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Organizational Analysis

Organizational analysis is a way in which a company’s structure,ability and perfomance are examined in order to improve its efficacy in terms of performance. Organizatioanl analysis can be explained using different principles and concepts  that focus at giving comprehensive knowledge in behavioral interactions, systems and technology. In my discussion about this topic, I have focused on the Swedish based furniture group IKEA. IKEA is a household name synonymous with production of state of the art home furniture. IKEA Group consists of several operative branches, which are the Swedgewood industries, a division that deals in distribution of its products and warehousing in addition to other companies holding stores in various states around the world.  INGKA Holdings IKEA’s parent  company structure is as follows ,IKEA Group is owned by  Stitchting INGKA Foundation while  INGKA Holding B.V. is the mother company.  IKEA Group Executive Management position are held by the chairperson Goran Grosskopf and six other excutives. IKEA stores are run and managed by the IKEA Group. There are about 290 IKEA stores in 26 states as franchises from Inter IKEA Systems B.V. These franchises are managed by IKEA Group. IKEA franchise systems  was a brainchild of IKEA Systems B.V. They issue companies rights to operate their businesses as franchises of IKEA Group of companies.

Legal Concerns

After an investigation by The Washington Post and the  BBC revealed that the company engaged in child labor, IKEA came clean  that several of its suppliers in the third world countries were misusing child labour and engaging in unauthorised lumbering in restricted forest zones. Being a company that advocates for green policy and safe human working conditions, IKEA was challenged to explain  the sources from which its suppliers got wood and subsequently labour. Ann & Frances (1999), caution that IKEA should be aware of the  production  chain from the suppliers. My view is that the company should carry out 100% research into unlawful lumbering rather than the usual 30% inspection carried out on its key suppliers. Enviromental and Human Rights activists argue that IKEA`s rapid expansion globaly goes against its stated morals. The trend should concentrate on preserving and upholding the quality of life both of  employees and consumers at large.

The other legal issue is that the company’s diversity policy does not resonate with the United States diveristy legal provisions. A survey carried out buy rights bodies that the company discriminates against people from minority backgrounds. Most of the comapny’s outlets in the united states are managed by peopple of caucasian origin. This situation contravenes the law. The provides that company’s that operate on a national platform must hire people of all races. The composition of the comapany’s staff must reflect the ethnic composition of the nation. IKEA must adjust its employment provisions as required by the law to hire people from various ethnic backgrounds.

Human Resource Issues

One of IKEA’s main human resource issue is that problem lacks cultural diversity in its management system. Lack of cultural diversity kills creativity and innovation. This leads to the same design models, which limit the company’s producst in terms of preferences. This scenario can result to production of monotonous products. In a dynamic industry like furniture, this is a  big risk given that consumer behaviour and patterns change constantly. IKEA`s recruitment guidelines result into hiring of similar individuals. This hinders introduction of variety in product development  making it difficult for the company to meet the ever shifting consumer demands in the market.

I submit that the company should overhaul its recruitment guidelines without altering key qualifications and abilites to pave wasy for hiring of  persons from diverse backgrounds who have the potential to nurture diversity and richness in the company’s products. I also add that diversity may help the company achieve its goals and objectives and  reduce misuse of raw materials and resources. Another notable problem within the company structure is the management, which comprises of Swiss nationals control administration and the mangement of entire stores. Furthermore, the company lacks leaders who share a common view in managment and decision making process. The best way to deal with this is to recruit Swiss nationals who exibit the same profesional ethics and principles. Alternatively,  the company should hire managers from different countries to control operations in its various global stores. This would promote nurturing of managerial capabilities of candidates worldwide.

The underlying issue under IKEA leadership policy is Kamparads hands on style. Even though, he has steered the company to greate success, the establishment is run and managed as  a family entity. Each associate of the comapny is required to potray an image that  reflects  the company’s goals and objectives. David & William (2007) assert that perfomance should be geared towards improving the company`s output rather than growth at an individual level. This philosophy could pose as a threat in the future in  hiring candidadtes who will accept and adhere to IKEA`s prinicples .

Leveraging the Human Resource

The issue of job safety is a major concern of the company. In present, the personell concentrate more on perfoming a shoddy job to maintain their positions rather than nurture innovative ideas in the same position. The problem is in the fear of loosing the job titles. The present economic trends have build up the fear among employees hindering their concentration to come up with creative ideas to improve a company`s  perfomance. Additionaly, many of its employees and customers fear that IKEA  is growing at a tramendious pace, finding it difficult to cope with. The question is: whether the company will be able to manage all its outlets. Flexibility and innovativeness must be encouraged to improve employee`s perfomance.For instance, a new outlet launched in Brent Park in northern London that offered large discounted goods caused a major traffic snurl up, which resulted to many casualties. IKEA should come up with better ways of managing customer flow by beefing up security personel and law enforcement officers. Cases of customers being crushed to death were also witnessed in Saudi Arabia in September 2004, when the store issued less numbers of free 150$  shopping vouchers.

A major setback which is experienced by IKEA was in consumer projection. The company expected to rise the number of the middle income earners in third world economies, while  the consumer group is supposed to be narrowed and anticipated to grow and middle income earners from the younger generation kept dwindling. The company should focus on affluent and older consumers to curb this problem. With its soaring growth interantionally, there was a raising concern as to whether IKEA could maitain its famous organizatonal cultural values. A better aproach should be provided with the aim to improve its managerial tactics, nurture a comptetent and strong workforce that is able to handle rapid pressure from raising consumer demands. As consumer tastes and preferences keep changing over time, a flexibilty of big firms such as IKEA is put to question. Adapting and changing immediately to meet such demands is very difficult  compared to smaller companys.

IKEA should  equally take the  adavantage of its large size and  maximize on the principle of economies of scale through diversifying its products to a wider market. IKEA should concentrate and nurture a culture-driven work environment to improve its geographical exapansion and diversification of products in different outlets. Besides analyzing current trends in the international market, the company should focus on drawing up a strong framework in the managerial position to improve its operations efficiently. It is also recommended that the company draws up structures packaging, outsourcing and logistics.


The company must examine the differences in local demand and come up with a policy that promotes strong international presence in its products by being proactive and sensitive to diaspora tests and preferences.  Furthermore, the company should focus on maintaining a smooth transitional role in order to establish  new stores, set up systems and controls and training operation staff. This will help intergrate the company closer with wider geographical experiences. It must be noted that a visionary approach of leadership and organizational management systems are better ways of steering a company to greater scales of performance than concentrating on a cautious approaches.

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