IKEA Organizational Structure: Expecting Benefits from a Major Restructuring

IKEA organizational structure is unique. “Around the globe, a large number of companies operate under the IKEA trademarks. All IKEA franchisees are independent of Inter IKEA Group. A large group of franchisees are owned and operated by INGKA Group. Inter IKEA Group and INGKA Group have the same founder, and a common history and heritage, but have operated under different owners and management since the 1980s”[1]

Figure below illustrates IKEA organizational structure

IKEA Organizational structure

IKEA organizational structure

The present organizational structure of IKEA illustrated in Figure 1 above is the outcome of a major restructuring initiative that was introduced in 2016. To improve the franchise system and clarify roles, IKEA range, supply and production activities were transferred to the new Inter IKEA Group headed by Inter IKEA Holding B.V.

Specifically, IKEA Group sold key subsidiaries for EUR 5.2 billion to increase the flexibility of the business to be able to adapt to changes in the external global marketplace. IKEA management considers this change to be much needed as “new low-margin market entrants and online players like Amazon.com are making life harder for everyone in retail”.[2]

Generally, IKEA organizational structure can be classified as hierarchical, reflecting massive size of the business that integrates 340 stores in 28 markets worldwide, 22 Pick-up and Order Points in 11 countries, 41 Shopping Centres in 15 countries and 38 Distribution sites in 18 countries.[3]

Hierarchical organizational structure can be associated with a range of serious shortcomings such as lack of flexibility of the business, poor quality of communication between the senior management and employees and slow speed of decision making. The latest organizational restructuring at IKEA discussed above, is intended to minimize the negative implications of these to a certain extent.

IKEA Group Report contains a full analysis of IKEA organizational structure. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on IKEA. Moreover, the report contains analyses of IKEA leadership, business strategy and organizational culture. The report also comprises discussions of IKEA marketing strategy and addresses issues of corporate social responsibility.

IKEA Group Report

[1] Our Business in Brief (2017) Inter IKEA Group, Available at: http://www.inter.ikea.com/en/about-us/business-in-brief/

[2] Bergin, T. (2016) “IKEA finalizing its biggest overhaul in decades” Reuters, Available at: http://www.reuters.com/article/us-ikea-restructuring-idUSKCN0XC0IA

[3] Group Yearly Summary (2016) IKEA Group