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Chapter 1: Introduction

1.1 Overview and background of the research

Corporate governance has become a buzz word in the corporate world. All types of organisation and business owners applying the concept of corporate governance in order to meet out the customer needs and ethical environment within workplace. This process involves the proper structure or procedure designed for roles and authorities. Corporate strategy plays an important role in an organisation to gain sustainability and managing business. Therefore, it is essential for each and every company to formulate corporate strategy as it determines the scope of a operational activities and the manner in which a processes support the goals as well.

1.2 Overview and background of the organisation

Present research will be based on corporate governance for which study will be taking IKEA which is the furniture retailer company that spread at wider level. It is a private limited  corporation that was founded in 1943 by Ingvar Kamprad. The headquarters of this retailer is located in Leiden, Netherlands. The present revenue of this organisation is $40.906 billion. There are 194,000 employees are working for proving effective services to customers. The focus of firm is one managing innovation in wood according to customer expectation and requirements (Amran, Lee and Devi, 2014). As a company cannot run without contribution of stakeholders, therefore, it is essential to take their participation for developing corporate strategies. In this regard, these stakeholders concerns more on developing fresh and new furniture designs to transform lives of buyers. The vision of the company is to create a life better for many people by offering innovative and well-designed furniture and home appliances at low price which become easy for all people can afford it. The mission of the company is to maximise the level of stakeholders and communicate the objectives and goals of company to them.

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1.3 Rationale of the research

Present study based on to issues behind increasing complaints of customers under IKEA. Due to this issue, it has faced various problems related to generate revenues and gain sustainability at marketplace. For this purpose, an analysis on customer services to gain competitive advantage id done, which might be helpful to get over from the corporate issues (Filatotchev and Stahl, 2015). The main purpose of this present study is to evaluate the solution to keep customer focused on the product or services of IKEA. The reason for taking this issue further, it helps to take the long-term goals and make it more effective and influencing. Customer service is very significant issue for the IKEA which is important to be reduced in appropriate manner. Overall, it helps to take the new managing successful business growth. Overall, company needs to take some strict action to get over from this issue as soon as possible.

1.4 Research Aim, objectives and questions

It is considered as most important part of research which defines aims and objectives to carry out entire investigation. By formulating the same in appropriate manner, a company gain opportunity to make improvement in its services and gain high profitability in business. In this regard, for minimising the rate of customer complaints under IKEA, aims and objectives are given as beneath:-

Aims: “A Critical analysis of revenues loss in 2011 due to numerous customer complains”. A Study on IKEA.

Objectives

  • To identify the issues behind numerous customer complaints in IKEA
  • To determine the importance of focussing on customer services as a competitive advantage.
  • To identify the impact of issue on revenues and profitability of IKEA

Research questions

  • What are the issues behind numerous customer complaints in IKEA?
  • What is the importance of focussing on customer services as competitive advantage?
  • What is the impact of issue on revenues and profitability of IKEA?

1.5 Structure of Report

This is being considered as one of crucial section of a research which shows blueprint that consist with every single activity which researcher is going to do in order to conduct the investigation. In present report, where the issue on which whole research will rely i.e. customer service that has been very significant issue for IKEA, is going to carry 5 different chapters and these are comprehended beneath:

Chapter 1 : Introduction – This section of the research report prepares the base of overall investigation because, it basically stays enclosed with the aim and objectives on the chosen topic. Apart from this, introduction can be defined as an overview or background of research that basically delivers right information related to the topic which helps in improving understanding of the topic. Including this, it may also carry significance of research as well. Thus, this section includes objectives, aim and background of the topic and shows that why the research is going to get conducted.

Chapter 2 : Literature Review – This section of the research is going to focus on a range of research questions that has been developed by investigator (Khan, Muttakin and Siddiqui, 2013). Basically, this section stays enclosed with answers of selected questions and here researcher takes help of articles, scholar books, journals and other online sources. Away with this, section includes different theoretical aspects which would aid investigator in improving knowledge related to the topic and here customer service given by IKEA will be the base of questions.

