Dung Dinh

MGMT 451
Professor Phillips
December 04, 2014

Table of Contents

 Executive Summary ..3

The Structural Frame....4
o
The Five Basic Parts of the Organization by Henry Mintzberg 4
o
Organizational Chart .. 7
The Human Resources Frame ....
..7
o A Theory of Human Motivation by Abraham Maslow.....8
o The Giving of Orders by Mary Parker Follett ...10
o The Human Side of Enterprise by Douglas McGregor.....12
The Political Frame .....13
o The Bases of Social Power by John French and Bertram Raven...... 13
o The Power Game and the Players by Henry Mintzberg....14
o Understanding the Power in Decision Making by Jeffrey Pfeffer........ 16
The Cultural/ Symbolic Frame ......16
o The Concept of Organizational Culture: Why Bother?
By Edgar Schein....17
o The Fifth Discipline: A Shift of Mind by Peter Senge...18
o The Z Organization by William Ouchi......19
Conclusion ....
20

Work Cited . 23

Executive Summary
As global warming affect our environment and natural resources, many companies
begin to seek for more sustainable ways to provide products and services. IKEA is a
multinational furniture retailer company that sells ready-to-assemble furniture along with
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appliances, and home accessories. Ingvar Kamprad is the founder of IKEA and he founded this
company in 1943. During the 1960s, IKEA discovers its business concept of providing their
consumers with variety of home furniture with stylish design and function at affordable prices
(IKEA Newsroom). In order to implement this business concept, IKEAs business idea is based
on a partnership with the customer. Meanings IKEA will design, produce, and manufacture the
materials of the home furniture. Meanwhile, the customers are in charge of assembling the final
product. To examine how IKEA sustain its organization and create positive impact to our society
and environment it is essential to understand and analyze IKEAs structure, human resources,
political frame, and culture.
When examining IKEA organizational structure we will use Henry Mintzberg The Five
Basic Parts of the Organization to analyze the significant roles of each part in the organization.
Using the Abraham Maslows A Theory of Human Motivation, Mary Parker Folletts The Giving
of Orders along with Douglas McGregors The Human Side of Enterprise we will evaluate IKEA
interpersonal and group dynamics. The three theories that will further explain IKEA political
framework are The Bases of Social Power by French and Raven, The Power Game and the
Players by Henry Mintzberg, and Understanding the Power in Decision Making by Jeffrey
Pfeffer. These theories will explain some of the internal and external conflicts or consequences
the organization has to face due the decision the leaders make. To understand IKEA culture, it is
critical to apply Edgar H. Scheins The Concept of Organizational Culture: Why Bother?,
William G. Ouchi The Z Organization, and The Fifth Discipline: A Shift of Mind by Peter Senge.
Overall, by using these management theories we will be able to have a deeper and relevant
understanding of how IKEA prolongs their organization in the business dynamic world.
The Structural Frame
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IKEA being the worlds largest furniture retailer that operates in 41 countries with more
than 301 stores and 30 franchised units (Loeb). It is essential for organization to be social
sustainable to protect their stakeholders health and well being along with prolonging their
organization. One of the most important key elements in social sustainability is to have an
organized company structure that well defined each position duties and tasks. In The Five Basic
Parts of the Organization by Henry Mintzberg defined five critical components that every
organization should have to help sustain the sociable parts of the company.
The first critical component of Mintzbergs theory is strategic apex. Strategic apex refers
to people in charge of overseeing and responsible for the organization such as Chief Executive
Officer (CEO) and Chief Financial Officer (CFO). People in these positions main objectives are
to ensure that organizations mission is being enforced in strategic planning and meet the needs
of the people in the organization. For example, the CEO of IKEA, Peter Agnefjll, has identified
three missions for IKEA Group (Brzezinski). The first mission is to provide products at the
lowest price as possible for consumers to live in a more sustainable lifestyle that will help
consumers save energy, reduce waste, and use less water. The second mission is to find ways to
be independent from resources and energy, maintain long-term access to prolonging raw
materials, and promote recycling. The last mission is to be the pioneer in creating better life
quality for people and communities that are affected by IKEA. As part of the strategic apex, the
CFO of IKEA, Alistair Davidson, focuses on elaborating finance and supply chain management
in order to minimize the cost of goods being purchased and distributed throughout their value of
chain (EY CFO Program). Since IKEA business model is cost-conscious, Davidson has to
understand how the foreign exchange market will affect their pricing while applying logistics
information accurately to plan and execute effectively.

