Improving Quality in the IKEA Company - Assignment Example

Improving Quality in the IKEA Company Abstract The International Quality Management System is a set of standards for the determination of quality policy, objectives and duties as well as managerial activities. This leads to the realization of quality through control, plan and improvement in the entire quality system. Effective quality management system should involve regular internal and external checks (Narayanasamy, 2014). This allows for detection and improvement of poorly performing areas so that the objectives are accomplished as set out in the policy plan. IKEA is a multinational group of companies specialized in designing and selling furniture, appliances and other home accessories. It is currently one of the world’s largest furniture retailers in operation. The company boasts of good quality services for their customers who identify with their low cost home furnishings. This has ensured its continued existence in the market since the time of its inception. This paper is a report outlining the plans on how to improve quality in the IKEA Company. Keywords: quality system, quality control, quality plan, quality improvement, management, home furnishing Background of IKEA IKEA was initiated in the year 1943 by a 17 year old Swedish man called Ingvar Kamprad. As at the time of inception, the company conducted a door-door business only selling pens, table runners, picture frames and jewelry. It later grew into a mail order business in 1945 with its first catalogue being published in 1951. IKEA is a combination of an acronym extracted from the initials of Ingvar Kamprad, Elmtaryd and Agunnaryd (Ferrell & Hartline, 2011). Elmtaryd is the farm where Ingvar grew up and Agunnaryd is his hometown which is located in Smaland in the Southern parts of Sweden. IKEA is widely known for its specialization in modern architectural designs best suited for varied kinds of appliances and furniture. The interior design of IKEA works has eco-friendly simplicity. This is further coupled with attention to good operational details, cost control, corporate attributes and regular product development. These enhance reduction in prices of products manufactured by the company. IKEA has several foundational control points in many different countries other than Sweden. This is due to its complex corporate structure. Current reports are that it has 353 operational stores in 46 countries. IKEA operates with the vision of creating a better everyday life for its customers (Sgroi, 2014). This is supported by the mission statement which is pegged on their business ideas through the provision of various types of nicely designed functional home furnishing products. The products are offered at relatively low prices for the customers’ affordability. Hence the mission of IKEA is to achieve and produce high quality standard and long lasting products at lower prices. This means providing low-cost home furnishings for people to have an opportunity of acquiring them (Sgroi, 2014). It is clear that the IKEA mission statement is customer-oriented as it only aims at satisfying and solving customers’ problems. This is because it is the same as the vision thereby communicating the core purpose of IKEA poorly. Critics argue that it does not touch on the markets, technology, company survival, public image and its employees. There is therefore the need for the company to have a separate mission statement that can address more stakeholders and the core components of IKEA. IKEA operates with the following strategic objectives (Sgori, 2014): To improve on the quality of their products. To provide more services in a year that exceed the previous year. To improve their offers and discounts. To ensure a growth of 10 percent volume yearly. To ensure more product sales than a competitor. To be an established key player in the furniture market. To enhance the IKEA brand name. To reduce the prices by at least 20 percent since the year 2010. To develop, maintain and expand the local customer base. To have an outstanding value for money in the market. SWOT Analysis for IKEA A SWOT analysis is the foundational base upon which every business is planned (Tonnquist, 2009). It is formulated for the evaluation and assessment of the progress of a business. It helps come up with smart goals for the attainment of good strategies and tactics adapted to the current circumstances. Hence the following is the SWOT analysis for IKEA. Strengths IKEA has a low cost structure which has greatly contributed to its continued success (Ferrell and Hartline, 2011). This easily tailors operations around its business model which matches well with the customers who are impressed by its designs. Due to this, it experiences good revenue expansion thereby ensuring its profitability unlike its competitors like the America’s Pier 1 which struggles with the challenges of continued survival. IKEA’s President and CEO Anders Dahlvig alludes that the company uses every available chance to maintain its low cost structure and competitiveness without compromising on the customer value. IKEA derives its strength from its corporate culture which is laid on the core values of togetherness, respect, simplicity and cost consciousness. It looks for employees with potential traits of motivation, desire for learning and do things better as well as the ability to lead. Another strength that IKEA has is added amenities. These include car packs for customers, child care services, presence of restaurants and consultation services because they esteem their customers. Furthermore, IKEA has strength in its brand image. Its products are globally recognized because of the yellow and blue logo which symbolizes the Swedish national flag. This is also a representation