Chapter 3 : Research Methodology – This chapter is going to be enclosed with a method that could basically help in conducting overall investigation, Along with this, section also stays enclosed with different data collection and the techniques as well of overall investigation. Overall primary and secondary are the two different data collecting methods and are going to be enclosed with respondents as well.

Chapter 4 : Critical Review Of Results – Overall results which has been carried out by the investigator, this section will analyse them with the help of an analysis data. This would basically consist of questionnaire methods, objectives developed in the research report are reviewed in order to identify all the results which can conclude the research objectives and results.

Chapter 5 : Recommendation And Action Plan – In this segment of research, recommendations for the proposed research are developed. A number of advises that has been given for a company i.e. IKEA, so that it could basically improve strategies linked with CG. This sub sector of research is going to rely on a proper action plan. All the activities basically going to get recorded under present investigation's action plan.

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Chapter 2: Literature Review

Literature review is a summary of previous research on any topic. It is a review of article regarding the current knowledge and it also includes theoretical and methodological finding on the topic on which it is being written. An area is determined and selected and report is prepared on the same (Fernando, 2012). The Best articles and journals are used to make a review on the topic on which research is being made. All the key findings and important things are highlighted in Literature review so that major highlights can be find out. Thus, Literature review makes it easy to understand the topic in detail and find out the key areas of the entire research so that further research can be conducted easily and effectively.

2.1 Issues behind numerous customer complaints in IKEA

According to Adnan Miski, it has been analysed that IKEA which deals in international furnishing industry, mainly concerns on creating a better life for people at affordable price rates.  It offers a wide range of ready to assemble furniture at international marketplace to attract and customers towards it business. This company is also known for modernist designs of furniture and interior theme of stores also based on eco-friendly simplicity. But as per reported in 2011, IKEA in one of its international branch has faces issues related to high revenue loss (Improving Customer Service at IKEA using Six Sigma Methodology, 2014). This issue is mainly associated with sales which seems to decline because of ineffective customer service. The main reason behind this substantial loss is attributed due to numerous complaints. With this assistance, it has been analysed that dissatisfaction of customers is associated with delivery of products, in terms of – delay in product-delivery and condition of the same (damage or defects in items). All these process lead to move people towards other companies for satisfying their needs.

It has evaluated from this article that there are various factors present within IKEA which leads towards dissatisfaction of customers. When a customer put order for a new item or wants to repaired old one, then  process of delivery includes numerous activities which are done in systematic manner (Tang, Hull and Rothenberg, 2012). It starts from packaging, sorting item into different categories and more, for providing effective service to customers. In this regard, if company fails to monitor any activity before delivery of furniture i.e. quality of products, inbound damage by vendor, inventory accuracy, total cost of labour, turnaround time, communicate with customers, etc. will drastically affect sales of branch. As undue demand of targeted audience could lead them to spend their money in other furniture retailing shops. Thus, all these causes leads to affect international reputation of IKEA at marketplace (Rao and Tilt, 2016). This company fails to deliver items on time to its domestic and international customers on time. In addition to this, as per customer feedback it has ascertained that their complaints are mostly related to get damaged products after delivery. Labours of IKEA are much inexperienced and therefore, they didn't know the way in which luxury furnitures could be handled and delivered.

2.2 Importance of focussing on customer services as a competitive advantage

According to Peppers and Rogers, (2016) focussing on Customer service refers to the activities in which company focused on the customers and offered services as per the buyers needs and wants. Each meeting of buyer helpful to reach milestone of the company. IKEA has been faced many issues related cost and selection of products or services. Buyers criticising the cost of selection which become very difficult for the company to full fill the needs of customers. In order to keep sustain the profit, IKEA has launched their new sister company which is Interred IKEA for sustaining the brand concept.

Communication with customers IKEA needs to adopt some concepts of customer engagement that helps to protect the interest of customers and maintained the profit of the company as well. Apart from that, it also helps to contained the effective work pressure and helps to keep sustained the better environment growth. Communication is the best forming results and growth (Customer engagement persuasion process. 2018).

