1. Introduction - Leading Innovation And Cultural Change
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The advent of globalization and advancement in technology has infused an influx of opportunitiesfor businesses all over the globe (Dana, 2021). The advancement of technology and availability of multiple options has increased the expectation of the customers. Today customers expect products with great value and fast delivery. Alongside, the rise of opportunity has also increased competition within the market. Consequently, organisations are looking for different approaches in order to grab the attention of consumers and gain a competitive advantage in the marketplace. Hence, it has become very crucial for organisations to continuously evolve and create an efficient strategy in order to stand out within the market. Henceforth, innovation plays a pivotal role for organisations to gain a competitive advantage.
Business innovation is the Organisational process that is associated with the introduction of new ideas, workflows, services, methodologies and products (Achmat and Brown, 2019). The primary purpose behind the initiation of innovation is to increase the revenue of the firm and make fortune. Innovation is more into initiating change in the core business which can sustain growth and revenue rather than making a small change or simply applying newly available technology. In this constant transforming world of business, the nature of adaptability has become a priority of organisations. Alongside, advancing their process in a constant manner has become necessary in order to sustain in the highly competitive market.
IKEA is a global destination for home furnishing, appliances, home accessories, kitchen products which attract a large number of consumers all over the globe. The organisation operate in 52 markets all over the world (Cosmo and Yang, 2017). The firm is popularly known for its innovation. From making innovative ideas to applying innovative style in their marketing approaches to creating moving showrooms and storage balconies all come under a few examples of innovations initiated by the organisation. In this regard, the discussion of the report will be initiated by various aspects relating to the innovation of IKEA.
2. Background of the Organisation
The world’s largest home furnishing retailer in the 21st century is IKEA. The organisationis a Swedish company operating more than 300 stores all over the globe. The main speciality of IKEA is that it sells products at a low price. The firm was founded by Ingvar Kamprad in the year 1943 and headquartered in Delft, Netherlands. IKEA offers their consumers ready to assemble furniture which includes, kitchen appliances,home accessories etc. (Cosmo and Yang, 2017).The firm is the first preference of consumers when it comes to buyingfurniture because of their value proposition and customer relationship which makes them unique among others. In 2020, the total revenue acquired by IKEA was 39.6 billion.
3. Critical Evaluation of the Organisational Current Innovational Process with Relevant Theories
An innovation process starts with the search in terms of discovering innovative potentials and the derivation of thoughts for product or service development. In the case of innovation of IKEA, they have implemented major strategies to improve their service and products for customers’ requirements. In this section, there will be a comparison between the earlier 4ps and the latest 4ps implemented by the company to discover the innovation process. On the other hand, Incremental innovation theory will be applied to demonstrate the innovation procedure.
3.1 comparison of existing and new marketing mix implemented by the company
Marketing Mix 4ps
Previous
New
Product
It is indeed true that the product range sold by IKEA is extremely large along with having each and every possible product for furnishing the house. This company has depended on design innovation in order to fulfill the requirements of all kinds of customers (Wu, 2020). They had been able to meet customers’ expectations through selling all kinds of products from the romantic to the minimalist.
Recently, it has been reported that above all the products, IKEA mainly focuses on the home appliances such as providing the customers wireless charging facilities for TV and media furniture. This innovation process has been able to lead the company to become recognised globally (Stenberg and Ruljova, 2021).
Place
It has been observed that IKEA operated in 28 countries where it basically sells its products from its 340 stores (Wu, 2020). Therefore, the store quality and designs are made in a way to attract people of all kinds inside the towns in eventful areas. The company also utilised model houses in the stores to create a visual attraction for the customers (Roy, 2020).
Compare to the previous place strategy, it has been observed that IKEA provides almost 12000 products in almost 50 different countries. The company has been able to expand its global distribution channel by enhancing its manufacturing process. The innovation regarding Procuring materials in immediacy with supply chain to decrease transport costs has been proved to be accommodating (Stenberg and Ruljova, 2021). On the other hand, the company introduces major changes to their distribution process. Customers who preferred online purchasing can buy them from the online stores presented in different countries (Vergassola, 2019). The multiple offline stores permit the customers who favored their shopping through visiting the stores.
