Implementing Changes to Ikea Management Essay
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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.
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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
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-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
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Planned Change (establish a 2nd hand furniture trading)
Forces against Change
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-increase operating cost
-pull or stretching of available resources
-resistance from managers and employees
-risks of incurring further losses
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            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
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2. consultation of managers and employees
Month 1
2 month
Parallel
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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
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           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.
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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
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Latents
Low
High
Employees
Customers
Apathethics
Low
Low
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Suppliers
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           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
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           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. Â
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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. Â 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.
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