Online customer communities: Online Customer communities is the best model or strategy to get the customer attraction. Online customer communities by blogging, forums, discussion boards and online community phenomenon have evolved to a new level of pervasiveness.

Management of online customer communities: Rothaermel, (2015) Following engaging with customers via online communities leads to another step of proactive and strategic management of the range of online performing task. In order to take better implementing process goals.

As per the IKEA must break the mould to overcome challenges, (2018) customer focus is helpful key element which connects company directly with their buyers. For that, IKEA needs to make innovative product or services to meet the client needs. Manager needs to select fresh approaches and idea by measuring the market research, competitors’ position and their strategic performance. Rothaermel (2015) that IKEA facing is sheer size through which company facing issue of delivering the products to the end consumers. This is the reason for which company fails to reach the customer needs in appropriate manner.

2.3 Impact of issue on revenues and profitability of IKEA

As per views of Marquis and Lee (2013), it has been ascertained that friction in the retail process doesn't consider as a bad thing. In context with IKEA stores, customers seek to get a particular feel which requires a certain level of engagement. When people put their feet in furniture stores then they attracted more on design and presentation of such products. After returning, they eagerly wants to build the same kind of furniture at home. In this regard, wider point is that when such customers cannot remember a good experience. In that condition, they cannot be loyal towards such retailers. Therefore, it is necessary for retailers to adopt approaches which provide unique customer experience that differentiates them from competitors (Sethi, 2012). As IKEA currently faces a high wave of problems under global competition due to dissatisfaction of competitors. So, it directly impacts on image of business in international retail sector. In this regard, some factors like low quality of customer service, untrained labours, poor communication with consumers, delay in perfect deliveries etc. leads to reduce effectiveness of business.

Therefore, due to increasing rate of customer complaints, sales performance of IKEA reduces in high manner. This would directly impact on its reputation due to which, business is not in condition to generate high profitability. Along with this, it also fails to gain sustainability and stay in competition as well. In this regard, some strategies by which IKEA can improve its customer services are given as beneath:-

According to Peppers and Rogers, (2016) Porters Generic strategies This strategy of generic strategies can be used to determine the direction of the business. Michael porter uses 4 strategies that should IKEA needs to adopt in order to get the customer satisfaction outcomes and growth.

Sihite and Simanjuntak (2015) Cost leadership: This is the best strategy which has been offer the lowest possible price. Cost leadership is the best strategy to adopt the average prices and market target. Overall, this strategy should needs to adopted by the company to take the market growth. Company should try to keep the costs as low as possible.

Differentiation: It is the another strategy or market positioning system growth. Differentiation defines the company unique from the different companies. This strategy helps IKEA to make its product different from others.

As per the Moon and et.al. (2014) Cost Focus and lowest possible price is the niche market where company chose customers to satisfy their needs and wants. Under which company needs to ensure about the costs has to be remain low. This can help IKEA to keep the customer focus towards the product and services and can easily meet the customer focus. This strategy focuses to keep company brand loyalty sustained in the market as long which is very essential to keep product unique.

Chapter 3: Research Methodology

3.1 Research approach

Research approach based on the philosophical concept which relevance of hypothesis to the research topic. It is the plan or a procedure which consists steps of broad assumptions in order to evaluate topic in detailed manner (Taylor, Bogdan and DeVault, 2015). There are two types of research approach deductive and inductive research approach. Inductive approach starts with observation and then comes to the end process. Besides, Deductive approach has been based on developing hypothesis. Present study will be based on inductive approach to identify the issue of focusing on customer meeting. This approach helps to identify the new approaches and new managing resources. In order to meet out the needs and managing task full sources to identify the effective problem identification sources.

3.2 Research Design

Research design is the different textbooks place different meaning on research design. Research design divides into two parts exploratory and conclusive. Exploratory research helps to explore the research topic to identify the proper solution to existing issue. On the other hand, conclusive approach method helpful to generating findings for making right decision-making step (Taylor, Bogdan and DeVault, 2015). Present research will be use exploratory research design in order to explore the reason of customer issues in terms of dealing with profit outcomes. Exploratory research can easily explore the new managing successful business growth. This approach helps to explore the problem issue and can easily determine the new ones.

