Module 6 Assignment 2 LASA 2—Company Analysis Report

Module 6 Assignment 2 LASA 2—Company Analysis Report

Unit 6: Module 6 – M6 Assignment 2

Module 6 Assignment 2: LASA 2—Company Analysis Report

Review the following scenario:

Assume that you have recently been hired as the director of continuous improvement of a company. You are an outside hire with limited history of the firm and personal capital at the firm, and you are responsible for lean production, total quality management (TQM), six sigma, and best practice implementation.

Lean production means doing more with less, such as less inventory, fewer workers, or less space. A recent trade in quality management is lean six sigma (also known as lean sigma) that integrates six sigma and lean production.

The capacity for which you were hired has existed for three years with a direct line of report to the vice-president of operations and dotted line of report to the head of information technology (IT), the chief information officer (CIO), and the director of internal controls and audit. You are the second person to fill in this position. You have a team of internal consultants; half of your team has six sigma black belt or equivalent capabilities with the remainder having a solid understanding of operations and IT. You also have a budget for two external vendor resources.

You have taken six months to familiarize yourself with the organization and its people, mission, goals, strategy, and structure. In this time, you have also evaluated current operations. At the end of this period, you are assigned to deliver a report identifying the three most promising avenues for achieving best practices within the company. You have already been told that the company suffers from both aging and complex information systems and that your recommendation must include a major upgrade of those systems. The executive officers anticipate major investments in IT over the next several years. Your best practice implementations, coupled with new technology, must be measurable in terms of speed, quality, productivity, and efficiency or other key performance indicators that you identify in your report.

For this assignment, you will choose a company with which you are familiar. You are encouraged to choose a company for which you currently work or have worked, but you may choose some other firm if you believe it will be a compelling analysis.

You may choose one area of the company, such as a manufacturing plant or product design, to focus on if you can make a strong case. Your recommendations should have the following features.

Repeatable: If you “fix” three things in a manufacturing plant, you should be able to tackle the “next” three in iteration. Scalable: If they work in one plant, they should work in all of them. Replicable: Your process for improvement should be repeatable in different, disparate parts of the organization.

This is a key initiative at the “C” level, and your recommendation will reach the board of directors.

Your paper must include the following sections:

Strategic Overview: (1 page) Provide a brief description of the following elements: The company, including its products or services Marketing strategy: target market segments, value proposition, market position, and source of competitive differentiation Organizational structure Any other relevant facts Analysis of the Supply Chain: (4 pages)Analyze the supply chain for your identified company by explaining the following key elements of the supply chain: Identify key inputs, including less tangible assets, such as human resources and information. How are these key inputs sourced, reconfigured into a product or service, and delivered to your customers?

· Identify the key processes that add value, and evaluate the supply chain performance relative to the competition.

What are the key inputs for each process? How are these inputs processed or configured into the final offering for your customers? What is the value added at each step? What is the role of information technology and e-commerce in serving your customers? What are the key performance measures for evaluating your supply chain? Research online sources to explain how the performance on these measures compares to that of your competitors? Plan to Improve Operating Processes: (3 pages)Create a plan for improving the performance of three specific operating processes in your company. Your plan should address the following: Identify three elements of the supply chain that you recommend as targets for improvement. State the performance improvement opportunity for each element, and indicate how it will improve process speed, quality, efficiency, and productivity. