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Implementing Strategy - Research Paper Example

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The chart will make IKEA’s decision-making faster and enhance the success of its operations in all of its markets. IKEA’s current organizational structure is good…
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IKEA Organizational Chart IKEA Organizational Chart Below is a proposed organizational chart that can help IKEA better support its corporate international strategy. The chart will make IKEA’s decision-making faster and enhance the success of its operations in all of its markets. IKEA’s current organizational structure is good but the proposed organizational chart will make up for the limitations of existing structure. It is important to note in the outset that the proposed organizational chart will require major shift in IKEA’s operations and that some of the proposed elements may take time to be fully implemented and integrated.
Figure: Proposed Organizational Chart for IKEA
The above organizational chart would work for IKEA because it would help make its operation less complicated. The Ingka Foundation would act as the executive committee. This committee would provide direction and support to the regional structure. The committee would handle IKEA’s strategic priorities. The regional structure should compose the members of the executive committee other than the Chief Executive Officer (Ingvar Kamprad or his successor). These other members of the IKEA’s executive committee should head the regions in which the company operates. This would provide for representation of the regions in the decision-making role of the executive committee and enhance the implementation its policies while reporting regional needs and emergent circumstances to the company’s top leadership (Steers et. al., 2010).
The regional structure is meant to enhance connection with local consumers through a combination of localization and centralization. This would help overcome the challenges that IKEA encountered when it launched into the US market. Consumers of different regions have varying tastes and preferences and as long as IKEA does not adopt a regional structure, it will not address the needs of the consumers of the regions in to which it might expand. IKEA should allow the regional structure to vary its management to suit their environments. This would also have the advantage of speeding up the decision-making process especially because regional leaders will sit in the executive committee meetings (Wheelen & Hunger, 2012).
The lowest level in this proposed organizational chart is the strategic business unit (SUB). These units are the geographically operating segments that would have several advantages for IKEA. They would help IKEA meat the taste and lifestyle needs of the people of their different geographical regions. Different geographical regions are different stages of development and SUBs would help IKEA vary its operations to address these needs. The structure would also have an element of matrix structure that would involve the interaction between different functions such as between the local finance directors answering to regional leaders. Even so, regional functions should operate across geographical boundaries in to share their best practices (Tallman, 2009).
As IKEA endeavors to expand to other parts of the world, it should entrust SBUs with the role of carrying out regional market research. This would help the company be informed as it launches into fresh markets within different regions. SUBs should also help IKEA develop local advertising such as using local languages in order to enhance the acceptability of IKEA’s products by local communities (Steers et. al., 2010).
In conclusion, the proposed organizational chart will compose the executive committee and the regional structure. The executive committee will be the company’s chief decision maker. Except the chief executive officer, the other members of the executive committee will be the heads of the regional leadership. The strategic business units will be the lowest level of the chart and will localizing IKEA’s operations.
Steers, R., Sanchez, C. & Nardon, L. (2010). Management across cultures: challenges and strategies. Cambridge: Cambridge University Press.
Tallman, S. (2009). Global strategy: global dimensions of strategy. Chichester, West Sussex: John Wiley & Sons.
Wheelen, T. & Hunger, J. (2012). Strategic management and business policy: toward global sustainability. Upper Saddle River, N.J.: Pearson Prentice Hall. Read More
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