02 Jul Organizational management
Please answer (maximum 2 pages) the following three questions with regards to the following IKEA Mini-Case
1. How is the IKEA operations design different from that of most furniture retail operations?
2. What do you think might be the major problems in running an operation like IKEA?
3. What do you identify as the ‘operations function’ within IKEA? How is this different from the ‘sales function’?
With over 300 stores operating throughout the world, IKEA has managed to develop its own special way of selling furniture. Customers often spend around two hours in the store – far longer than in rival furniture retailers. This is because of the way it organizes its store operations. IKEA ́s philosophy goes back to the original business, started in the 1950s in southern Sweden by Ingvar Kamprad who was successfully selling furniture, through a catalogue operation. Because customers wanted to see some of his furniture, he built a showroom in Stockholm, Sweden. Not in the centre of the city where land was expensive, but on the outskirts of town. Instead of buying expensive display stands, he simply set the furniture out as it would be in a domestic setting. Also, instead of moving the furniture from the warehouse to the showroom area, he asked his customers to pick the furniture up themselves from the warehouse, an approach that is still the basis of IKEA ́s process today.
IKEA offers ‘value for money’ furniture with a wide range of choice, usually designed to be stored and sold as a ‘flat pack’ which the customer assembles at home. The stores are all designed around the same self-service concept – that finding the store, parking, moving through the store itself, and ordering and picking up goods should be simple, smooth and problem-free. At the entrance to each store are large noticeboards which proclaim IKEA ́s philosophy and provide advice to shoppers who have not used the store before. Catalogues are available at this point showing product details and illustrations. For young children, there is a supervised children’s play area, a small cinema, a parent and baby room and toilets, so parents can leave their children in the supervised play area for a time. Each child is attired in a yellow numbered top while in this area and parents are recalled via the loudspeaker system if the child has any needs. Customer may borrow pushchairs to keep their children with them.
Parts of the showroom are set out in ‘room settings’, while other parts show similar products together, so that customers can make comparisons. IKEA like to allow customers to make up their minds in their own time. If advice is needed, ‘information points’ have staff who can help. Every piece of furniture carries a ticket with a code number which indicates the location in the warehouse from where it can be collected. (For larger items customers go to the information desk for assistance.) After the showroom, customers pass through the self-service warehouse where they can pick up the items they viewed in the showroom.
Finally, the customers pay at the checkouts, where a ramped conveyor belt moves purchases up to the checkout staff. The exit area has service points, and often a ‘Swedish Shop’ with Swedish foodstuffs. A large loading area allows customers to bring their cars from the car park and load their purchases. Customers may also rent or buy a roof rack.
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