Existing Communication Processes in IKEA to Stakeholders - Case Study Example

Managing Communication, Knowledge and Information Introduction The primary function of communication in organisations is to transmit information from one person to another for purposes of decision-making. Communication involves giving, receiving, and exchanging information, opinions, and ideas by writing, speech or visual means to ensure the material communicated is completely understood by the interested parties. The effectiveness of communication is determined by the extent to which the receiver understands the message that the sender intends to transmit. The success of organisational functions largely depends on the effectiveness of communication with the company’s stakeholders. IKEA has internal and external stakeholders including shareholders, suppliers, customers, employees and the government. The company uses multiple tools of communication because it is the best way of maximising advantages while minimising the weaknesses of each tool of communication. Improving the appropriateness of communication is beneficial to stakeholders since it guarantees timely transmission of information, immediate feedback and understandability of the transmitted information. Existing communication processes in IKEA to Stakeholders Shareholders Electronic communication tools Emails IKEA sends emails to shareholders when there is need to transmit private and confidential information. Shareholders who have queries and comments concerning the company’s operational matters can send their enquiries via mail to the investor relations personnel (Dahlvig, 2012). Electronic media news The company transmits pertinent information to the shareholders through the media in form of news. The media can cover an aspect of the company and air it to the public during the business section of the news broadcast. Company website IKEA website provides shareholders with access to relevant and critical information on an effective and timely basis. There is a section in the company website concerning investor relations where the company publishes all crucial announcements on a regular basis (Dahlvig, 2012). The pieces of information available in this website include financial performance of the company in the form of annual and interim reports in addition to quarterly financial and business reviews. The company also uses the website for sending circulars to shareholders, providing share and dividend information, and announcing press releases concerning the IKEA’s latest developments. Non-electronic communication tools Financial reports The company prepares and prints financial statements and posts them in strategic locations where shareholders can access them for viewing (Edvardsson & Enquist, 2011). Financial statements are vital for investor decision making. The company must provide audited financial statements; printed statements are necessary because they are usually signed by the auditor as a proof of the company’s free and fair value of the company’s financial position as at a given date. Newsletters Newsletters are crucial in communicating to the shareholders the company’s prospects. IKEA publishes and sells quarterly magazine with the title IKEA Family Live that supplements the loyalty card and catalogue (Edvardsson & Enquist, 2011). Although the magazine is meant for customers, both present and prospective investors can read it to identify the company’s prospective in order to find out whether it can meet the shareholders’ interests. Circulars The company prints and circulates information through use of circulars. IKEA uses circulars when communicating with external stakeholders. Circulars are tedious to prepare and circulate; however, they are beneficial because they provide a proof for future reference. Corporate calendar The corporate calendar is used in setting out the activities the company wants to achieve in a given period of operation. Shareholders access information concerning the fiscal year’s activities and goals to be achieved for them to monitor the company’s progress. Shareholder meetings The law requires companies to hold annual general meetings (AGMs) for informing the shareholders of previous and future activities. Shareholders receive copies of the company’s accounts for the previous financial period (Dahlvig, 2012). Shareholders also review fiscal information for the past year and ask any questions concerning the directions the business intends to take in the future. Suppliers Electronic communication tools Emails IKEA sends emails to the company’s suppliers when there is need for them to supply more stock. Suppliers include timber sellers, food suppliers to the company’s restaurants and suppliers for raw materials. Telephone The company uses telephone calls to communicate to the suppliers especially when there is need to provide suppliers urgently. Telephone call ensures immediate message delivery and feedback, although it cannot be used to discuss complex matters. Fax Faxing is used for making orders for material supply. The company types the required orders at their offices and the copy is printed at the supplier’s office. Suppliers can also fax when informing the company about abrupt price changes. Non-electronic communication tools Goods received notes When IKEA receives goods from the suppliers, the company sends to them goods received notes to inform them that they have received the supplies in good condition. Acknowledgement letters Suppliers send acknowledgement letters to IKEA upon receipt of orders to inform the company that they have received their orders and they are working on making supplies in time. Customers Electronic communication tools Electronic magazines The company prepares a quarterly magazine referred to as IKEA Family Live (Edvardsson & Enquist, 2011). The magazine is used for communicating the company’s goods and services to the customers who have signed up in the IKEA website. Company websites The company website, http://www.ikea.com/, provides a wide range of information concerning IKEA products, their prices and locations from where customers can easily access them (Edvardsson & Enquist, 2011). The website provides a list of regions and the names of branches where customers can access pertinent information concerning the company’s goods and services. Email The company sends emails to customers when they introduce new goods and services. IKEA also emails customers when there are planned promotions or price-cuts as one way of advertising. Phone calls The company’s customer care representatives receive and respond to the inquiries of customers using phone calls. Non-electronic communication tools Flyers and posters The company prepares flyers and posters occasionally, particularly when they introduce a new product or service. Flyers are usually given to passers-by in busy streets and recreational centres while posters are stuck at strategic points to attract attention of the public. Catalogues IKEA uses the catalogue as a marketing tool and for informing both current and prospective customers about the company’s product prices. The company distributes catalogues both in stores and by mail. Customer service Customer care representatives serve customers who can access the company’s physical offices. Customer care service is meant to respond to customers’ inquiries using face-to-face communication. Magazines The company publishes and sells to customers the IKEA Family live magazines. The magazines are printed quarterly and contain a wide range of products that the company stocks (Dahlvig, 2012. Employees Electronic communication tools Video teleconferencing IKEA uses video conferencing when discussing matters affecting the company in different branches or within one branch. Video teleconferencing may involve personnel belonging to different organisational levels or same level personnel from different branches. Phone calls The company can make phone calls when there is an urgent need to reach employees immediately to handle issues needing immediate attention. Emails IKEA sends emails to employees concerning planned meetings, performance appraisals, promotions, dismissals, and calls for action. Non-electronic communication tools Internal memos The company uses memos to inform employees about specific issues such as events, policy changes, resources and actions. Internal memos also encourage employees to take predetermined steps to achieve certain goals in the organisation. Formal letters IKEA sends official letters to employees to inform them about specific matters in the company. Formal letters are used for informing employees of serious matters in the organisation, recruiting, giving appraisal reports, demotions and promotions. Conducting meetings During meetings, employees discuss various matters affecting the company and provide solutions for dealing with organisational issues. The management also uses this chance to inform employees about their expectations (Kodama, 2013). Government Electronic communication tools Online Service Communications IKEA complete their tax returns, claim tax credits, and perform various businesses with the local online directory. This helps the company to save a great deal of time that could have been spent queuing and travelling to the tax revenue offices. Online communications also ensure provision of continuous help through pop-up help facilities (Wells, 2008). Online communications, therefore, provides a cheap, quick and efficient means of communication. Non-electronic communication tools Printed final year statements IKEA is an incorporated company. The law requires the company to submit to the registrar of companies the statements of financial performance for purposes of assessing tax liability (Mathews, Healy & Wickramasekera, 2012). The primary types of social statements the company submits to the registrar of companies include the comprehensive income statement, the balance sheet and the statement of cash flows. Tax returns IKEA prepares tax returns and submits them to the revenue authority offices together with the amount of money the company is liable to pay. Preparation of tax returns varies from one place to another depending on the country in which a given branch is operating. Social responsibility reports Most countries in which IKEA operates are environmentally sensitive. It is crucial for the company to prepare reports about the company’s social responsibility initiatives for the government to assess the likelihood of social concern (Dahlvig, 2012). In the social responsibility reports, the company highlights the projects that are planned, the projects that are in progress, and the completed projects. Evaluation of the use of catalogue as one external corporate communication strategy IKEA publishes an annual catalogue for customers to view the company’s prices for its various goods and services. The catalogue is one of the best strategies for marketing because it creates demand for IKEA’s products. The catalogue is the primary marketing tool of the company, which consumes 70% of the company’s annual marketing budget (Dahlvig, 2012). This implies that IKEA is aware of the necessity of the catalogue as the main strategy for awareness creation. The 2013 catalogue by IKEA is Smartphone compatible; it contains videos and photo galleries that are accessible through an app by scanning the pages of the catalogue. This ensures that customers can access the catalogues from the convenience of their mobile phones without necessary having to seek printouts or computers. The company’s 2014 catalogue incorporates an augmented reality app that has the features for projecting furniture items into a real-time image in the user’s room. The primary aim of the augmented reality is to indicate the scale of IKEA in relation to the customers’ living environments. The customer, therefore, can determine the suitability of IKEA products in their living environments before purchase decision making. Strategies of Improving Communication Appropriateness Improving communication to stakeholders is the primary determinant for communication success for organizations (Sue, Heeseok & Youngjin, 2010). IKEA has the potential for success if the management adopts the most appropriate strategies for communication. First, the company should ensure provision of timely feedback to stakeholders’ inquiries and reactions. Feedback ensures sustainability of communication endeavours between the company and their stakeholders (Wells, 2008). IKEA can achieve effective feedback by setting up call centres equipped with highly experienced personnel to ensure that all calls are received and answered. The second strategy constitutes use of integrated communication systems. It is impossible to reach a variety of people by using only one mode of communication (Wells, 2008). This is because not all stakeholders can access the single mode of communication. The management should recognize that the company has diverse stakeholders who can be reached at different times and places through effective use of integrated communication methods. Third, IKEA should have proper systems for timely response to and confirmation of rumours. The marketplace is characterised by a variety of cutthroat anticipations, and sometimes malice. This may lead to spread of untrue information that may significantly affect the share price and profitability of IKEA. Appropriate communication will require the company to install systems that can enable communication personnel to respond to misinformation and address rumours in time. The fourth strategy is publishing information in various languages. Currently, IKEA makes their publications in twenty languages and sixty-one editions. However, the process of translation is usually done manually, which consumes a lot of time and financial resources. The company needs an automatic translation system that eliminates all errors caused by direct translation. This will ensure timeliness and cost-effectiveness in the translation process. Benefits of the Improving Communication Appropriateness The first benefit of improving communication