Middle line managers are people below strategic apex who distribute tasks and duties to
operating core. These people are first-line supervisors such as Human Resources who collect
feedback information on performance of their unit and report it to their superiors. They can make
some decisions and handles disturbances at the lower level of the organization. At IKEA, the
director of Human Resources, Petra Hesser, is focusing on creating a balanced gender workforce
to develop a distinct corporate culture. This helps the organization put peoples values and talents
at their best core. As of 2013, IKEA has 47% female managers and 40% of their top managers
are females (Brzezinski). A diverse working environment will help workers be more creative,
innovative, and observe issues in different perspectives. Martin Hansson, the director of Retail
and Expansion, focus his strategy on shopping experience and customers financial constraint
when the economy is facing a downturn. Hansson would spend hours in IKEA stores to observe
what the customers want and need (Wood). Then he would discuss the problem with his coworkers to seek for possible solutions.
The third essential element of Mintzbergs theory is technostructure. Technostructure is a
group of experts in their respective field that provide expertise knowledge, skills, and opinion to
the organization. Technostructure analysts can affect other people work because their knowledge
and information on certain subject can change the organizations plan. There are three types of
control analysts: work study, planning and control, and personnel analysts. Planning and control
analyst is the only that correlates with IKEA organizational chart. Steve Howard, the director of
Sustainability, can be considered as planning and control analysts since he determines the output
and makes long term plans for IKEA. Howard tasks are to find the best ways to use the scarce
resources and seeking for suppliers that provide sustainable raw materials. In order to seeking for
the proper suppliers, IKEA has develops a code of conducts called IWAY. IWAY stands for IKEA

Way of Purchasing Home Furnishing Products. It provides guidelines that comply with
international laws to help manufacturers produce products in environmental friendly ways.
Therefore, Howard has to ensure that IKEA suppliers follow IWAY rules to avoid any potential
violations.
Support staff is another component of The Five Basic Parts of the Organization. Support
staff refers to individuals providing assistant to the organization outside of individuals work
flow. For instance, the Range and Supply department has to collaborate closely the Retail and
Expansion department of IKEA in order to supply and distribute products in an efficient way.
Another support staff at IKEA is the corporate communications team. As IKEA constantly
seeking for candidates that match with their organizations culture, they also want to prolong the
organizations culture with their current staff. Therefore, the corporate communications team is
in charge of following up with leaders in the organization regarding to culture and values by
examining how well they send the message across to their co-workers. This demonstrates that
support staff is there to indirectly providing support to the organizations mission, values, and
culture.
The last element in Mintzbergs theory is operating core. Unlike supporting staff,
operating core provides assistant to the organization directly since they produce products and
services. There are four functions of operation core: (1) secure inputs for production, (2)
transform inputs to outputs, (3) distribute the outputs, and (4) provide direct support to the input,
transformation, and output functions. IKEA industry department is considered an operating core
because the department goes through each function of operation core while elaborating with
other departments. For instance, the range and supply department has to provide raw materials to
the production units. From there the production units can transform the raw materials into

products. Afterward, the range and supply department will have to help distribute the products to
IKEA stores. The Range and Supply department needs to collaborate with the Retail and
Expansion department in order to determine which products each specific store needs. Therefore,
it is essential for all aspects of the organization to have well-managed way to communicate with
other departments to maintain the organization social sustainability.

Figure1.1 The Organizational Chart of IKEA is shown above.