3.3 Research philosophy

Research philosophy is the most crucial element of methodology which discussing the research topic in detailed manner. Every researcher requires adopting their one philosophy of the study to conduct the research approach out of two methods Positivism and Interpretivism. Positivism philosophy based on real things or on the facts which has been existed. It helped researcher to collects number of data and information through observation. On the contrary, Interpretivism adopt approach which taking the involvement of human interest. Present study will be using Interpretivism approach style to conduct the best services or goals.

3.4 Data collection

Data collection is another significant element in research process which is more helpful to create deep understanding of study topic to the end results. Data collection is the process where researcher collects data through two methods primary or secondary collection.

  • Primary data: Ithas been collected by two methods qualitative and quantitative. Qualitative method based on words, emotions etc. those which are not quantifiable. On the contrary, quantitative method based on numerically or mathematically term from mean, median, mode. Present study will be taking qualitative primary method of data collection. This approach is easier and more flexible to understand and conduct the study.
  • Secondary data: It includes collection of techniques which collect data through books, journals, internet with the help of collecting data from interviews, observation, questionnaire etc.

Present study will be taking primary as well as secondary data collection tool, for gathering data related to increasing rate of customer complaints under IKEA. This, thematic analysis will help researcher to ascertain importance of effective customer service for getting sustainable business performance of IKEA effectively and easily.

3.5 Sampling

Sampling is another significant process of research, sampling can be explained as a specific principle used to select member population to be included in the study. Sampling can be divided into two methods probability sampling and non-probability sampling method. Probability sampling is the method in which every member of population gets a chance to participate in research process. On the other hand, non-probability sampling under which researcher restrict to select some group of members for the study. Present study will be using simple random sampling for conducting survey with 20 employees. Simple random sampling is easy to adopt and find out the best approachable results.

3.6 Ethical consideration

Ethics are very much crucial in research process to keep all activities safe and secure. It helps to ensure ethical environment within the working atmosphere which needs to be followed by researcher. It is very important that researcher should know the ethics before conducting the research. It is vital part of the study in order to maintain the reliability and validity of the research. Adhering to ethics is the first concern of researcher where the individual focus on seeking consent of contestant of primary data collection for there involvement in data collection process. The researcher in this present research has seek consent of contestant on paper where terms and conditions of research will be mentioned in order to protect interest of participants. Apart from this, secondary information will obtain by taking approval and permission from responsible authorities.

Questionnaire

Name:

Age:

Gender:

Q1) Do you think providing effective services to customers will aid an organisation in earning high competitive advantage at marketplace?

a) Yes

b) No

Q2) Is focusing on quality of service and products is important for international retailers?

a) Yes

b) No

Q3) What is the major cause behind pitfall of IKEA's performance at marketplace?

a) Dissatisfaction of customer with delivery of products

b) Product quality as per compared to price

c) Poor management

Q4) What is the main issue that attributed towards numerous customer complaints?

a) Poor communication within departments

b) Inbound damage by vendors

c) Misleading the customers when purchase

d) Low quality of customer service

Q5) What are the main factors that IKEA needs to concern while developing corporate strategies to deal with customers complaints?

a) Benchmarking

b) Inventory Accuracy

c) Perfect deliveries

Q6) Which is the main aspects that IKEA need to concern while improving customer services?

a) Corporate strategy and goals

b) Effective relationship with vendors

c) Pricing strategy

Q7) What are the ways by which effective services can be provided to customers?

a) Provide training to employees

b) Ensure safe and timely deliveries

c) Concern on providing effective customer service

Q8) Are you satisfied with the quality of customer service provided by IKEA?

a) Yes

b) No

Q9) Give some recommendation for IKEA in providing best services to customers to achieve high competitive advantage?