appropriateness is ensuring timely transmission of information. Stakeholders, thus, will access information in time for them to make their schedules and other decisions such as investment decisions. Second, the new communication system will guarantee understandability of the transmitted information. For example, when the company lays down their information in languages that people can understand, there are increased chances of both current and prospective customers comprehending the catalogues and other publications to support their decision-making. Third, the transition will ensure timely feedback, which will be a critical element of effective communication. Stakeholders making inquiries require immediate feedback from the company since decision-making processes depend on feedback from the agents of IKEA. Therefore, IKEA should focus on improving communication appropriateness since it is beneficial to the company’s communication processes. Personal Plan for the Transition 1. Define the problem that the organisation wants to eliminate as far as its communication is concerned. 2. Identify the objectives, aims, vision and mission of the project. 3. Carry out survey to collect data from both internal and external stakeholders to find out their view concerning the intended transition. 4. Analyse and interpret the collected data, and draw conclusions about stakeholders’ views and feelings about the transition. 5. Implement the strategy for improving the communication system. 6. Carry out monitoring and evaluation to identify the workability of the transition project. Data collection, Formatting and Storage IKEA uses several systems for data collection. IKEA has installed Artificial Intelligence Systems that simulate human behaviour such as reasoning, natural language processing, vision and learning. Another information system that the company uses is Office Automation System (OAS). This system support general office work for handling and managing documents and facilitating effective information transmission (Mathews, Healy & Wickramasekera, 2012). OAS also helps IKEA in transmitting messages and documents through emails and teleconferencing. Data about sales is collected from transaction processing system (TPS). TPS can process and record transactions and update records. The functions of TPS are to record daily and routine transactions such as sales orders from customers, bank deposits and withdrawals (Sue, Heeseok & Youngjin, 2010). It could be difficult for IKEA to process sales and financial reports for management and critical marketing information for the strategic management. The company’s management information systems provide routine information for decision-making. Decision Support Systems comprises of database, model base and dialogue module for providing problem-specific support for non-routine, dynamic and often complex decisions and problems. Problems Associated with existing information systems The main problem associated with the existing information systems is lack of proper integration. Most of these systems work independently; thus, it is difficult to access integrate information from all the systems. Another problem associated with these systems is lack of highly skilled experts for using and maintaining theses systems. According to the company’s chief executive officer, IKEA needs to concentrate on creating a knowledge base for all the employees in order to enhance the skills of each employee in relation to systems use. Proper environmental conditions in the offices are critical in effective work performance since they guarantee conducive environments for people to work. The available systems do not have features for regulating environmental systems in the offices and stores. Strategies for Improving Access to Information The first step in improving access to information is hiring the staff that is conversant with designing, using and maintaining information systems. Highly qualified personnel have the potential for creating and educating other members of the organisation how to access and satisfy their information needs for supported decision-making (Sue, Heeseok & Youngjin, 2010). The company should focus on training external stakeholders on the procedures of accessing the exact information they need from the company’s website. IKEA needs to adopt Knowledge Work Systems (KWS). According to Wells (2008), KWS is critical in supporting exceptionally skilled workers in creating and integrating new knowledge in the company. Product designers can use Computer Aided Design (CAD) systems for easy modifications without having to redraw the entire object and enable them test the product without having to build physical prototypes. Designers use CAD to create, modify, evaluate and test designs; such designs can generate photo-realistic pictures, simulate the light in the rooms at different times of the day and perform calculations. This enables interested parties to access accurate and timely information concerning the company’s operations. Options Available at IKEA for Accessing Information The information about IKEA can accessed from the company’s website, periodical publications, published financial statements, the media, customer care representatives, social responsibility reports, circulars and emails sent to stakeholders. Conclusion Communication is the transmission of information and ideas from one to another using either electronic or non-electronic tools. The stakeholders involved in communication in IKEA include suppliers, employees, customers and the government. IKEA is striving to improve the appropriateness of their communication with the company stakeholders. The company should focus on hiring highly qualified and experienced information systems experts in order to enhance accessibility of information by the stakeholders. The transition of communication in IKEA will enable the company to improve the effectiveness of its communication process because it will lead to timely feedback and response in addition to understandability of the communicated information. References Dahlvig, A. 2012. The IKEA edge: Building global growth and social good at the worlds most iconic home store. New York: McGraw-Hill. Edvardsson, B., & Enquist, B. 2011. Values-based service for sustainable business: Lessons from IKEA. London: Routledge. Kodama, M. 2013, Managing Knowledge through Video-Based Communities, Knowledge & Process Management, 20, 4, pp. 256-276. Mathews, S, Healy, M, & Wickramasekera, R. 2012, The Internetalisation of information, knowledge, and interaction components of the firms internationalisation process, Journal Of Marketing Management, 28, 5/6, pp. 733-754. Sue Young, C, Heeseok, L, & Youngjin, Y. 2010, The Impact of Information Technology and Transactive Memory Systems on Knowledge Sharing, Application, and Team Performance: A Field Study, MIS Quarterly, 34, 4, pp. 855-870. Wells, R.J. 2008, The Product Innovation Process: Are Managing Information Flows and Cross-Functional Collaboration Key?, Academy Of Management Perspectives, 22, 1, pp. 58-60. Read More