of the modern, trendy and fashionable furniture. The brand strength derives from their widely varied products that exude high quality and low cost focus. Hence customers are able to build a home with relatively reasonable prices and environmentally friendly materials. Additionally there is the do-it-yourself approach whereby customers are served with every possible material needed for their shopping once get in the store. IKEA provides customers with furniture components which the customers assemble together on their own (Berger, 2011). The store has showrooms in its floors hence customers can see and do things for themselves without the help of sales people/ shop attendants. The customers who do not prefer this service are provided with the assembly services and home delivery options. Collaboration is also strength for IKEA. Berger (2011) asserts that 10,000 of the IKEA products are being manufactured by 2000 suppliers and directed to their stores. They have established links with the suppliers hence are shielded from price fluctuations. They also have offices which act as monitoring points and centers for creating new products. Other IKEA strengths include competitive employees, quality products, product functionality financial stability and physical facilities. Weaknesses The weaknesses of IKEA are pegged on poor quality of some items which do not match the current world product styling (Solomon, Connel &Nizan, 2009). Some of its items are too involving for the average customer to assemble. Its business model has not been fully adapted to ensure profitability yet its store count continues to expand to smaller markets. Some customers do not appreciate the do-it-yourself approach due to the tediousness of the work involved in the furniture assembling. Therefore the presence of salespeople is crucial without which IKEA cannot realize sales. IKEA also has a weakness of limited customization due to its low cost structure and easy assembling promise (Ferrell and Hartline, 2011). This is because some consumers prefer more stylish items with good ascent and color options. Limited promotional expenditure is also a weakness because there is no money assigned for adverts due to its dependence on verbal communication and use of catalogues. They miss out in reaching many customers since most of them are best attracted by advertisements on media. Additionally, the weak online support of the IKEA’s website leaves customers with a lot more to be desired. Inadequate online buying options make it difficult to in order for items online. Opportunities Favorable economic conditions: The low costs and high quality strategies easily fit with the present state of the economy. IKEA is also well positioned to cater for the cost sensitive customers. It can also expand its service offerings for increased customers’ conveniences since their main focus is quality services at good prices and these are easily accessible and time saving. Demand for convenience. IKEA currently experiences an up surge in online consumers’ shopping (Ferrell and Hartline, 2011). Hence it can capitalize on improving the internet connectivity and services to dominate the low cost quality furnishing sector. Online shopping will also enable easy fitting with the IKEA’s low cost structure. This is because it will increase items sales via distributed networks instead of relying on physical stores and their higher overhead costs. Restaurants and day care services are already best suited for the customers’ needs. Popularity of stylish sustainable products: The simple, futuristic, and fashionable Swedish designs offered by IKEA is increasingly becoming popular globally. Customers have been impressed by green resources due to the enhancement of sustainable natural resources. There is also high prevalence of movement towards green practices with increasing customers’ awareness of companies’ carbon footprint (Ferrell and Hartline, 2011). Hence IKEA can take advantage of this trend since it is well positioned for it. Threats Presence of stiff competition: IKEA faces competition from large established retailers that are vying for the do-it-yourself furniture segment. This is due to the consumers’ focus on cost consciousness in the current economy. IKEA is also faced with online competitors that claim to offer good quality, unassembled furniture at relatively cheap prices. The constantly changing customer needs/ tastes. Ferrell and Hartline (2011) assert that there is a time when customer interests in the Swedish designs will change and the do-it-yourself furniture completely fades away. This will have a negative impact on the IKEA’s business incomes. Also preferences for mature markets by consumers leaves IKEA with limited chances of excelling in the seriously competing business world. Rationale for Adopting Total Quality Management (TQM) Total quality management is the art of a whole organizational management in ensuring excellent and quality provision of services or products (Dale et al, 2011). It is composed of a set of guiding principles representing the foundational base for continuous improvement of an organization. Adopting TQM in the management of IKEA business operations is essential in achieving competitiveness and good quality plan for the customer value. This is because IKEA thrives on a network of over 2000 vendors which has been a major determinant in its success. How TQM can help in the achievement of IKEA’s competitiveness Adoption of total quality management can greatly enhance the competitiveness of the IKEA Company. First, is by variety based positioning. TQM will enable IKEA to pursue variety-based strategic positioning because it continuously offer varied unique products and services by applying distinct set of activities and standards (Mascarenhas, 2011). Needs-based positioning: This is a strategy aimed at a segment of customers with different needs to be served with unique set of activities. Adoption of TQM can facilitate easy meeting of needs of the target customers since it is tailored with various uniquely set activities. This can further ease the backlog of work for IKEA in providing home furnishing products to meet the needs of price conscious buyers (Rowe, 2008). This is because the buyers can pick and carry the products home as well as do the assembling for the benefit of cheapness. Accessed-based positioning which focuses on the customers with limited access to the services/ products. This is based on the geographical location and scalability of the customers so that they can easily be reached in the best way possible. IKEA’s unique set of activities are its low cost products, car packs, baby care and many more. Hence adoption of TQM can create for it a flexible and conducive environment for innovative developments in product differentiation (Rowe, 2008). IKEA’s core competencies Core competencies are the means by which enable a company to gain a competitive edge over its competitors through product and price differentiation (Kwapong, 2005). They should ensure market access and have significant contribution in meeting customers’ needs as well as ensure no imitation by competitors. For IKEA, the core competencies are the following: Competitive advantage: IKEA has a strategy of well-established networks with suppliers enabling it to offer value to its customers at relatively cheaper prices. IKEA boasts of low pricing, excellent quality, convenient and affordable service/ product delivery, baby care services as well as outstanding designs and trendy fashions. These attributes give it a competitive edge in the furniture business. IKEA’s product development: IKEA’s products and services are developed with a conscious focus at the end result. Any identified service/ product is analyzed for the possibility of meeting price-tag requirements. Suppliers are then involved in coming up with a strategy of developing the product once the idea is ratified. Also, environmental friendliness, efficiency of packaging and customer conveniences are prioritized before releasing the product into the market. Other key competencies of IKEA are diverse functionality, quality standards of services and user friendliness of the products. Also, provision of low cost products, available car racks for customers, trendy, fashionable, classic and modern furniture designs are its core competencies for customers are highly esteemed. Its vision of making it a better everyday life for its customers is also a core competency. IKEA's Implementation of ISO 9000 ISO 9000 is part of the international quality management systems designed with the aim of helping organizations to satisfy the needs of their customers. It is a series of developed and published standards by International Standardization Organization (ISO). This series defines, establishes and ensures effective maintenance of quality assurance system for companies and organizations such as IKEA. This is because it serves as a guideline to quality products, services and management. Organizations and companies must adhere to the set standards for the ISO 9000 certification which is effected through an external assessment/ examination body. Staff members are interviewed for the assurance for them to understand the value of complying with the ISO 9000 standards. The organization’s paperwork is also examined to ensure compliance with the ISO 9000 standards after which a detailed report is published. As part of implementing the ISO 9000 certification, IKEA applies a wide scale adoption of the Total Quality Management (TQM). This gives a detailed business management strategy for improving the quality of products and services. This is successfully evident for IKEA in the reduction of prices while improving service quality (Buttle & Maklan, 2015). IKEA is a global home furnishings retailer with distinct blue and yellow brands (Buttle & Maklan, 2015). Because of the one way route allowing IKEA merchandise to have a display-in-use-like room set ups, shoppers have a direct in-store experience. There is also free car parking. At the entrance of the store, customers pick pencils, paper, catalogues, shopping carts and bags, baby strollers and tape measure as well as the store guides. They have the do-it-yourself approach hence no bother with the store salespeople since price tags contain all details pertaining to the items. These are the name of the item, the color, the material and the size. The customers record the items in their notebooks and pick them from the self-service section or at the pick-up point delivered by a staff member. Moreover, most of the furniture is flat-packed enabling the customers to take their purchases home immediately or get a home delivery by the IKEA staff. There are in-store restaurants with IKEA accepting cash, debit cards, credit cards as well as IKEA gift cards as means of payments. Dissatisfied customers are provided with a return and exchange solution for their full satisfaction. All these in-store experiences are well planned and coordinated as well as undergo periodical review and improvement. This is in line with the implementation of the ISO 9000 certification so that the quality of IKEA products is improved and prices for customers reduced to ensure continued buying from their stores. Requirements for Improving Quality in IKEA Quality improvement is essential for increased productivity as well as improving the creation of brand image. IKEA achieves this through a number of strategies ranging from mechanisms of adopting philosophy, company leadership factors, policies determining