Implementing Changes To Ikea Management EssayFor assignment help please contact

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IKEA is the world's most successful mass-market retailer, selling

Scandinavian-style home furnishings and other house goods in 230 stores

in 33 countries and hosting 410 million shoppers per year. An acronym

for founder Ingvar Kamprad and his boyhood home of Elmtaryd,

Agunnaryd, IKEA began operating in Sweden in 1943 and continues its

original ethos based upon cost obsession fused with design culture. No

design, no matter how inspired, finds its way into the catalogue if it

cannot be made affordable. As a means of expanding the business, the

company considered change in its business in the form of selling 2nd

hand furniture by reconditioning damaged or old furniture stocked in its

warehouse and offering furniture reconditioning services to customers.

In developing this kind of business, it expects to make this constitute fifty

percent of its business.

2. Term of reference

In this part of the section, we will list several aspect of theoretical

approaches that we could apply in the company to plan and implement

the change.

3. Planning and implementing the change

3.1. The need & factor during the change

Waste reduction and improvement in recycling wastes are the issues that

are driving the need for change. IKEA incurs waste because of damaged

furniture during transportation, handling or wear-and-tear when stocked

for longer periods in the warehouse. Although the compa

. Problem/Issues that Prompted the Need for Change

            Waste reduction and improvement in recycling

practices are the issues that prompted the need for change. Eastern

Furniture Company incurs waste because of damaged furniture during

transportation, handling or wear-and-tear when stocked for long periods

in the warehouse. Although the company takes its cue from the inflow

and outflow of furniture from its warehouse for delivery to customers in

determining which furniture to make in greater volume and which

furniture to stop making or make in lesser volume, the company has to

manage a bulk of damaged furniture that it cannot sell. These take up

valuable warehouse space and comprise loss for the company.

            Overall, the issue is one of efficiency, which has

two elements. One is the ability to maintain a good ratio between the

input allocated or employed and the output generated. Ideally, there

should be balance in the ratio to ensure break-even but to ensure positive

returns the ratio should be greater in favor of output. (Thompson,

Strickland & Gamble, 2007, p. 93) Waste represents input not

transformed into output. The company wanted to place greater weight on

output by optimizing resources use. Another is the enhancement of the

skills in avoiding or preventing wastage of resources and time. The

company has to minimize waste of both resources and time to improve

performance.

 

3. Identifying and Assessing the Causes of Change

            Understanding the change and clarifying the

justifications for the change is an important management process. There

are various diagnostic tools useful in assessing change. These clarify the

change and points to compelling reasons that supports the decision to

implement the change.

            One tool is the force field analysis, which refers to

the process of listing down the pros and cons of the planned change and

evaluating the merit or soundness of the decision as well as the viability

of the change (Hurt, 1998, p. 55). The table below shows the forces

supporting and discouraging the implementation of the planned change.

Forces for Change

 

-boost resource management efficiency

-increase sales

-control cost

-enhance profitability

- address customer demand

-add value for products and services to customers

- increase market share

-ensure sustainable growth

 

 

 

 

 

 

Planned Change (establish a 2nd hand furniture trading)

Forces against Change

 

-increase operating cost

-pull or stretching of available resources

-resistance from managers and employees

-risks of incurring further losses

 

 

             A number of forces support change. These

forces encompass different areas from the improvement of resource

management practices by optimizing output from the input used,

financial performance in terms of sales and profitability by controlling

cost, and marketing outcomes by meeting new demand and adding value

to customers. The occurrence of these forces of change could mean

sustainable growth for the company. However, there are also important

forces discouraging the change. These include increasing operating cost

because of the expansion of the business, the pull of resources from the

existing business to the new business that means the stretching of

available resources. There could also be resistance from managers and

employees because of the change in organizational structure. The risk of

incurring further losses in case the company is unable to manage

effectively the rigors of the change process is also an adverse factor.

            By balancing these forces, it appears that the

forces supporting change weigh greater than the forces discouraging

change. Achieving the benefits is viable given the stable financial

situation of the company and the opportunities for expansion in the

market. The company has sufficient resources to invest in the change and

the expected returns are high because of the growing market for

refurbished and environmentally friendly furniture products and services.

The establishment of a 2nd hand furniture business also adds value to its

product and service offering to customers by providing customers with

the opportunity to help in conserving the environment by minimizing

waste through recycling. However, the company needs to address the

forces discouraging change by developing a sound resource management

and investment plan, developing preventive and contingency plans for

risks, and easing the resistance of managers and employees. By

addressing these discouraging factors, the company can ensure expected

results from the change.