The Human Resources Frame
Human resource is another critical factor that maintains social sustainability in an
organization. IKEA is a down-to-earth and straightforward company that always ready to hear
from their co-workers and customers on how to improve their products and services. Individuals
can evaluate IKEA interpersonal and group dynamics by applying A Theory of Human
Motivation by Abraham Maslow, The Giving of Orders by Mary Parker Follett, and The Human
Side of Enterprise by Douglas McGregor to fully understand how IKEA human resources
motivate their employees.
According to Abraham Maslow, everyone has different motivation to encourage them to
move forwards to the self-actualization level. In A Theory of Human Motivation defines the five
fundamental levels of human needs: physiological, safety, social, esteem, and self-actualization.
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Physiological needs are the lowest level in Maslows Hierarchy of needs. It includes food, water,
shelter, and other things that human beings need in order to survive. The next level is safety
needs that include the feeling of security and safety from physical and emotional harm. Both
level of physiological and safety needs are classified as the basic needs in this theory. Social
needs are the next level above safety needs. Social needs can be described as individual feeling
the sense of belonging and affection within a group. The next level is esteem needs where
individual seeks for self-respect, achievement, and status after accomplishing the first three
levels. On to the top of the hierarchy is self-actualization. At this level individual will seek to
fulfill their goals and look for other goals in life. IKEA motivates their employees by fulfilling
three of the five levels of Maslows Hierarchy of needs: safety, social, and self-actualization
needs.
IKEA motivates their employees at the fundamental level by satisfying employees safety
needs. IKEA offers several benefits to their employees to provide family-friendly and safely
working environment. For example, employees who work more than 20 hours per week will
receive full medical and dental insurance. In addition, there are fully paid health plan coverage
for domestic partners and children, paid maternity/paternity leave, tuition assistance, and 401(k)
matching plan (IKEA National Press Releases). Like another workplaces, IKEA also has safety
guidelines to help employees perform their tasks and duties in a safely manner. To ensure job
security at IKEA it is important for mangers and their co-workers to share the same value. As a
result, these benefits satisfy managers and co-workers safety needs because they know that they
will be working in a secure and safe environment.
In order to help employees feel the sense of belonging in the company, IKEA has been
using these tactics to meet the social needs of their employees. The first tactic is management

always welcome feedbacks from their co-workers. This demonstrates how the company values
employees opinion that makes employees feels a greater belonging in the company. Another
approach that IKEA uses to encourage their employees is offering extrinsic or intrinsic reward.
For example, IKEA offers year-end bonuses and promotion to their employees as extrinsic
rewards (IKEA Motivation). IKEA provides intrinsic reward to their employees by respecting
and acknowledging their employees idea and opinion. The last method that IKEA uses to create
the sense of belonging among employees and top management is Anti-bureaucracy weeks.
During Anti-bureaucracy weeks, executives work on the shop floor to understand the daily
operations in the store (Capell). For example, during one of the Anti-bureaucracy weeks, CEO
Dahlvig was unloading trucks and selling beds and mattresses at one of IKEA store. Through
these different tactics individuals can observe that IKEA wants everyone from top management
to the lowest level of employees to sense the feeling of belonging in the company, as they
understand each other motivations.
As Maslow mentions everyone has different motivation that encourages him or her to do
things. IKEA has established different methods for people to accomplish their self-actualization
needs. The first approach is to offer education assistance for employees who seeking for
managerial roles. This will help employees on individual level and professional level as they will
become more knowledgeable on how to work at corporate level. In addition, IKEA also ensure
that all their employees have equal opportunities for promotion and career advancement in the
company. When an individual is at self-actualization level, they are seeking for challenging and
creative tasks to show their abilities. Therefore, IKEA last tactic is to allocate challenging tasks
and important roles to certain employees. As a result, these tactics will help employees realize
their full potential and boost their self-confident.

When managing a group of people it is important for managers to understand how to give
order. In the theory, The Giving the Orders by Mary Parker Follett explains three essential
concepts of giving orders: consent to governed, depersonalizing and repersonalizing, and winwin scenario. It is critical to gain consent to governed a group of people because it will
encourage people to complete their tasks and duties. This does not mean that people will perform
all of their tasks and responsibilities but they will perform majority of their job. For example,
IKEA has a corporate communications team to convey ideas, value, and mission to their
employees. This allows employees to understand the direction IKEA is heading toward and
seeking for employees to anticipate and participate in the process. According to IKEAs CEO,
Peter Agnefjall, IKEA has a team-oriented culture where people are delegated and rely on other
people by giving them responsibilities (Brzezinski). As a result, IKEA employees will
understand teamwork and the fact that IKEA will grow through their people. Like Follett said
To give an order does not ensure it will be executed and sometimes it take more than reasoning
to convince people. For instance, IKEA endeavors to implement IKEAs corporate culture in
China local stores were a failure because there was a misunderstanding of the concept. IKEA is
known for their ready-to assemble furniture. In Chinas point of view, it is illogical to put
together your own furniture if you can afford to buy a new one. In addition, not many Chinese
people have their own car, so people need contractors to assist with installation and
transportation.
In The Giving the Orders, Follett defines depersonalizing an order as receiving orders
from someone else. While, repersonalizing an order refers to an individual receiving orders and
making the orders personal. An example of depersonalizing an order is when IKEA tries to
implement their independent and responsible management style in other countries such as in

