Implementing Changes To Ikea

Management Essay
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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-andtear 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 wellinformed 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 culturebased 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 decisionmaking. 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. 132133)
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.