IKEA Case Study

IKEA Case Study

Applying the Hard Systems Method

Problem/ Opportunity Definition

            The recent years have seen increased demand for companies and organizations to embrace environmentally friendly practices to ensure sustainable development (Buckley & Ghauri 2015). It is clear that IKEA also faces a similar challenge. Specifically, its stakeholders expect it to avoid business practices and activities that can cause harm to the environment. This in an opportunity to the firm because it can take advantage of responsible practices to improve its performances in the market. Mostly, it will enable the firm not only to earn a good reputation but also attract and retain the highest number of consumers. As a consequence, this will aid it to increase its revenue and profits and hence take advantage of the same to improve the quality of its products.

Analysis of the Situation

            IKEA has over the years dedicated its resources to the creation of environmentally friendly products. This has been achieved through ensuring production is carried out in such a manner that transportation, technology, and materials have a least damaging effect on the environment. Equally, raw materials are utilized rationally to ensure reduction is wastes. The management at the company is determined to ensure it does not consume materials at a rate higher than the rate of replenishing the same. The company also tries as much as possible to avoid the use of unnatural substances and materials. Moreover, it also seeks to preserve nature and its inhabitants by refraining from dumping wastes. Nevertheless, there no single production process that is entirely environmentally friendly. There is still a lot the business can do to ensure it remains green. Improving on its ability to protect the environment will go a long way in improving the company’s reputation among different stakeholders. Additionally, this will also aid the firm to maintain its edge in the competitive industry. IKEA has done a lot to reach where it is at the moment. Improving on its corporate social responsibility (CSR) footprint will enable it to achieve sustainable development (Case Study, n.d).

Identification of Constraints and Objectives

            The primary purpose is to improve IKEA’s reputation regarding environmental friendliness. Another goal is using good practices to attract and retain the highest number of consumers. Ultimately, the proposed solutions will enable the organization to achieve sustainable development. IKEA has what it takes to improve ensure its business practices and activities are more environmentally friendly. It has already demonstrated the same considering the current CSR footprint. However, further improvement in its environmental practices will require more resources. The company has made a name for offering quality furniture at low prices (Case Study, n.d). It may be challenging for it to sustain the low prices while at the same time handling environmental concerns. Individuals have the tendency to resist change whenever it is introduced in an organization. IKEA is not any different. The risk of some people opposing some of the solutions is high. Nevertheless, the company is built on great values that can help in enlisting the necessary support to achieve effective implementation. Individuals may also lack the necessary skills and knowledge to implement the changes as expected. Nonetheless, this is a challenge that can be addressed through training and development (Buckley & Ghauri 2015).

Routes to Objectives

There are different routes that the management at IKEA can take to achieve the above objectives. For one, it can emphasize the production of greener products. Clearly, the company already owns some green products in different categories. Nevertheless, it also still produces many products that cannot be categorized as green (Buckley & Ghauri 2015). The growing demand for similar products provides the business with an opportunity to retain its current customers and attract new ones and in the process enhance its profitability. The demand for lower carbon footprint and reduced water usage is also another option. The company can reduce its water consumption and improve its manufacturing processes to reduce carbon emitted to the environment. This can be achieved through the utilization of modern technologies such renewable sources of energy and operate closer to consumers to reduce carbon emitted when transporting goods from manufacturing points to the point of consumption. IKEA can also further invest in research and development (R&D) to come up with creative ideas on how to improve its ability to protect the environment. This can enable it to cover different areas where it is considered less environmentally friendly (Edvardsson & Enquist 2014).

Measures of Performance

            The performance of the proposed changes must be measured to determine whether the company has achieved its goals or not. One performance measure is benchmarking results with the set standards. The modern society has set standards regarding what constitutes an environmentally friendly product or practices (Buckley & Ghauri 2015). This criterion is used to determine whether a business is performing well regarding protecting the environment or is contributing to environmental degradation. IKEA has a culture of engaging in market research to ascertain its consumers’ thoughts and concerns about its products. Market studies are also used to determine customer needs and preferences (Case Study, n.d). The company can also use the same strategy to gather information on its capability to meet customer needs. High satisfaction among customers attracted to greener products will mean that IKEA is achieving its goals. On the contrary, low levels of satisfaction would imply the solutions created for the business are not working hence the need for change.

