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| Module name | Knowledge Management and Information Systems |
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MSc Management with Streams
Knowledge Management and Information Systems
Coursework Assessment Brief
Submission deadline: 25th August, 2020 Submission mode: Turnitin online access
Table of Contents
Existing challenges in HRM faced by Ikea 9
Difficulties in application of the Updated Information System 11
Introduction
The IT infrastructure is regarded as the network resources, services, hardware and software using which the organisation can operate the business properly and also manage it efficiently. All the companies focus on having updated infrastructure of IT so that the organisation have the possibility of maintaining the dominant position in the industry in which it is operating its business. It is essential for the organisation to be technologically advanced to run the business successfully. The focus of the study is on the integration of knowledge management with the useful information system so that the challenges faced related to human resource management can be solved. Ikea has been taken into consideration for the achievement of the objective of the study. Different frameworks, such as SWOT analysis and other theories, have been implemented in the study to understand the opportunities and threats of the organisation by evaluating the main weaknesses and strengths. Along with this, the focus is on the selection of the information system which can help in performance enhancement of the employees as well as the overall organisation to accomplish the objectives of the organisation and gain the growth in the future.
Background of the company
Corporate objectives
Ikea have the objective of producing the affordable and cheap products for the customers. It also focuses on providing better life to the individuals who are not able to afford expensive products. It has the goal to ensure that the customers are able to find the products they want in the store at low prices.
Business overview
Ikea introduced the business in the year 1926 by Invard Kampard, and it is based in Sweden. It has established the company to become the recognised brand in affordable furniture. It is operating its business over 26 countries along with having more than 150, 000 employees by the year 2018 (). Ikea has focused on the adaptation of design style for the products which can be aligned with the taste and preferences of the country in which it is operating as a business. It mainly focused on the functional and straightforward types of furniture rather than emphasising more on making it attractive and fashionable. The organisation has followed the value even in the other countries where the business is operated. Ikea is the privately-held organisation which retails international home products such as flat-pack furniture, bathroom accessories and kitchen items throughout the globe. The organisation that has pioneered the flat-pack design furniture at reasonable rates and now has become of the leading furniture retailers in the world. It distributes the products in all their retail stores. Australia, Asia, North America and Europe covers the maximum number of retail outlets owned by Ikea.
Corporate structure
The organisational structure of Ikea as the ownership structure as it is independent and the founder focused on the long-term perspective. IKEA Sweden is the largest business units of all the units of the organisation. It has employed over 700 employees who are working from the centralised position. With the help of the matrix structure of IKEA, the managers will be able to send the required information using organisational structure through the positions line in each of the stores and the countries. Moreover, it also considered the functional lines from the headquarters that are situated globally.
Business model of Ikea
Complete industrial chain: Ikea has been indulged in the raw material supply, production, development, process manufacturing, product design, customer services and sales flow. All these five processes are part of the industrial chain. Moreover, it has focused on the design of the products through which the services can be turned into sales while maintaining a low-price strategy (). Influential research and development design ability and innovative thinking standardisation: Ikea has performed a market survey. It concentrates on the needs and expectation of the customers. In addition to this, the organisation takes into consideration the environmentally friendly materials such as recycled woods and materials instead of focusing on the deforestation method. This also reduces the cost of the organisation and assist it in maintaining a low-cost strategy. Ikea follows the marketing strategies through which the perceptions and demands of the customer can be evaluated. Instead of introducing their products to the customers directly, it intends to create the scope for the customers to experience products. According to (), it has been construed that Ikea has made an effort in gaining the trust of the customers and providing them with quality assurance.
Framework and Theories
SWOT Analysis
Strengths: The strength of Ikea can be witnessed in its availability of quality and functional furniture at affordable prices (). Also, the organisation has been able to build the goodwill as well as a brand identity. The organisation has maintained an efficient value chain system which is regularly evaluated to ensure that the customers are able to receive high-quality services for the products purchased by them. This has resulted in increasing the competitive edge of Ikea in the sector. It is operating different parts of the world under the franchise arrangement in some parts of the countries. This uniformity in the design of the products sold globally has affected the strength of the company by increasing it. At the same time, it has increased the dependability of the customers on the products of Ikea.
Weaknesses: The weakness of Ikea is the inadequacy and limitation of assistance along with the limited visibility through the marketing and promotion process. There are very few stores which are sparsely located. While these stores are highly big with several floors, yet there are only a few staff with limited efforts and involvement towards improving the purchasing experience of the customers from Ikea.