            Another tool is critical pathways, which refers to

the use of directions and schedules in planning tasks and monitoring

completion to ensure the achievement of the expected results. Using this

tool determines the viability of the change and the areas requiring focus.

(Thompson, Strickland & Gamble, 2007, p. 93) The table below shows the

tasks required in the implementation of the change, the commencement

period, the period for completion, type of activity, and the relative

depends on the tasks necessary for completion.

Task

Commencement

Completion

Type

Task Interdependence

1. marketing study

Month 1

1 month

Sequential

 

2. consultation of managers and employees

Month 1

2 month

Parallel

 

3. brainstorming and preliminary planning

Month 2

2 months

Parallel

2

4. expansion strategy implementation (i.e. mergers and acquisitions, joint

venture, takeover, etc.)

Month 4

2 months

Sequential

1-3

5. restructuring and hiring of new employees

Month 4

3 months

Parallel

4

6. preliminary marketing activities

Month 7

6 months

Sequential

1-5

7. preliminary evaluation

Month 10

1 month

Sequential

1-6

8. final evaluation

Month 12

1 month

Sequential

1-7

 

            The entire change process happens in a twelve-

month period. The identified tasks support the viability of the change.

The tasks distinguish the preparatory activities, implementation proper

activities, and post-implementation activities that the company needs to

complete the change process. The tasks also coincide with the issues

requiring consideration such as resistance during the restructuring

process relative to the results of the consultation with managers and

employees and the development of the appropriate marketing activities

coinciding with the results of the marketing study. The determination of

the sequencing of tasks and interdependence of the tasks also supports

the viability of the change by determining priorities during a particular

period to ensure due preparation and evaluation of implementation.

Overall, the critical pathways analysis supports the commencement of

the change and identifies the tasks for completion to achieve the change.

 

3. Stakeholder Analysis

            The change process is organization-wide, which

means various parties likely affected by the change involving the

development of a 2nd hand furniture service. Stakeholders pertain to the

parties linked to the business firm who stand to experience benefits or

adverse effects from the change (Friedmand, 2007, p. 172). Identifying

the stakeholders and the respective interests is important to develop

ways of wining over these various stakeholders who are likely to

contribute to the success of the planned change. Determining

stakeholders or the parties affected by the change together with the

impact of the change to these parties is also important in prioritizing

stakeholder interests as well as the resolution of issues faced by the

stakeholders. (French & Delahaye, 1996, p. 22)

            There are a number of stakeholders in the planned

change falling under either internal or external stakeholders. First is top

management of the organization who decide on the change, direct

strategy implementation, and carry accountability for the outcomes of

the change. Second are middle managers affected by the change and

comprise implementers of the tasks constituting change. Third are

employees also affected by the change and serve as movers in the change

process. These three stakeholders also constitute internal stakeholders

as they form part of the organization and directly experience and

participate in the change process. Fourth are suppliers of furniture

retailed by the company who could be affected by the expansion. Fifth

are investors and investment parts providing capital needed in the

change process. Sixth are customers for whom the change is directed

and from whom the impact of change is assessed. These last three

stakeholders comprise external stakeholders by not being part of the

organization. These stakeholders influence the change indirectly but

could influence the success of the change management activity.

            There are a number of tools in analyzing these

stakeholders. The application of these tools identifies stakeholder

interests and clarifies the prioritization of stakeholder interests, in case

of conflict. This is necessary to ensure that the intended impact for

stakeholders and the expected response from these stakeholders ensure

the achievement of objectives for the planned change.

            One analytical tool is the power model, which

classifies stakeholders according to their relative power or influence in

swaying the change process. There are four classifications of

stakeholders relative to power, which are promoters, defenders, latents

or apathetics. These classifications vary according to the interest in

achieving the change and the influence on the change process. The

model also determines the stakeholders included in the decision-making

over the change process depending on the relationship with the company

and the influence on the operations of the company. (Cooper, 2004, p.

13)

Stakeholder Classification

Prioritization of Change

Influence on the Change

Internal Stakeholders

External Stakeholders

Promoters

High

High

Top Management

Investors or Investment Partners

Defenders

High

Low

Middle Manager

 

Latents

Low

High

Employees

Customers

Apathethics

Low

Low

 

Suppliers

 

            In implementing this analytical tool, the identified

stakeholders fall under different classifications. This determines

differences in interest and the means of managing these interests. In

achieving the planned change via policy support, there should be strong

support from the top management and middle managers. It is important

achieve strong support from top company officers as well as middle

managers to ensure the development and implementation of policies

towards the planner change. To ensure successful implementation, it is

important to consider and integrate the interests of investors to gain

capital that supports the change process, employees who would

implement tasks comprising the change process, and customers whose

acceptance determine the marketability of the new business.