Chapter 4 : Critical Review Of Results

Data analysis: analysis is the process of observing the collected data through two types of techniques qualitative and quantitative. Qualitative technique analysis the data through thematic presentation, tables and graphs (Mackey and Gass, 2015). Contrary, quantitative technique analysis the data through numeric term with the helps mean median and mode. Present study will be analysing data through qualitative method by conduct questionnaire with 20 customers.  

4.1 Critical review on the basis of secondary research

Issues behind numerous customer complaints in IKEA

From literature point of view, it has been evaluated that to meet demand of customers and exceed their level of satisfaction, it is essential for IKEA to identify issues behind dissatisfaction of targeted audience. As per perception of Muchlinski (2012), it has been ascertained that due to poor inventory management, this company fails to delivery products in appropriate manner. In addition to this, unskilled workers also misleads customer at the time of purchase. So, it leads to create negative image in minds of people when they visit IKEA stores for buying furniture items. As there is no adequate training is provided to workers in relation with how to handle and deliver luxury items. Therefore, it creates damages in the same which lead to create negative impact on IKEA in minds of customers.

Importance of focussing on customer services as a competitive advantage

According to Bell, Filatotchev and Aguilera (2014), it has been evaluated that for enhancing sales performance and gain high competitive advantage, it is essential for IKEA to concern on the concept of customer service. For providing effective customer, this company must focus on various aspects. It includes measures the quality of items which are offered to targeted audience. Store managers should communicate with people appropriately at the time of taking orders till delivering the same. They should also measures the inbound damages by vendors as well as implement steps for resolving such issues. In addition to this, by measuring accuracy of inventories and deliveries, IKEA can gain high satisfaction of customers and enhance its sales performance. This would lead to gain sustainability and generate high revenues to get competitive advancement.

Impact of issue on revenues and profitability of IKEA

In accordance with the report of the company IKEA, it is identified that all the activities of management of organisation is fair and legal but organisation is lacking in the rendering the customer satisfaction. People are not satisfied with delivery system of this company as they receive damage or defective items mostly. This would lead to create dissatisfaction among customers and move them towards other retailers (Van den Berghe, 2012). Therefore, all such causes leads to decline sales performance of IKEA in international market. It directly impact on reputation and global presence of this company that reduces its customer base also. Under this condition, company will also not in position to generate revenues and profitability to run business successfully.

4.2 Critical review on the basis of primary research

Theme 1: Customer service helps in earning high competitive advancement

Q1) Do you think providing effective services to customers will aid an organisation in earning high competitive advantage at marketplace?

Frequency

a) Yes

32

b) No

18

Interpretation: With the help of above mentioned graph, it can easily be interpreted that 50 out of 32 respondents were in favour of providing effective services to customers could easily help a business company in reaching to all new heights where it could easily gain higher competitive advantages. On the other hand, only 18 respondents (customers) has given their answers as no and have considered quality of products as a factor that could lead company to gain competitive edge. Thus, it can easily be said that most of the time if, IKEA is going to start delivering right customer services to consumers, they will easily gain many competitive advantages at marketplace.

Theme 2: International retailers need to concern more on providing effective customer services

Q2) Is focusing on quality of service and products is important for international retailers?

Frequency

a) Yes

45

b) No

5

Interpretation: Considering above mentioned graph, it is being analysed that quality of services basically is being considered as an essential part of a product and this could easily aid international retailers to reach at all new heights. Here, 45 respondents were in favour of the quality and stated that, an international retailer if requiring to expand its business. Than it will be required for them to expand then, it is mandatory to keep their focus on quality. Apart from this, only 5 out of 50 respondents have said that quality would not improve company's profit margins.

Theme 3: International retailers need to concern more on providing effective customer services

Q3) What is the major cause behind pitfall of IKEA's performance at marketplace?

Frequency

a) Dissatisfaction of customer with delivery of products

25

b) Product quality as per compared to price

12

c) Poor management

13

Interpretation: With the help of above mentioned report, it can easily be interpreted that one of the major issue which was being faced by IKEA or the reason behind its pitfall was dissatisfaction of customers with delivery of products that are offered by them. Here, 25 respondents were in favour of dissatisfaction of consumers. Along with this, 50 out of 12 stated that quality which was offered by IKEA in its products was same but the prices were higher than their rivals. Lastly, 13 respondents said that poor management was basically the reason behind pitfall of IKEA's performance level.