Price
The products sold by IKEA are not too exclusive but they are not too low-priced either. The company has balanced prices within providing quality products efficiently (Singh et al., 2021). In comparison to other rival companies such as Bed or West Elm, IKEA offers products at many reasonable prices (Miller and Smith, 2021).
The cost of products offered by IKEA comes very close to their actual price due to the fact of product quality and characteristics. Customers do not have to worry about maintenance costs as the products are easy to clean (Solanki, 2021). For example, the textile covers on sofas and chairs are washable like any other fabrics used in household activities.
Promotion
It has been seen that IKEA utilises digital and traditional marketing channels in terms of its promotion. Through the initiation of catalog, the company had been able to strengthen its promotion process in different markets. The utilisation of this app has facilitated the company to stay competitive in the international market.
The advertising campaign implemented by IKEA is considered exceedingly innovative. The thought behind the campaign is that a social mess between men and women guides to a conflict that can be solved as per IKEA (Solanki, 2021). In the case of promoting a new product, the company utilises major social networking sites such as Twitter, Instagram and Facebook. By giving appropriate information about the products, the company tries to influence and convene the customers to purchase their products (Singh et al., 2021).
3.2 Incremental innovation
Incremental innovation has the ability to convey substantial profits to the businesses in case of improving the existing product at the right time. By applying this theory, IKEA will be able to bring an innovative change in terms of its business. In other words, Incremental might be supposed as nonstop innovation.
Digital transformation: In order to perform the regular operational activities of IKEA, digital transformation has an important part to play. The company has been able to transform its stores in a digitalized way. Regarding the fact of the pandemic, the company ramped up and increased speed even more as people transferred online and on the way to digital solutions (Stackpole, 2021). It has been observed that Things that would usually take years or months were accomplished in a few weeks with the help of efficient technologies. Implementation of innovative technologies is not a goal for the company rather than finding the latest ways to bring their offers to the consumers (ChatToPaul, 2017).
Enhance customer experience: IKEA constantly trying to improve the customers' experiences along with making an innovative change. The introduction of the AR tool has been able to increase the customer experience through shopping remotely by using this tool. The company has faced several difficulties by launching this app but managed its way of sustaining delivery costs (Roy, 2020). IKEA also cut several employees in order to improve their company performance. On the other hand, through the implications of automation and AI-based technologies, the company has been proved to be beneficial in enhancing customers' expectations.
Product development strategy: The ultimate innovation strategy of IKEA is to focus on low cost. Primarily the company leased out tackles to suppliers and offered training to make certain of the quality (ArekSkuza, 2019). It basically focuses on managing its supply chain to handle the huge quantity and geographic scattering in terms of its suppliers. IKEA has been able to follow a product development strategy as well as contribute furnishings in terms of household activities. IKEA also has an obligation in terms of sustainable design ethics. As a matter of fact, its product approaches are basically dependent on elegant design-driven by its unmatched supply chain.
4. Critical Analysis of the Process of Change and Evaluation of the Change Process in relation to Theories of Change
Theimportance of change management is increasingly becoming popular among modern organisations (Tiddand Bessant, 2018). As the world is transforming rapidly, in the same manner, businesses require to adapt to changes in order to ensure the sustainability of the organisation. Without the embracement of change, a business can wipe out another well-establishedorganisation. As a result, it has become crucial to manage the changes systematically in order to keep the changing procedure in order (John Hayes, 2018). For instance, due to having poor performance in change embracement, the biggest mobile phone company Nokia almost went out of the market and the market share of the firm has declined rapidly. Hence, for corporation growth and success change is necessary.
The IKEA group has represented itself as an epitome of an example when it comes to changing procedures and initiating change within the organisation (Tulentsova, 2020). The organisation uses the ADKAR model t adapt to change relating to its innovative expansion and innovational strategy. This model of change management also benefits the organisation to retain a powerful platform and to face any type of challenge in the modern industry which may impact the firm negatively. The leader of the furniture retailing industry corporation like IKEA always needs to stay ahead of the rest in order to attain a competitive advantage in the current market. Hence, the implementation of the ADKAR Model benefits the firm to initiate necessary changes systematically.
