to Ingvar Kamprad. through this case, we wanted to show that it is the Man itself who made the corporation what it became. We also wanted to emphasize the fact that the structures change (very) quickly, thus, you must follow the market surrounding.
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