Options

            Two main options are available to the company regarding improving its environmental friendliness practices. Firstly, the business can focus on one area such as reducing its carbon footprint or producing greener products. This can give it an opportunity to focus on areas that are performing poorly regarding environmental protection. The second option will entail the business focusing on R&D to develop ideas on how to improve its systems and practices as a whole. In this case, the resulting solutions may apply to the entire company and not just one area as the case with the first option. The two options are both feasible. However, the results or consequences will vary considering one option focuses on a particular area, for example, in production and the other one seeks to improve different systems.

Evaluation of Options

            The first option applies to the organization as there are different areas in the organization that needs improvement. Focusing on one of them will aid the business to improve its social responsibility. For example, reducing carbon footprint will ensure IKEA does more to reduce air pollution. Nevertheless, this may not help in addressing issues experienced in other areas in the production process. For instance, the company still experiences the issue of how it uses its water. It tries to reduce water wastage. However, it is yet to achieve zero wastage. In general, achieving good results in one area and failing in other areas may not do much in improving the company’s reputation. Stakeholders are likely to ignore the changes and instead judge the firm based on its weak areas.

On the contrary, the second option is more reasonable as it will help the business to focus on improving different areas at the same time. For example, research can enable the business not only to come up with ideas on how to reduce carbon emissions but also reduce water consumption. This will go a long way in ensuring the production of greener goods and services. In the same way, further investment in R&D will aid the firm to ascertain how to sustain the production of quality products that are priced low (Edvardsson & Enquist 2014). This option also has its disadvantages. The company will require more resources to implement this option as compared to the first one. More expertise will also be required to effectively implement changes linked with the second choice.

The Best Option

From the above analysis, it is evident that the best option is the second one. This can be attributed to the fact that it will offer the business more benefits that the first one. It may be expensive to some extent. Nevertheless, the benefits far outweigh the costs. The modern world has been experiencing a surge in the number of consumers attracted to greener products. They are even willing to spend more on a product that does not lead to environmental degradation. With IKEA offering low prices, greener products will mean more business. The first option may not allow the business to make more progress in achieving environmental friendliness.

 Implementation

The company needs to implement the proposed change as soon as possible to achieve its objectives. The management must first communicate the need for change. This will aid to get the essential support before commencing the implementation process (Cadle, Paul, & Turner 2011). It must ensure that every stakeholder understands why the change is necessary and how the business stands to benefit from the implementation process. Correspondingly, this will give it an opportunity to deal with issues raised by naysayers. The implementation process should then be followed soon after the right support has been attained. The management has to ensure important stakeholders are included in the implementation process. For example, employees must be involved considering they will be directly affected by the proposed change. This will also help in ensuring the management makes informed decisions during the implementation stage. Leaders at IKEA must also make sure they assess the performance of the process to ascertain if there is the need to make alterations to achieve the best results. The creation of short-term wins is of the essence.

New Understandings

The application of the HSM to the IKEA case study has enhanced my understanding of what it takes to manage complexity. The tool enables the management to assess the current organizational situation against what it intends or desires to achieve in the future. This is then followed by the development of goals and the constraints to the attainment of the objectives. Such processes are integral in the decision-making process (Sokolowski & Banks 2012). Specifically, they allow one to determine the best course of action considering the situation and the intended goals. Personally, I have had the tendency to make rash decisions without considering all the possible scenarios along with their pros and cons. I have learned that the HSM tool can be used to mitigate similar risks as well as improve one’s ability to make informed decisions in complex situations. I have also learned that different changes may require unique implementation strategies to achieve success. Sticking to one strategy in all cases may not work or lead to the desired results. This explains why often the management in an organization must involve others in the decision-making process to ascertain the best approaches.

Applying HSM also enhanced my knowledge on the importance of measures of performance when implementing change in a system. Often, individuals come up with creative ideas on how to deal with different problems. However, they fail to determine how the success of the proposed changes can be measured. As a result, it becomes hard for them to ascertain on whether they realize any benefits or losses after implementing change. I have been a victim of such problems. I now understand the fact that coming up with measures of performance is essential to enhance the chances of achieving success after a change.