ADKAR Model
ADKAR model is a potential model for change management established by Jeff Hatt which assists organisations to achieve potential objectives. There are some of the key components of the ADKAR model which includes, achievement, awareness and desire to win. These are some of the crucial factors which directly helps an organisation to adapt to modernized changes(Gilani et al. 2018). This model instigates the factors including awareness and desire to change of a group or by a person to initiate change. Awareness benefits a leader of a corporation to be aware of the strengths and weaknesses which allows them to work upon the weaknesses and activity take the benefits of the opportunities. The desire of accomplishing the goals benefits a firm to develop a strong mindset in terms of achieving the corporation goals. Hence, desire and awareness are both crucial factors in terms of business and management based on the concept of the ADKAR model.
In addition to this, the ADKAR model benefits a firm to identify potential methods in order to adapt to change which is a very beneficial method in the modern world of technology.Hence, considering the Organisational functionality change management plays a pivotal part to adopt modern technology. This model has been proven to be one of the frameworks which initiate methodical change in terms of managerial aspects and assist a firm to recognize the goals.
Fig 1: ADKAR model of Change Management
IKEA has understood that in order to sustain itself in a market filled with competition it is necessary to initiate precautionary measures in terms of change management. Embracing necessary measures can benefit IKEA to achieve high customer satisfaction and can also benefit in terms of acquiring positive feedback. In this regard, IKEA should have an innovative strategy as per the marketplace landscape. Henceforth, “change management” plays a vitalpart in terms of managing new changes which are necessary to be tackled by both the organisation and by the workforces (Bejinariu et al.,2017). IKEA constantly adopt new technologies and have vast knowledge regarding the change. Additionally, IKEA ensures that its employees are well conscious of the alteration and can safeguard all the struggle of staffs towards changes.
The organisation always take proper initiatives with the purpose of making the organisation successful. The primary setupinvolving to change of an organisation is that it entails immense pressure to grow a change in the goods(Morrar et al. 2017).The external environment is very crucial in terms of creating pressure as it directly pressurizes the entire organisation in terms of delivering the best result and services. In order to cope up with the extremely competitive world, the organisation confront the extreme challenge that obstructs the firm in the way of achieving goals. IKEA thinks about the service, product and the consequence as these are the primary and basic factors that play a key part in the commercial world. The organisation also adapt precautionary changes in order to meet these aspects. IKEA initiating technologicalchanges which benefits them to discover better methods to handle the challenges of the marketplace. It is proven that the organisation also need to utilize the common impacts of change in order to evolve within the current market. Correct documentation of methods can benefit the firm to manage change to grasp the objectivesfixed by the firm. Therefore, Organisational alteration is very necessary for terms of enhancing the potentialsconcerning market capability along with buyerresponse.
In the closing section, it can be included that the management structure of IKEA has ensured“change management” is the significantfeature when it comes to business firms. IKEA has planned to create a vigorous platform for enhancing consumer approval via digital innovational processes which have directly contributed to the high growth of the firm. The implementation of the ADKAR model has enabled IKEA to develop a propersetting of modification in the commercial strategy through building web services ad cooperating with the workforce.
Analysis upon the current or Future micro and Macro Environmental Changes that can Impact the Firm
In this section, there will be an evaluation of the macro and micro environmental changes that occurred and impacted the business during 5 years. The evaluation of PEST and SWOT analysis will be able to construct the evolution of the company in recent years.
5.1 PEST analysis
Political changes: It has been measured that IKEA functions across more than 41 countries previously and still it has been maintained. It basically shows that the company has been able to stardom in those countries (Miller and Smith, 2021). Nevertheless, the company has not been successful in operating in a new country or region in these years. The increasing level of political changes has made it difficult for the company to enter the new foreign market. Although, it is indeed true that, IKEA made an enormous impact on different regions. For example, in India, the company has invested a lot in promoting a campaign of 'make in India' and made a successful entrance in this marketplace (Al-Zghool, 2019). This particular campaign has been proved to be accommodating for IKEA and it opened up its first store instantly after having a friendliest association within the Indian government.
Economical changes: The economical changes also impacted IKEA in various ways. In terms of the marketplace of the UK, the inflation rate is getting inferior compare to the previous five years. Nevertheless, the national income is getting elevated and that means IKEA has superior opportunities to develop and capture the marketplace of the UK. Recently, it has been found that the company has been facing major financial disabilities regarding the fact of COVID19 pandemic. The pandemic makes a major impact on creating a financial downturn worldwide. It has been observed that for almost two years IKEA has been encountering this difficulty due to the fact of a pandemic (Al-Zghool, 2019).