ethical values, a motivated workforce, detecting and responding to customers’ changing needs as well as building partnerships to ensure continued existence of quality improvement. Mechanisms for adopting philosophy and impact on the success of IKEA IKEA has a back casting planning strategy which emphasizes its capacity to predict the future sustainability of the business. This means their planning ahead marks the point for future success so that whatever activity is presently undertaken for fruitful result is visualized in the future. Developing tactical, strategic, operational and dynamism enables managers to cultivate varied range of tools and techniques that positively impact on the company’s success. IKEA has unique organizational behavior since it strictly operates according to its enlightened philosophy (Daft, Kendrick & Vershinina, 2010). The philosophy is instilled in all employees through a learn-by-doing program for the success of the company. Leadership factors determining successful quality program in IKEA Good leadership through proper management not only contributes to the success of a company but also ensures good quality plan and control. In IKEA there are special learning conferences and programs for the training of prospective managers so that they exhibit effective leadership skills. It is a requirement for new managers to train on the shop floors so as to have a similar experience as the other co-workers (Daft, Kendrick & Vershinina, 2010). Managers also undergo rotational duty program as a basis of quality enhancement in all the sections of the store. IKEA applies focused leadership strategy which is an action plan developed for the production of quality goods and services with relatively low costs (Ireland, Hoskisson & Hitt, 2008). IKEA is a global furniture retailer located in over 30 countries and target cost sensitive customers with keen interests in style and fashion. IKEA’s home furnishings have good designs and functionality at cheaper prices. Hence it focuses its concentration on cost reduction and satisfying customer needs. To maintain the firm’s low standardized costs and ensure quality products, IKEA’s engineers adopted low-cost modular furniture which customers can easily assemble on their own. Additionally, IKEA is a cost and customer sensitive furniture retailer. Therefore it carefully employs people with potential traits of motivation, desire for learning and do things better since this is the vision it operates with. It does not compromise on the employees’ competitiveness so that quality is ensured and the customer value is achieved. This is also evident in the manner in which it assesses the suitability of the suppliers. IKEA’s culture and its appropriateness to the quality system The culture in IKEA is togetherness, simplicity, costs consciousness and respect and this is closely related to its continued success (Berger, 2011). It is committed to human resource practices that identify the needs of employees, their ambitions as well as their capabilities. The culture of IKEA is also reflected in their products naming and marketing strategies. The company logo also has blue and yellow colors which represent the national flag of Sweden. This is appropriate for the IKEA’s quality system because of the emphasis on no other brands apart from its own. This is because it has the capacity for designing its own products and services with the aim of leading and fully satisfying the tastes of their customers. That is why the mission statement also lays emphasis on the functionality, good design low price and good quality. Ethical issues in quality management in IKEA Ethical issues are highly regarded in organizations because they define their image to the outside world. Therefore ethics refer the prescribed code of conducts and moral principles governing an organization and its staff. In IKEA, the policies adopted to ensure ethics in the operations include employees’ competitiveness, quality designs, price sensitivity, simplicity, togetherness and respect. The management of IKEA encourages everyone who is part of IKEA to share in these values to achieve a common goal as set in the company’s vision (Berger, 2011). Hence these ethical considerations are relevant to the quality management system. This is because IKEA employees collectively strive for the production of low cost home furnishings and maintain the functional requirements of the company. Adopted policies in achieving a motivated workforce in IKEA One of the IKEA’s strengths is derived from a committed workforce. There is a positive approach regarding the adoption of human resource management (Daft, Kendrick & Vershinina, 2010). This policy enhances good staff attitude which results into an increased company performance. The personnel policy of IKEA emphasizes diversity and equal treatment of their employees at all levels be it in terms of gender, ethnicity or age. This means the goal of the company is to see the staff diversity correspond with the composition of the local community. Employees’ needs are covered by union representatives and the company is also in the process of ensuring greater diversity of employees. The employees have flexible working hours such that they can take time off from duty to attend to personal errands or any emergency. Additionally IKEA’s employees are given body massages twice every month, courses on healthy lifestyles, medical benefits. They also attend classes where they are taught on how to cope with conflicts and stress (Daft, Kendrick & Vershinina, 2010). IKEA thrives on its inspiration of motivated employees through management and leadership training programs. New managers begin their training on the shop floors to have a similar experience with the rest of the co-workers. The sense