Theme 4: Main issue that attributed towards numerous customer complaints

Q4) What is the main issue that attributed towards numerous customer complaints?

Frequency

a) Poor communication within departments

10

b) Inbound damage by vendors

20

c) Misleading the customers when purchase

10

d) Low quality of customer service

10

Interpretation: Based on above graph, it is being interpreted that, main problem which came in front and raised customer's complaints, i.e. inbound damage done by vendors at the time of manufacturing products. Here, 20 respondents stated that IKEA was damaging products at the time of packing them for their customers. Away with this, 50 out of 10 customers (respondents) have stated that different departments were not even communicating with each other. 50 of 10 considered misleading kind of acts that has happened in the past with customers at the time of purchasing products, as the reason behind rise in number of complaints. Along with this, low quality of service was basically be taken as a reason behind increase in customer's complaints as 10 respondents were in favour of this.

Theme 5: Main factors that IKEA needs to concern while developing corporate strategies to deal with customers complaints

Q5) What are the main factors that IKEA needs to concern while developing corporate strategies to deal with customers complaints?

Frequency

a) Benchmarking

15

b) Inventory Accuracy

18

c) Perfect deliveries

17

Interpretation: With the help of above mentioned report, it is being easily interpreted that, 50 out of 18 respondents were in favour of inventory accuracy, 17 stated that perfect deliveries and 15 were in favour of benchmarking. Here, main factor that IKEA needs to focus on i.e. inventory accuracy because, major customers as respondents have said that this is one of issue which could break the overall corporate strategies made by the company. Thus, keeping every little information related to inventory, IKEA could take right decisions in places where it is lacking.

Theme 6: Main aspects that IKEA need to concern while improving customer services

Q6) Which is the main aspects that IKEA need to concern while improving customer services?

Frequency

a) Corporate strategy and goals

18

b) Effective relationship with vendors

17

c) Pricing strategy

15

Interpretation: With the help of above mentioned report. It can easily be understood with The main aspect which IKEA needs to concern i.e. corporate strategy and goals. Apart from this, another concern that has been carried out in front which is developing effective relations with vendors. Here, corporate strategy goals has been considered as the aspect in which 50 out of 18 respondents were in favour of. Other than this, 17 respondents stated that building effective relationship with vendors would really help IKEA in improving services linked to customers. Lastly, only 15 have said that pricing strategy of IKEA could help company in enhancing customer's loyalty.

Theme 7: Ways by which effective services can be provided to customers

Q7) What are the ways by which effective services can be provided to customers?

Frequency

a) Provide training to employees

10

b) Ensure safe and timely deliveries

28

c) Concern on providing effective customer service

12

Interpretation: Form the above graph it can be analysis that different respondent have different opinions regarding the ways by which effective services can be provided to customers while delivering the products. Out of 50 respondents 10 respondents think that IKEA can improve their delivering services by providing effective training to employees. So that they able to handle and deliver products in effective and efficient manner in appropriate time. Whereas 28 respondent think that respective company can use improve their delivering service by ensuring safe and timely delivery. When deliver products are in good and appropriate conduction and at within or at delivery date customers will feel satisfy and happy. But 12 respondent think that respective company improve their issue by taking consideration of providing effective customer services. The IKEA can done this by connecting and communicating with their customers in regular basis and in effectively manner.

Theme 8: Quality of customer service provided by IKEA

Q8) Are you satisfied with the quality of customer service provided by IKEA?

Frequency

a) Yes

22

b) No

28

Interpretation: It has been interpreted from this data representation that out of 50 customers, 22 are satisfied with services offered by IKEA. They are mostly attracted by modernist designs and pricing strategies of wide range of furniture items. But remaining 28 respondents are not satisfied with its services. As they have received damaged and defective products after purchasing. Along with this, delay in deliveries also create negative image of IKEA at marketplace which leads others to move towards other retailing stores.


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