Opportunities: As posited by (), it is found that it has recognised specific opportunities which includes providing greener products to the clients and also creating awareness among the public to reduce the waste in the furniture usage area. Also, the organisation is taking the approach of DIY for the furniture assemblage by identifying the different learning forms which are witnessed in various people such as audio, kinaesthetic and video along with providing the required instructions. At the same time, Ikea focuses on building a strong relationship with the customers as well as the employees as they are the company’s stakeholders. In order to achieve consistent development of the organisation, trust-building is highly essential.
Threats: The threats faced by Ikea involves the economic recession downturn that is mainly experienced by Europe and the United Kingdom, which has impacted the purchasing power of the consumers. According to (), it has been evaluated that the sales of the company rather than the entire furniture industry has been affected due to this. Moreover, the number of competitors in the sector of home and office furniture have increased who are also following the pricing strategy based on budget cost downturn. These organisations have highly penetrated the market share of Ikea.
PESTEL Analysis
Political factors: According to (), it has been determined that the political environment of the home country of the organisation can directly affect its business operations. The illegal immigrants clamp by the UK Government, and the large number of individuals coming to the European countries have created a negative effect on the labour provided for the sector. In addition to this, the consumer and corporate tax with the business legislations, which is different for different countries can also impact on Ikea as well as its structure.
Economic factors: Weak economy has witnessed across Europe, which has also led to weak purchasing power bi affecting the disposable income of the consumers. Along with this, the oil fluctuating rate and the currency rates based on employment also affect the economy. Moreover, the environment in which the organisation is operating its business has also become one of the factors that can impact on Ikea. The living cost also shows the disparity in places like China and Poland, which profoundly differs from the labour cost in the United States or London.
Social factors: Intercountry migration, for instance, individuals move to the city from the countryside for the jobs because of the closing down of the sectors can lead to increase in demand for the functional furniture of low cost in the city where IKEA is operating is business. Moreover, in the host countries, there is also a lack of proper infrastructure where Ikea is conducting the company can prevent the growth of the organisation. The road networks, the adequate structure of transportation network, national highway presence is some of the factors which directly influences on Ikea and enable the organisation to run the business successfully in the host country.
Technological factors: The internet utilisation has facilitated the individuals to make their own decisions as it can be achieved by using modified and advanced technologies. The society demographics, which includes the size of the family, income, age, etc. are the major factors that impact the performance of Ikea. For instance, the old aged pensioners will show low demand for the furniture than the middle-class people and teenagers of society. It is a responsibility of the organisation to ensure the availability of the products based on sufficient demand (). In addition to this, RFID technology that is introduced in the stores and the supermarkets have made the shopping experience of the customers easier than before along with improving the option of recognising the products for the organisations. The organisations are also achieving the competitive edge with the help of the technology so that the customers can have better shopping experience through the usage of a wide range of products.
Environmental factors: Recently, the focus towards the environment is increasing rapidly with more emphasis on the environmental regulations like the carbon emission reduction and using the greening friendly or recycling procedures within the factories (). Ikea is trying to comply with the rules mainly in place of the raw materials that are sourced locally along with concentrating on the dangerous waste product disposal while involving in the process of product manufacturing.
Legal factors: Legislations in different countries impact on the organisations which is operating in it. The protective standards and legislation might vary from one country to another. Moreover, there are so many legal implications which might differ, leading to legal conflicts over the fines, court injunctions, consumer rights and damages.
Porters Five forces
The threat of substitute products: Substitute for the products can be identical or similar. For example, if the price of Coke increases, the customers will most likely switch to Pepsi. Therefore, it can be stated that Pepsi is a substitute for coke. As indicated by (), it is found that the consumers generally accept the current product price in the case when there is a lack of alternative or quality of the substitute is low. The consumers of IKEA will show a lesser probability of switching to other the other options because of low competitiveness and stiff market.
Rivalry: If the market is saturated and the threat of new entrants is low in the global industry of furniture, there will be highly intensive competitiveness among the organisations is the furniture market. The main competition is of Ikea includes Home Depot, Argos, Walmart, etc. These organisations have similar traits to a large extent which provides for the presence of a vast market, effective supply chain, and low-cost products. It will become easier for competitors to capture the market of Ikea by providing the customers with lower cost, quality and better services, superior products and thereby trying to Grab the customers of Ikea advertisements and publicity. Hence, it can be stated that even with the low competition, the threats of rivals are comparatively high.
Bargaining power of the suppliers: There is high potential in suppliers to impact on the company output by increasing the cost of the products or raw materials. Despite this, in the case of Ikea, there is low bargaining power with the suppliers. The reason behind this is a large number of alternatives which is available throughout the world. With the help of the technological advances available globally, there are various factories with the needed expertise for partnership with IKEA. On the other hand, the organisation is also focusing on the establishment of the long-term strategic partnership with the suppliers.