Social changes: companies have to deal with the social changes and they have to maintain their business according to the modification of social changes. Adopting the basic lifestyle of the people in the newly operated countries is extremely beneficial for the company (Miller and Smith, 2021). For example, in the UK, people have flexible working hours and they are inclined to complete shopping at late hours and that has been proved quite problematic for the company. Now, they are concerned about the fact in an effective manner. Recently, it has been reported that the majority of Australians are living a luxurious lifestyle and the price range really does matter for them. The people of Australia are only concerned about the fact of getting the best quality product. Thus, by implementing these major social changes IKEA has been able to bring a strategic advantage for the organisation to make possible of enhanced market capitalisation in different countries.
Technological changes: Technological changes have a major impact on enhancing the profitability and productivity of the firm. Compare to the previous five years, it has been observed that technological advancements have been able to create a huge modification on connecting within the customers along with fulfilling the customers’ expectations. The company invests heavily in its research and expansion and brings in more and more technologies in order to maintain its customers contented (Al-Zghool, 2019). It has been able to make IKEA gain competitive advantage in the international market.
5.2 SWOT analysis
SWOT analysis is considered as an analysis tool in order to measure the internal condition of an organisation.
Strengths
IKEA has maintained long-term partnerships with its suppliers in an effective manner.
The company has been able to enhance its customer experiences through digitalised innovation in Dubai (Stackpole, 2021).
The company has established several offline stores in different countries compared to the previous two years.
Weaknesses
Lack of superiority and durability of the products has impacted majorly to create a barrier in the selling process compared to the previous two years (Miller, and Smith, 2021).
It has been observed that the Imitable business model has been able to generate a problem in terms of IKEA to carry on its uniqueness.
Opportunities
By focusing on technological advancements, IKEA has been able to develop a low-cost strategy which was not possible if compare to five years back (ArekSkuza, 2019).
The company is expanding its market in different countries along with sustaining its stardom (Stackpole, 2021).
Threats
The elevated rate of competitors creates a disruption in the selling process of IKEA.
The impact of COVID19 has made an enormous impact on creating an economic downturn for the company.
6. Recommendations
One of the most crucial issues faced by the organisation while diversifying and initiating innovation within the product differentiation segment is relating to the created waste and damaged furniture during the time of transportation or handling stock for a longer period in the warehouse. Hence, the main challenge while developing a new product or initiating innovation within the existing product is to reduce waste and improve the recycling procedure in the recycling practices (Ding, Liu and Xu, 2021). Though it is considered that the firm takes good care of the inflow and outflow of furniture from the storehouse to product delivery to the users. In this regard, IKEA should emphasize enhancing the skill of the employees to enhance efficiency and should develop a good transportation system and focus upon packaging to avoid damage. Alongside, the firm should also take warehouse space for managing the furniture damage.
In addition to this, IKEA is indeed a superior example when it comes to change management. But there are certain things that need to be considered by this leading organisation while managing change and fostering innovation is that there are some ethical challenges that are associated with the transformation of the technology within the corporation. The implementation of artificial intelligence is crucial in the present world which can foster competitive advantage by enhancing efficiency and increasing productivity (West and Allen, 2020). But there are some ethical challenges that incur imbalance within the society like the implementation of AI will definitely enhance efficiency but will lead to lay off employees. In this regard, the firm should foster innovation and creativity within the Organisational environment and should deliver proper training to prepare them for the upcoming time which will lead the future of the business world.
7. Conclusion
The entire study has basically focused upon the aspect of innovational approaches of IKEA. In this regard, the report has highlighted multiple aspects. Firstly, the report has included a discussion upon an evaluation of the current innovational processes initiated by the firm and has brought up the theoretical approach of Marketing mix 4p and incremental theory. The next section of the report has focused upon describing the current processes of change management and has also drawn out theoretical approaches in order to understand the processes of change management initiated by the firm IKEA.A discussion upon the potential macro andmicro environmental aspects which can impact the organisation has been included in this section. The last section of the report has highlighted a recommendation for the IKEA organisation.
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