            Another analytical tool is the resource

dependence theory (Frooman, 1999, p. 191) that classified the

relationship between the firm and stakeholders into four types, which are

1) firm power, 2) high interdependence, 3) low interdependence, and 4)

stakeholder power. The nature of the relationship determines the issues

requiring resolution to manage effectively stakeholders. The core idea of

this analytical tool is the recognition of the limited self-sufficiency of

business firms so that they have to rely on their environment to address

difficulties.

Firm-Stakeholder Relationship

Stakeholders

Firm Power

Middle Managers, Employees,

Stakeholder Power

Customers, Top Management

High Interdependence

Investors and Investment Parties

Low Interdependence

Suppliers

 

            The implementation of this analytical tool shows

the stakeholder priority of the organization in achieving the planned

change in the context of resource accumulation. Since the company has

strong dependence on investors and investment parties as source of

capital and investors also rely on the company to experience returns.

This means that the company should develop mutual positive relationship

with investors and investment parties. Since the power of stakeholder is

high in the case of customers and top management, which means that the

company should consider the important roles of top management in

directing change policy and customers in justifying the area of change.  

 

4. Change Implementation Strategy

            Determining the appropriate and effective change

implementation strategy is an important part of the management of the

planned change. The change implementation strategy determines points

to the viability of the change by identifying the nature and direction of

the intended change together with the corresponding roles of the parties

involved and the activities requiring completion. There are two

considerations in developing the change implementation strategy. One is

the direction of the change, which is either top-down or starting from the

front line. Another is the source of the factors for change, which is either

internal or external.

            A top-down change implementation refers to

planned change because change emanates from the implementation of

change policy from the top management. This means that change occurs

through directives from the top expressed through change in the

attitudes and behavior of employees as well as work processes and

output. Top-down change implementation strategy is also similar to the

hierarchical model of change, which places stress on the manner of

utilizing the firm structure, compensation and incentive system, and

other control systems to facilitate the achievement of the intended

change. As such, senior management serves as architects of the change

and manages the organization to achieve the desired change. The

hierarchical model usually applies in changes involving the change in

structure, staff, compensation systems, incentives, performance

measures, and other similar change. Control serves as the means of

ensuring the change. Rational connection between the planners and

doers also ensures change implementation, which means that the

intended change should be rational in terms of firms and stakeholder

benefits to be accepted by the doers, which is made up of the front line

employees. However, this also has limitations such as the use of

inaccurate information to support decisions over the change process and

problems in motivating change at the lower levels of the organizational

structure. In addition, this aligns with the economic perspective of

organizational change. (DeWit & Meyer, 2004, p. 297)

            Change commencing from the front line refers to

the encouragement of creativity and innovation at the bottom level of the

organization. The creation of an innovative working environment and

implementation of incentives for innovative outputs encourage employees

to determine solutions to problems they experience in the delivery of

products and services and dealings with customers. The implementation

of these solutions comprises the change. This has relation to the cultural

model of change implementation, which emphasize on the participation

of employees at the lower level in the formulation and implementation of

strategy in terms of information feedback to their immediate managers

or supervisors. As such, there is a fusion between the roles of thinkers

and doers because managers participating in doing while employees also

take the role of thinkers. Because of this, the change focuses on the

infusion of organizational culture across the firm. Top management

provides broad guidance in innovation. (Goold & Quinn, 1990, p. 176)

This works well for decentralized business firms. However, this also

limitations including the assumption that the managers and employees

are well-informed and able to make informed decisions on areas of

change and sound solutions to front line problems. Focus is difficult to

maintain in using this model. The change process would also likely

involve costs and involves a certain period. Not all organizations can

afford the high price for change from the grassroots or culture-based

change or have the luxury of time to wait for protracted change. (Parsa,

1999, p. 73)

            There is also an alternative change

implementation perspective, the collaborative model, which requires the

participation of senior managers in the process of strategy formulation.

This means that top management facilitates brainstorming, consensus

building and other collaborative methods in planning the change so that

top management also comprises the bridge for change implementation on

the part of middle managers and employees. (Goold & Quinn, 1990,

p.176) As an integrative model, this addresses the problem of information

inaccuracy likely to occur in the implementation of top-down change as

well as the assumption of complete information at the grassroots in

applying the cultural model (Parsa, 1999, p. 73). The distinction between

thinkers and doers blurs but this does not completely disappear because

of the assumption of the parties of dual roles.

