Last Updated 26 Jan 2021

Ikea’s Business Process Management

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Business Process Management (BPM) can be defined as a field of management which is based upon the needs and wants of the organization’s customers and clients. Business process management is a holistic approach of management which deals with effectiveness and efficiency of the organization, in this case it would be IKEA and it encourages innovation, flexibility and integration with technology. This approach of management is also called the ‘process optimization’ process as well, because it is continuously trying to improve the IKEA’s process.

Business process management is based on five categories. These categories include design, modeling, execution, monitoring and optimization. They are as follows:- Design Design is based on the identification of a process and also based upon activities that would be conducted or needed for the process (Jetson & Nelis, 2006). Modeling Modeling can be considered as a theoretical design of the process. Modeling basically includes different combinations of variables like increase in rent or a change in the cost of materials etc.

This process also includes the ‘What If’ scenarios as well. Execution Execution helps with automation of the process that is it automates all the processes, so that it is able to develop a process that helps to execute the required steps that are needed for the production of IKEA’s products. For example, a manufacturing system accepts raw materials (like wood, nails etc. ) and produces finished goods (like beds, chairs, tables etc. ) An information system that accepts resources as input and processes them into products like furniture as outputs.

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A business organization like IKEA is a system where economic resources are transformed by various business processes into goods and services. Monitoring Monitoring means to keep a check on the processes of IKEA’s products, to make sure that everything is right on track. Monitoring is a form of controlling and evaluating to determine as to whether the system is moving towards the desired goal or not. If monitoring is being done is a continuous way, then in case a problem arises, the problems will is dealt is a quick and efficient manner by the management of IKEA.

For example, a sales manager of IKEA exercises control when reassigning salespersons to new sales territories after evaluating their sales performances (Daft, 1997). Optimization Optimization process in the business process management cycle would include; identifying the potential bottlenecks of IKEA, it would also help with identifying the opportunities like cost savings or other improvements that were done in IKEA’s processes. Optimization will help create a huge business value for IKEA.

For example, you could try to determine the highest possible levels of profits that could be achieved by varying the values for selected revenue sources and expense categories. There may also be some constraints that can restrict changes to variables such as the limited capacity of a production process. (Jetson & Nelis, 2006) Internal and External Drivers of Business Process Management Business Drivers Business drivers are basically business requirements that are caused by the nature of the industry and its competitive or environmental forces.

For example, companies like IKEA that have global customers, that is, customers who buy their products from their outlets worldwide, such companies will need global information technologies for online transactions so that they can provide fast, convenient services to their customers of face losing them to their competitors. Business drivers for global information technology for IKEA would be its products, customers, operations, resources and collaboration. For example, global e- commerce websites and customer service systems for IKEA’s customers and global supply chain management systems for IKEA’s suppliers.

Internal Drivers As it is a known fact that internal drivers are considered to be a company’s factors which are related to the business of the company. The actual drivers of a company would include liabilities, assets, revenue, income, products, management, production process, profit, and share volume of the company in our case it would be IKEA’s. The internal drivers for business process management are 1) direct access to the clients, and 2) the scope of ‘offshore- able’. But the major internal driver of business process management is a direct access to the company’s client.

Direct access to clients would mean that IKEA has a direct link with their customer that is there is no third party included link. As it is a known that in today’s time customers are always in charge, that is it has become very easy for the customers to make a comparison in products and companies and they can switch any time they want to from one company to another. Therefore companies like IKEA are building strong relationships with their customers, and as a result these relationships are worth more than IKEA’s products, stores, factories, web addresses and even its employees. Therefore IKEA is a customer focused business.

(Jetson & Nelis, 2006) The scope of ‘offshore- able’ is based upon IKEA’s efficiency, effectiveness and economy. Therefore the success of any company like IKEAS’s is heavily dependent on information technology. And here efficiency should not be measured only in terms of minimizing costs, time and the use of information resources, but it should also be measured by the effectiveness of technology in supporting IKEA’s business strategies, enabling its business processes, enhancing the company’s structure and culture alike and as well as increasing the customer and business value too.

External Driver External drivers are usually those factors that are outside the company and these factors are not in control of the company, yet these factors have a huge effect on the processes of the company. External drivers or factor usually include competition, government regulations, economic environment, social interest of the employees and groups and technology. The external drivers of business process management are 1) an acceptable level of interaction and 2) an acceptable level of risk. (Jetson & Nelis, 2006)

An acceptable level of interaction IKEA would be based upon the specialization and the compartmentalization of the company’s processes. The level of interaction is connected with the markets of IKEA, which would by the furniture industry. Compartmentalization would help business process management by communicating with their clients and employees alike. The system will help to make that the groups collaborate but with an emphasis on customer service as well. And an acceptable level of risk is mostly based on salivating over potential labor cost savings of the company in this case would be IKEA.

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