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In this essay, I will present an analysis of IKEA current position using the Mac Kinsey 7S model. Under the seven-S model, a particular company can be understood through the seven-S, namely: strategy, structure, systems, skills, style, staff and shared values.

Firstly, we shall talk about the strategy of IKEA. The key strategy of IKEA is to pursue a low-cost leadership in the furniture industry, by delivering good quality products at low costs, in strategic locations around big cities around the world. Another strategy of IKEA is to concentrate solely on its core competencies, and outsource those low value add activities to suppliers. IKEA does not have manufacturing arms, but rather, IKEA concentrate on sharpening its marketing intelligences and skills to penetrate new or existing market. Besides, another factor leading to IKEA success includes the ability to redefine customers and suppliers’ roles (where customers now are persuaded to self assemble the furniture, but they will get the products at a cheaper price).

Secondly, structure refers to the manner a firm arrange its business units and division of work. In reality, many types of organization structure can exist, for example, structure designed according to geographical regions, or structure designed in accordance to functional forms. For this, IKEA has a flat structure. As a result, decentralized decision making is critical in the organization. The employees now are required to determine their own job scope and career based on a boundary of guideline and company policies.

Thirdly, system refers to the procedures operate, gather information, allocate or control money and materials. There can be many types of systems in place in an organization, for example, the managerial accounting system, marketing research systems, or competitors’ intelligence systems. All of the systems designed are tailored to the flat organization of IKEA.

Next, Style is often referred to as the organization culture of a particular firm. It is about the aggregate behaviors, thoughts, beliefs, assumptions and symbols that are practiced and communicated to people in the organization. For IKEA, it is famous for the culture of frugality, efficiencies, hard work, individual responsibilities and customer services. Such a culture enables the firm to deliver good quality products at low costs in the competitive furniture industry. From another perspective, IKEA culture can be categorized as the ‘role’ culture. According to Handy, culture can be categorized into power, role, task, and person culture. IKEA can be considered as the ‘role’ culture as employees play their roles, and employees are expected to make decentralized decisions based on the circumstances.

Other than that, Staff in the seven-S model refers to the human resources management system in a company. Here, leadership is an important subject, as how the leader led its people in the organization will affect the organizational performance in the marketplace. It is said that key management at IKEA viewed themselves as the coach, supporter and enabler. According to Adair, leadership can be separated into different styles, namely authoritarian, participative, and laissez faire. For this, IKEA should be a culture of participative, as both task and people are mutually emphasized by the management as the elements in HRM to be managed.

Then, Skills can be referred to the distinctive abilities and talents that a company possesses. It is the competitive advantage as well as core competency that a firm possesses. For this, IKEA competitive advantage is its ability to deliver good quality products at low costs, with a track record of customer satisfaction.

Lastly, Shared Goals are also often named as the super-ordinate goals for a firm. Such a goal is the fundamental ideas on which a firm is built on. For this, IKEA shared goal is to deliver quality products with greatest economic efficiencies. This can be seen from the behaviors and attitudes of the frugal founder and management that will waste no money in unnecessary things, but still striving to deliver excellent products to customers.