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China. In China, the employees are not mature enough to repersonalizing an order because
Chinese employees require more instructions and direct orders (Wigerfelt). One of IKEAs
leadership styles is democracy so many leaders have to impose orders by using repersonalizing
method in the theory. With democracy management style, employees are encouraged to
participate in business decisions. Managers seek for employees opinions and suggestions on
final decision. As a result, employees are more likely to put more effort in their work.
The last concept of this theory is win-win scenario that seeks to compromise both parties
objectives. Since IKEA is a multinational corporation, in order to resolve language barriers IKEA
has made English its corporate language. To prolong IKEA organizational culture the corporation
tries to enforce their Swedish management style in their international franchises. By doing so,
IKEA will be able to maintain unity and distinctive culture that consumers can only experience at
IKEA. Understanding that majority of IKEA consumers are women, the corporation is working
hard to break the glass ceiling in some countries such as in Smaland to promote more females
managers (Wigerfelt). By promoting more females managers, the corporation can understand
more what their target market wants and needs since women know how women think.
According to Douglas McGregor in The Human Side of Enterprise, managers observe
human behavior in two perspectives. The negative perspective is known as Theory X and the
positive perspective is called Theory Y. In Theory X, managers perceive employees as lazy,
dislike to work, and will try to minimize their workload as little as possible. Therefore, mangers
usually direct or warn employees to complete their tasks and responsibilities to meet the
companys objectives. In contrast, Theory Y assumes that employees like their work and will
perform duties that are good for the organization. Managers that follow Theory Y usually create
an encouraging and friendly working environment for employees to commit to the organization

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goals. When applying The Human Side of Enterprise theory to IKEA, Theory Y is more
compatible with this corporation management styles.
At IKEA, the corporation combines several management styles to create their own
ultimate management style that applies to Theory Y. IKEA adopt paternalistic management style
in their corporation to provide direction to the workforce and demonstrate consideration for coworkers. Paternalistic management style is when manager has a strong idea or concept for the
organization and seeks for co-workers input to elevate the idea that creates a sense of
involvement in decision-making (Shetty). To create a relaxing working environment, IKEA uses
laissez-faire leadership style where employees can perform their tasks freely with few guidelines
and directions (Shetty). The negative aspect of this leadership style is it can lead to poor
productivity and lack of motivation since there is more incentive to work harder. Each year,
IKEA ask their employees to fill out a survey called VOICE to understand what motivate and
dissatisfied employees in the workplace. From there IKEA will take the survey results and define
which areas the company needs to improve in. Overall, with these management styles and survey
IKEA is clearly applying Theory Y on their employees to lead the company to a prospective
future.
The Political Frame
Having organizations staying in their business for long term and providing job
opportunities are critical contributions to the national economies. The political framework of The
Bases of Social Power by John French and Bertram Raven, The Power Game and the Players by
Henry Mintzberg, and Understanding the Power in Decision Making by Jeffrey Pfeffer will help
individuals understand internal and external environment that IKEA has to resolve in order to
economically sustain its furniture business.

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Leadership and power are often interconnected because people tend to follow people who
have power. According to John French and Bertram Raven, there are five bases of power:
legitimate, reward, coercive, expert, and referent. Legitimate power refers to the person who has
authority to make decision and influence people. For example, at IKEA consumers have
legitimate power to demand low-cost and high quality products from IKEA. IKEA has legitimate
power over their suppliers since they required suppliers to follow IWAY regulations. Since IKEA
is a multinational organization, government from different countries can demand IKEA to follow
certain regulations. Reward power is the ability to compensate other party for their compliance.
For instance, when IKEA meet the demand of their consumers they will notice consumers
satisfaction by the increase in revenue stream. Suppliers of IKEA will get compensated for
following IWAY rules by gaining a reliable and stable partnership with IKEA. When IKEA
complies with local government rules they will be reward by being able to operate in the
respective country. The ability to punish other party for their noncompliance actions is called
coercive power. Consumers do have coercive power on IKEA because they can boycott IKEAs
products and services if they discover that any unethical practices in the corporation. If suppliers
disobey IWAY rules and regulations they can potential lose an immense partner. The local
government can punish IKEA misconduct in their country such as violating labor law.
Expert and referent power is distinctive type of powers since individual needs to have
skills, talents, and knowledge in their respective field to claim this power. Expert power defines
based on an individual expertise and knowledge. For example, the Chief Financial Officer and
Supply Chain Management of IKEA have to use both their expertise to find possible approaches
on how to reduce cost for the company. The sustainability department has to regulate suppliers
sustainable raw materials while learning new ways to develop sustainable products and