            Based on the understanding of the planned

change, which is expansion by establishing a 2nd hand furniture business

and requiring prioritization of the interests of investors and customers,

the appropriate change implementation strategy is the collaborative

model. The change involves the acquisition of business units,

restructuring of the organizational structure, and hiring of new

employees. The acquisition of new business units is a strategic issue for

resolution at the level of top management with feedback from senior

managers to support sound decision-making. The hiring of new

employees and restructuring of the organizational structures are

management issues for resolution at the senior management level

obtaining policy guidance and confirmation from top management while

at the same time obtaining feedback from middle managers and

employees on emerging problems and effective solutions. Senior

managers serve as the fulcrum balancing or bridging change

implementation and the change process. Successful change ensures the

interests of investors and customers.

            Change implementation strategy could also be

internal and external. Internal change implementation means that the

parties involved in the change are members of the organization and the

achievement of change depends on internal competencies. External

change means that the parties facilitating change do not form part of the

organization and infuse external competencies into the change process.

However, these are not conflicting, which means change implementation

could involve both internal and external factors, with the extent of

combination depending on the requirements of change implementation.

(Grant, 2002, pp. 132-133)

            The change implementation strategy for the

planned establishment of a 2nd hand furniture business involves the

combination of internal and external factors. The internal factors refer to

top management directives or guidance, consensus building and

feedback from senior managers, and feedback from middle managers and

employees over issues and solutions emerging from the front line. The

external factors include capital infusion from investors, feedback from

external consultants, and acquisition of business units.

5. Addressing Resistance

            Key to the success of the change implementation

strategy is the identification and understanding of the factors blocking

the implementation of change. Kotter (1996, p. 3) described blocks as the

entirety of the hindrances and issues experienced by business firms in

the course of implementing change. This requires resolution to ensure

the successful implementation of change. An impending block to change

implementation is resistance or disagreement, disapproval or opposition

to some aspects or all of the planned change. If unaddressed, resistance

could lead to delays, accumulation of additional costs or even the failure

of change implementation.

            Resistance finds explanation through the

transition curve (Fisher, 2001, n.p.) [See Figure 1 below] that explains

the response of parties to the change as a process. Upon learning of the

planned change, the affected parties experience anxiety because of

concerns over whether they can cope with the change. This could lead to

happiness because of the realization that change, which could be

anticipated, could happen or denial because of the inability to accept the

change. However, this could immediately turn into fear because of

concerns over the expectations of their role and the impact on them that

could develop into depression when in the stage of uncertainty. This

could then lead to two directions. One is towards gradual acceptance and

moving forward as the affected parties develop confidence in the change

and their roles in the implementation of change. Another is towards

hostility and absolute resistance because of the inability to find their

place and role in the expected change. Recognizing the adjustment to

change as a process implies that business firms should address the fears

and threats faced by the parties affected by the change to ensure that the

attitudes and behaviors of stakeholders lead to acceptance and moving

on.

            Based on the transition curve, resistance to the

planned establishment of a 2nd hand furniture business would likely

come managers and employees. The change involved the acquisition of

new business units to comprise 50 percent of the business. The different

nature of the business means change in existing practices and norms.

The change also involves the restructuring of the organization, which

means the removal of some positions and creation of new one and the

removal or reassignment of people. These situations build fear among

managers and employees. The change also involves the hiring of new

personnel, which could be perceived as threats by existing employees.

            Specifically, there could be several sources of

resistance to the planned change. One is the concern of employees over

the changes in their employment status after the implementation of the

change. The initial response to threats on employment status is

resistance by fighting against the change to prevent the cancellation of

positions and removal of personnel. Another is the concern over possible

changes in their tasks if they remain employed with the company after

the establishment of the new business. Employees experience security by

developing knowledge and skills necessary to accomplish their work

effectively. The change requires the accumulation of new knowledge and

skills that challenge the security of employees. Still another is the

different perspectives of managers and employees towards the purpose

and impact of the planned change. The different in opinion could divide

support for the change. Last is the adverse perception towards the

change because of lack of consultation. The implementation of change

without sufficient consultation, based on the perspective of managers

and employees, could develop negative regard towards the change.