Bargaining power of the customers: There is high bargaining power with the buyers because of the stiff competition intense rivalry between the organisation and the rivalries. A few years before, it was reported by the case study of an Ikea’s customer that the organisation is not focusing on the production surfaces, and the customers are not satisfied. This has become the reason for shifting to other companies. Also, there was an accused that the low budget employees are provided with unsafe working conditions. The brand image of Ikea has been affected due to such negative publicity which can also result in lower sales volume and a decrease in the customer base.
Threat of new entrants: The profitable markets which show high returns on output appear to be attractive mainly to the fresh new entrepreneurs as well as the other organisations who are seeking expansion in the targeted market. It can be stated that the new entrants can influence on the existing organisations in the industry and also can reduce the revenues of the current organisations. On the other hand, most of the new entrants exit the market in the first and second year. Only the new entrants who perform extraordinary well or believed to be studied in the performance and develop over time are able to stay in the market with some added level of risk. In the case of Ikea, the threat of new entrants is low due to the required expertise and substantial financial investment initially along with existing saturation in the market ().
Existing challenges in HRM faced by Ikea
() has averred that the human resource involved certain planning which is the vital activity in the process of management. It has been construed that organisations might have to feel difficulty in terms of the employees and related activities such as management, selection, recruitment, employee motivation, engagement, etc. Employees look for opportunities through which they can achieve growth and success in their career either in the same organisation or moving to another. The development of the individuals also is dependent on the procedures involved by the firms so that the skills and abilities can be improved. This also involves getting the opportunity of receiving the training based on the new technologies which is beneficial for the business and can add to the skills possessed by the workforce. Ikea is not focusing on the innovation and technologies. Instead, it is still working with the outdated information system and there is used requirement of updating it. All these factors are to further challenges faced by the organisation while managing the employees. The workforce is not provided with new platform and opportunity through which we can learn new important aspects of the business. In addition to this, human resource also has a significant function which is known as recruitment and selection process according to which there is need of looking for appropriate candidates with the needed expertise and skills through which Ikea can achieve growth and success globally. However, this is a costly procedure in terms of time and overall budget. Ikea is working on maintaining low price strategy to attract the customers and retain the old ones. However, training and development although is expected by the employees results in increasing the budget of the company which thereby adds to the price in which the product is offered to the customers.
Knowledge Management
Knowledge management includes information technology and human resource management so that the goals of the organisation can be met. The primary element of knowledge management is the development of information technology in the organisation. There are specific models of knowledge management such as knowledge management matrix which is based on the theoretical frameworks and focus mainly on sourcing and organising the knowledge so that it can be implemented in the business.
Integration of KM and CRM
According to (), it has been evaluated that customer relationship management is significant for the business as it helps in understanding the perception and the requirements of the customers. Also, the organisations are able to provide better quality services to the customers and retain them for a long duration. It will give the opportunity of organising and storing the information based on the customers using advanced technology. Hence, CRM can be integrated with knowledge management. The knowledge of the customers and the global market can be taken into consideration for achieving the organisational objectives and achieving the desired success in the business.
Implementation of CKM
Ikea has a goal of providing its customer with quality and functional furniture at low prices so that the customers can gain unique experience with the help of the services. It can be stated that the quality products, affordable prices, considering the needs and demands of the customers and standard services. Ikea can focus on building the communication link with the employees and the customers to achieve the desired objectives. This leads to the requirement of deep insight about the customers for offering the products as per the needs of the clients. Therefore, Customer Knowledge Management, also known as CKM, can be applied in the organisation. The integrated approach can be taught to the employees with the help of the training, which will also help in motivating the employees and thereby addressing the challenges faced by human resource management.
Difficulties in application of the Updated Information System
CKM can be implemented within the organisation by making massive investment along with the added risk level, such as it can lead to the failure of the project. Customer knowledge management might not be successfully be adopted by the organisation due to different reasons. It involves a lack of interest to use new technology due to being comfortable with the previous systems. They can be other reasons as well for the failure of the information system implementation, which can create dissatisfaction among the employees and further create the challenge of the low level of employee engagement. This can prevent the organisation from working on similar projects in future as well due to the fear of failure.
Conclusion
It can be deduced that Ikea has a high probability of gaining a competitive advantage by the implementation of the discussed information system along with the knowledge management system. This has been evaluated using the frameworks based on environmental factors and competition. Ikea can form strategies using which the CRM can be implemented with the knowledge management for providing the organisation with the required advantages and also help in addressing the critical challenges faced by the organisation.