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resources. Corporate communications unit has its own methods to send across IKEAs positive
image to consumers and employees to help sustain the company. Referent power explains how
an individuals attractiveness, worthiness, and abilities can influence other people. For example,
IKEA has referent power on influencing their consumers to be more eco-friendly by purchasing
products that is made from sustainable resources. In addition, IKEA can also influence their
suppliers to be more sustainable by demanding and setting the standards for sustainable raw
materials. IKEA providing sustainable products help the country improve quality of life since
they are taking responsibilities for the resources they consume.
The Power Game and the Players by Henry Mintzberg explains the dynamic interaction
among internal and external coalitions using their will and political skill. According to IKEAs
Race to the Bottom by John Logan conveys how IKEA has double standard in labor law. The
article states that IKEA respects labor law in Northern Europe but not in Turkey. IKEA Turkey
was using anti-union tactics to discourage employees to join the labor union. Therefore, a group
of IKEA Turkey workers were protesting against IKEA for poor labor standards and
management violations of freedom of association (Logan). This section of the paper will
correlate IKEA Turkey workers protest with The Power Game and the Players theory.
Will and skill are two essential components that leaders need to have in order to influence
people to follow their cause. Will refers leaders using their time, power, and capital to
accomplish their goals. For example, by having franchises in Turkey, IKEA has make Turkey as
one of its suppliers. Since IKEA Turkey workers had protested, IKEA organization has to spend
time, capital, and power to dissolve the problem in order to protect it reputation. Turkey
government has gained few things from the five IKEA stores in Turkey. In 2011, IKEA exports
from Turkey about half a billion dollars worth of products (Logan). IKEA aims to double the

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amount supplies from Turkey in the next five years. Political skill defines as the ability that
leaders manipulate from the system to obtain their goals. For instance, IKEA Turkey violates the
local labor law since Turkey authoritarian government allowed companies to violate those labor
laws. Many people assume that IKEA practices ethical labor law since they are part of the Union
Network International (UNI). IKEA participation in the UNI is part of their tactic to maintain
their image to the rest of the world.
The political game in Mintzbergs theory defines internal and external players in the
game. Internal coalitions are people inside the organization who trying to influence changes in
the organization. External coalitions are people outside of the organization who attempting to
influence people inside the organization for the change. In IKEA Turkey scenario, internal
coalitions are the parent organization, CEO, and Turkey workers. The parent organization is
considered as the directors of the corporation that lead the CEO to manage and operate the
company based on the organizations ideology. In this case, Turkey workers are referring as
operators in the political game since they produce the products for IKEA Turkey. The external
coalitions are consumers, suppliers, and Turkey government. Based on the dilemma, consumers
and suppliers may have to reconsider purchasing and collaborating with IKEA Turkey since they
are being unethical. Turkey government will wait for IKEA Turkey and IKEA organization to
response to the dilemma in order to plan on how they should react to the problem.
According to Jeffrey Pfeffer in Understanding the Power in Decision Making, power
refers to an individuals ability to obtain their objectives. The basic theme of this theory is about
understanding behavior in organization through power and politics. There are four types of
decision-making models: rational, bureaucratic, decision process, and political power. This paper
will be focusing on the rational decision making model to recognize how IKEA make their

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decision. IKEAs goals are to provide good quality, maintain customer loyalty, generate profit,
and use sustainable resources and energy in their organization. The organization has been
consistent with it goals since it is the worlds largest furniture retailer that has a well-managed
reputation (Loeb). At IKEA Corporation the CEO, Peter Agnefjall, has the power to control and
manage the operation. Therefore, the power at the corporation level is centralized around
Agnefjall and the other board of directors. When it is time to make decision, Agnefjall needs
approval of a trust, INGKA Holding, before putting plan into action. The ideology of IKEA is
efficient and effective since they are using sustainable raw materials and renewable energy
source in their organization to provide good quality products to its consumers.
The Cultural/ Symbolic Frame
As consumers are more concern on how, where, and what their products are made of it is
important for organization to maintain a positive business culture to attract consumers. In order
to understand IKEA culture and symbolic frame, individuals can examine The Concept of
Organizational Culture: Why Bother? By Edgar Schein, The Fifth Discipline: A Shift of Mind by
Peter Senge, and The Z Organization by William Ouchi to understand how IKEA maintain its
eco-friendly image.
Edgar Schein the author of The Concept of Organizational Culture: Why Bother? defines
organizational culture as the basic tact assumptions about how the world is and ought to be that
group of people share and that determines their perceptions, thoughts, feelings, and their overt
behavior (Culture Levels). This means that organizational culture needs to be general so that
people would not eliminate factors that are part of corporate culture. There are three levels of
organizational culture: artifacts, espoused values, and basic assumptions and values. Artifacts are
things that are the visual, structures, and processes of the organization. For example, IKEA store