            Addressing the problems of resistance that

develop in a process could also be through a process that requires strong

leadership. Addressing resistance is a three-stage process [See Figure 2

below] that commences with the unfreezing of the present status of the

organization, followed by the guided movement towards the new

position, and concluding with the freezing of organizational life at the

new position. This means top management, with feedback from senior

managers, should determine the existing position of the company,

articulate the new position, and implement policies or activities that

move the organization from the current to the new position. This finds

further explanation by the parallel three-step process. The first step is

defrosting of the status quo, followed by the taking of actions that usher

change, and concluding with the anchoring of the achieved changes

using corporate culture. This also highlights the importance of leadership

and adds the incorporation of the change in the corporate culture as the

means of ensuring that the organization remains at the new position.

(Lewin, 1997, pp. 330-334)

            These three-step processes address resistance in a

number of ways. Completing the first step means that the company has

identified a rational justification for the change by understanding

problems in the present status of the company and developing a vision of

the outcome of the required change to address these problems and gain

benefits. Implementing the second step requires the identification of

activities and processes that encourage the intended behavior or action

from all stakeholders. These behaviors and actions comprise movement

towards the new position. The application of the third process through

activities that secure the comfort and satisfaction of the organization

towards change should ensure the stability of the organization in its new

position. (Lewin, 1997, pp. 330-334)

            Specific actions or activities that could help the

organization address resistance. First is the establishment of a sense of

urgency over the need for change. It is common for people to require a

reason for agreeing and participating in change. Leaders or top

management has to provide an acceptable justification to expect change

from managers and employees. Second is the development of the vision

for change and communicating this to the parties affected. People also

expect to make changes when they know where they are going. This

means that leaders need to clarify where the change would lead the

organization to expect managers and employees to understand the

importance of their role in the change process and the impact of the

change on them. Third is the establishment of a guiding coalition made-

up of a team nurturing and supporting the change. The team has to exert

influence because of their qualifications and other forms of influence

towards managers and employees. Fourth is the empowerment of

employees to participate in the change process with confidence. This

means that leaders should provide room for the development of ideas on

the part of managers and employees. This environment develops

flexibility, which supports change. Fifth is the establishment of short-

term goals that is realizable in a short period because people are not

likely to cooperate in change without seeing positive results, no matter

how minute, in the short-term. Sixth is the encouragement of additional

changes to secure long-term or sustainable change to take advantage of

the momentum of change by encouraging open communication and

innovation. Seventh is the reinforcement of change through positive

developments in the organization that justifies the better position of the

company after the change. (Kotter, 1996, pp. 33-145)

6. Project Evaluation

            The evaluation of the project constitutes another

important aspect of change management. Evaluating the project ensures

the resolution of problems as well as the prevention of issues. One

project evaluation model is the lifecycle of change management. The

implementation of this mode commences with modifications at the model

level and then the translation of these changes at the implementation

level. This minimizes rework at the implementation level while at the

same time developing a model for use in the assessment of the outcomes

of change implementation. (Singh & Shoura, 2006, p. 25) Simulation is a

means of considering possible modification at the model level. In

application to the establishment of a 2nd hand furniture business,

simulation could apply to the assessment of different modes of mergers

and acquisitions to determine the best means of achieving the desired

change. The selected option is subject to implementation and expected

outcomes, based on the model as the point of reference.  Another

situation implementing the lifecycle model is the consideration of the role

of leadership in the change implementation process. Ideally, leadership

should develop the vision for change and guide movement towards the

change through activities that comprise the change such as the

assumption of new tasks by managers and employees. This ideal serves

as the means of evaluating the role of leadership in actual practice.

Managers should also facilitate consultations and feedback sharing

within and across the different levels of the organization. This ideal

comprises the point of reference in assessing the role of managers in the

change process. Overall, the intention of the lifecycle model of change is

that the organization should remain operational after the implementation

of change but placed at a better position compared to the previous state

before the change. The comparison of the difference between the old and

present status in terms of strategic objectives tells something about the

merit of the change and the effectiveness of the change implementation

strategy. (Singh & Shoura, 2006, p. 25)

7. Conclusion

            Change management is important in achieving

strategic objectives. There are a number of elements for consideration in

implementing change management. One is the clarification of the change

by determining the problem or issue underlying the planned change. This

is important to rationalize and justify the change. Another is the

assessment of the change by weighing the forces that persuade and

dissuade the change. The persuading factors should outweigh the

dissuading factors to support the change. Still another is the

identification of the stakeholders or the parties affected by the change

together with the interests for purposes of the prioritization of interests

in case of conflict. The development of the change implementation plan is

also important because this determines the activities comprising change

and the role of the parties in achieving the change. Understanding the

blocks to change, particularly resistance is also important to ensure a

smooth change process. Lastly, designing a project evaluation is also an

important element because this determines the extent of achievement of

the change and areas for improvement in the course of implementation.