The Main Criticisms of the Hard Systems Method

Some individuals and scholars have criticized the hard systems method. Most of the criticisms are associated with the fact that this approach assumes the notion that all problems are ill-defined or easily quantifiable (Culmsee & Awati 2013). One assumption is that all problems have on optimum solution. This is a supposition that is widely criticized for scholars maintaining that some problems have more than one solution and that applying different strategies to deal with an issue increases the chances of success. To some extent, this criticism makes sense. Certain problems require a combination of strategies to address them adequately, for example, maintaining or boosting employee morale in an organization. On the contrary, some problems have optimum solutions in that picking on any other solution other than the one considered the best yields poor results (Ramage & Shipp 2015). For example, by IKEA investing in research, it will be able to come up with different ideas and solutions to the various environmental responsibility issues it is currently facing. Focusing on the area may not yield the best results as the company will be left with other areas that must be handled.

HSM is also criticized for applying scientific approaches to solving problems. It is argued that scientific methods cannot be relied upon to deal with all problems. In most cases, it is only quantified problems that are best suited for scientific methods. Problems that cannot be quantified cannot be solved scientifically. This means that HSM cannot be relied upon in all situations as compared to soft systems (Reynolds & Holwell 2012). This argument is valid indeed some problems can only be solved through non-scientific methods. Such methods can also be relied upon when dealing with quantifiable problems. Typically, other variables, other than technical factors are examined to detail the best way forward. Plus, applying hard systems methods require technical skills lack of which chances of success are reduced.

CATWOE

CATWOE is considered a checklist of thinking and one of the universal techniques that business analysts use to identify what a company or organization is trying to achieve, problem areas, and how to favored solution is going to affect the business and stakeholders involved in it. Typically, it is used in the search for a solution to implement and help in consideration of the impact it will have on everyone involved (Roe 2014). CATWOE stands for customers, actors, transformation process, world view, owner, and environmental constraints. Clients or customers are stakeholders who are the users of the process or system. Such individuals suffer or benefit from a change in a system or process. Actors are persons involved in the implementation of the proposed change in a system or process (Ellis 2013). Transformation relates to the alterations that a process or system brings about. A worldview or Weltanschauung refers to the bigger picture and the wider impact of the transformed process or system. On the other hand, owner relates to the decision makers who have the power to make changes, decide on whether to go ahead with change or stop the project. Lastly, environmental constraints are limitations and constrictions that will impact the solution and its success (Williams & Hummelbrunner 2010).

Regarding the IKEA case, customers refer to individuals and businesses that are attracted to its products. The company targets anyone who can access its products and can afford them. Actors, in this case, are the management, executives, and employees in the organization who will be involved in the implementation process. Transformation process relates to the outcomes of investing in research and development. The worldview refers to the benefits the change will have in the world and in this case they include environmental protection and sustenance of natural resources. The leading decision makers at IKEA are the top executives and shareholders. Some of the restrictions on constraints to the change process include reluctance among executives and lack of the necessary resources. The ability of the firm to realize the goals and objectives linked with the changes is largely dependent on its capability to sustain high performances. It cannot afford the luxury of incurring losses as this would strain its resources, hence inability to maintain its edge.  CATWOE is also a technique that can be used to increase the chances of success in change implementation at IKEA.

Bibliography

Buckley, P J & Ghauri, P N 2015, International Business Strategy: Theory and Practice, Routledge, New York, NY.

Cadle, J, Paul, D & Turner, P 2011, Business analysis techniques: 72 essential tools for success, British Computer Society, London.

Case Study. n.d, IKEA Case Study.

Culmsee, P & Awati, K 2013, The heretic’s guide to best practices: the reality of managing complex problems in organisations, iUniverse, Bloomington, IN.

Edvardsson, B & Enquist, B 2014, Values-based Service for Sustainable Business: Lessons from IKEA, Routledge, London.

Ellis, R K 2013, Critical issues in systems theory and practice, Plenum Press, New York, NY.

Ramage, M & Shipp, K 2015, Systems thinkers, Springer, London.

Reynolds, M & Holwell, S 2012, Systems approaches to managing change: a practical guide, Springer, London.

Roe, K 2014, Leadership: practice and perspectives, Oxford University Press, Oxford.

Sokolowski, J A & Banks, C M  2012, Handbook of real-world applications in modeling and simulation, Wiley, Hoboken, NJ.

Williams, B & Hummelbrunner, R 2010, Systems Concepts in Action: a Practitioner’s Toolkit, Stanford University Press, Palo Alto.