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visual is known to be the big blue building with the four yellow letters. In order to provide a
friendly working environment at the store floor, associates are required to wear their IKEAs polo
shirt with jeans or pants. These basic artifacts help IKEA implicitly promote their logo.
Espoused values are the next level after artifacts where individuals can discover the
organizations strategies, goals, and philosophies. For instance, IKEA goal is to provide their
consumers with Scandinavian modern style furniture that will satisfy their budget. Meanwhile,
IKEA is also conscious about people who live in the communities that they receive the resources
from. Therefore, IKEA has participated in many philanthropy projects such as UNICEF and the
Clinton Health Access Initiative to help children living in the worlds poorest communities to
have better future. The basic assumptions and values are the core of the corporate culture where
people unconsciously perform the duties without realizing that it has become part of their values
and beliefs. Based on these goal and philosophy, IKEA launched their sustainability strategy to
help make a positive impact on people and the planet. For example, there are over 550,000 solar
panels installed on IKEA buildings worldwide to produce renewable energy for IKEA stores
(People & Planet). As a result, the giving and taking culture of IKEA makes employees feel
proud and enthusiastic to able to work in its company.
Due to the rapid changing of the business environment, it is important to have a learning
organization where individuals are continually enhancing their capabilities to add and improve
companys values. In The Fifth Discipline: A Shift of Mind by Peter Senge explains the essential
elements in learning organization: personal mastery, mental models, building shared vision, team
learning, and systems thinking. This paper will correlate building shared vision, team learning,
and system thinking to IKEA organization. The concept of building shared vision is blending in
employees aspirations with the company goals. IKEA vision is to create a better everyday life

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for the many people that they associate with. In order to treat 600,000 people that is working to
directly supply IKEA with materials and products around the world fairly (People & Planet). The
organization has launched IWAY in 2000 to provide the basic code of conduct for suppliers.
IWAY states the minimum requirements that relate to the environment, social impact, and
working conditions that IKEA expects from their suppliers. To make social impact in the people
communities, IKEA foundation helps empowering women and girls by educating, skills training,
and improved healthcare for them to have better future opportunities. In addition, IKEA
foundation also works with UNICEF and Save the Children to fight against child labor in
countries like India and Pakistan.
Team learning defines the ability to solve and learn problem in a group. The two elements
in team learning are discussion and dialogue. Discussion is a process where team members
express their opinion on the topic or problem during group meeting. In dialogue, individuals are
having a conversation to understand the scenario with different points of view. IKEA uses the
dialogue method of team learning in the working environment. For example, with IKEA
democracy and laissez-faire management style employees are encourage to have dialogue with
their managers and other co-workers to participate and improve the working environment at
IKEA. For instance, Guy Labrecque an employee at IKEA France said When I showed an
interest in doing something new, the company was prepared to let me do it. (The IKEA Store)
The fifth discipline of Senges theory is system thinking that integrate all four other
disciplines to understand the complex organization system. System thinking conveys that
different aspects in the organization have interconnected relationships. For example, IKEA,
consumers, and suppliers all have interconnected relationship that defines IKEA system thinking.
IKEA can provide consumers with stylish and cheap products by looking for alternative ways to