of a motivated workforce is achieved by a learn-by-doing principle. This is instilled in the employees with a sense of pride and purpose through the help of co-workers (Daft, Kendrick & Vershinina, 2010). Mechanisms for detecting IKEA’s customers’ changing needs IKEA is a customer-focused global furniture retailer hence its detailed attention and aims is focused on strategies that connect the management, employees in all respects to the customers (Daft, 2015). However, IKEA has grappled with numerous challenges as a result of continuous changing needs of customers. The changing taste of customers is facilitated by the customers’ shift from one phase of life to another. Hence the mechanisms that IKEA uses to detect these changes are expansion of product lines assessment and conducting periodical market survey. These strategies make it easy to detect any shift in the customers’ tastes and enable easier formulation of timely response to such changes so that the market grip is not lost. IKEA’s mechanisms for building partnerships IKEA partners with suppliers to invent and produce products. Berger (2011) asserts that 10,000 of IKEA products are manufactured by 2000 suppliers before being transported to the stores. It also has regional offices for monitoring the suppliers’ progress and even creation of new products. Partnerships are significantly beneficial for quality development systems since they provide learning opportunities for testing new product features. This has enabled IKEA to build trust in the communities touched. For example, IKEA partnering with UNICEF contributed to the fulfilment of its objectives while supporting the learning and development opportunities for women and children (UN Global Compact, n.d.). IKEA’s Implementation Plan with Justification Defining business quality management contributes to meeting the customers’ service requirements. This is because customers are the main focus for quality management strategies for better profitability as a result of reduced costs coupled with improved customer value. This means IKEA must have an effective product quality management system to ensure better customer services. IKEA, a global retailing furniture and home accessories manages a whole chain covering market analysis, product design and development, material testing, stock management, production and construction designs as well as transport and sales to consumers (ILO, 1991). With its own departmental stores, it issues annual catalogues hence is able to finance investments as well as modernize company facilities for production. IKEA has the mandate to prescribe and control the choice of materials from suppliers since it designs its own products. The suppliers are carefully selected so that the quality requirements delivery deadlines are met. They also undertake some development efforts for improving the products and rationalizing production. History has it that IKEA sparked the Swedish development of the furniture industry in the 1970s which also modernized its production facilities (ILO, 1991). IKEA’s demands on its suppliers have prompted rationalized production techniques, work routine improvement as well as investments in new machineries. The efficiency of the furniture industry has therefore been improved shifting from craft oriented activity to high-output industrial processes. These are targeted at producing long, unchanged runs with limited choice variety for the customers. It is worth noting that IKEA has elicited industrial improvement of capital use, introduction of new planning routines as well as engagement in quality development activities. The present concentration of IKEA is on network of suppliers. This is because it is aiming at becoming the major customer for the suppliers so that it gets higher percentage of absorption for its production capacity. IKEA’s success is pegged on its corporate culture and the strategic objectives. The overall summary of the IKEA management is to see “IKEA offering an extended variety of furnishing items with good design and functionality. This should be achieved through selling the items at cheaper prices which can be affordable bought by majority of people” (ILO, 1991). Hence it boasts of being a well-designed global retailer with quality furniture at lower prices. Conclusion IKEA emphasizes on good supplier management, price reductions, ensuring friendliness to the environment, good and quality product designs as well as service with utmost good faith. Therefore it seeks for raw materials from responsibly managed sources so as to ensure longer sustainability. Application of Total Quality Management in its operations offers it with effective and reliable improvement of products and services quality for the cost conscious customers. This is because it gives a structured approach for the management techniques. This results to quality of services and products being improved while maintaining the low costs for the customers. References Berger, A. (2011). Operations Management in IKEA. Munchen: GRIN Verlag GmbH. (https://books.google.co.ke/books?isbn=3640937767). Buttle, F. & Maklan, S. (2015). Customer Relationship Management: Concepts and Technologies, 3rd Ed. Milton Park: Routledge. (https://books.google.co.ke/books?isbn=1317654765). Daft, R. L. (2015). Organization and Theory Design, 12th Ed. Boston: Cengage Learning. (https://books.google.co.ke/books?isbn=1305533887). Daft, R. L., Kendrick, M. & Vershinina, N. (2010). Management. Andover: Cengage Learning. (https://books.google.co.ke/books?isbn=1844808823). Dale, B. H. et al (2011). Total Quality Management. Delhi: Pearson. (https://books.google.co.ke/books?isbn=8131732274). Ferrell, O. C. & Hartline, M. D. (2011). Marketing Strategy. 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