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reduce cost and seeking for reliable suppliers. Meanwhile, IKEA consumers have to accept the
concept of democratic design process in order for both parties to save money together.
Democratic design process defines as IKEA provide the ready-to-assemble products and
consumers have to assemble their own furniture. This has been the philosophy of IKEA We do
our part, and you do yours to provide great quality products at a low price. Suppliers also have
to do their part by providing products and services in ethical and sustainable way to IKEA.
Therefore, IKEA has about 80 auditors and independent third party auditors to check on their
suppliers production (People & Planet).
The Z Organization by William Ouchi is the sequence of the Douglas McGregors Theory
X and Y. This concept is also known as Theory Z. Theory Z elaborates Theory X and Theory X
while combining American and Japanese management styles. American management style is
individualistic meanwhile, Japanese management styles is collective. Therefore, Theory Z
encourages organization to focus on employees long-term commitment with the company and
their well being inside and outside of the company (Pryce). The first assumption of Theory Z is
people need to sense the support of job security and facilities to develop their potential within the
organization. For example, IKEA offers education assistance for employees who seeking for
managerial roles in the organization. By offering education assistance, IKEA is educating its
workforce and helping individuals discover their skills and talents. The second assumption is
individuals cherish their family life, culture, and organization at the same level they value
material gains. Understanding this assumption, IKEA offers paid maternity and paternity leave
for employees with family. Therefore, IKEA has been named as one of the best 100 companies
for working mothers in 2007 (IKEA National Press Releases). The last assumption of Theory Z
is people will develop sense of dedication and self-discipline when they discover what the

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organization means to them. This is one reason why IKEA launches the People and Planet
project in their organization so that employees can feel that they are working for an organization
that care and conscious about the society and environment. Therefore, each year IKEA
employees and consumers join force together to work in two campaigns that help raise money
for UNICEF, Save the Children and UNHCR (UN Refugee Agency). As a result, IKEA
employees and consumers will sense the feeling of belong to IKEA organization, as their
contributions will go for good causes.
Conclusion
IKEA is a green company with a social mission aiming to provide their consumers with
stylish products at the lowest price. IKEA vision is To create a better everyday life for the many
people. Therefore, IKEA continually seeks for alternative methods to provide people with
sustainable workforce, resources, and products. As the result of researching and analyzing IKEA
with several management theories individuals will discover that IKEA follows the triple bottom
line.
The triple bottom line refers to the three pillars of sustainability: social, economic, and
environmental sustainability. Social sustainability is defined as the organizations commitment
to maintain healthy communities and a society that improves the quality of life (Collier, 17).
IKEA has demonstrated how they sustain the sociable parts of the organization in organizational
structure and human resources. IKEA is able to sustain their workforce while meeting its goals
because they have a clear and well govern organizational structure when analyzing with The
Five Basic Parts of the Organization by Henry Mintzberg. Through several management theories
such as A Theory of Human Motivation, The Giving of Orders, and The Human Side of
Enterprise IKEA shows how human resources play a critical role in understanding the workforce
motivations. This clearly explains how IKEA sustain it social aspect because the organization has
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focus on governing their corporate structure for the long-term while paying attention to the
workforce health and safety. Economic sustainability is when an organization addresses current
business needs and economic vitality by preparing strategic planning for the future business
growth and operating environments (Collier, 18). In IKEA political framework, the organization
is economically sustainable because they have capable leaderships, high-perform workforce, and
investing in long-term plan to ensure the organization survival. Furthermore, the organization
knows how to acquire and manage their resources effectively and efficiently by collaborating
with internal and external coalitions. When an organization commits to the long-term quality of
our environment is called environmental sustainability (Collier, 17). Since IKEA is known as an
eco-friendly company, being environmental sustainable is part of their corporate culture. For
example, the concept of democratic design process implements sustainable product design where
goods can be recycled. In addition, it also practices energy optimization because IKEA has
planted solar panels on top of their buildings and transportation optimization by transporting
without air. IKEA also launch the People and Planet project to contribute back to the people and
communities that IKEA works with.
IKEA has been around for 71 years since it was founded in 1943. In my opinion, the
founder of IKEA, Ingvar Kamprad, has established a brilliant philosophy for his furniture
empire. Kamprad believes that by keeping IKEA as a private owned company its can concentrate
on long-term growth rather than depending on the financial market. It is a brilliant philosophy
for IKEA because the company can focus on meeting and satisfying consumers needs and wants
rather than stockholders want. Like fashion, trend comes and goes often in the furnishing
industry. Therefore, IKEA needs to constantly provide consumers with innovative and stylish
products. Overall, Kamprads philosophy helps IKEA obtain the triple bottom line because the

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philosophy guides IKEA to focus on what benefits the organization and stakeholders such as
people and planet rather than simply generating revenue for stockholders.

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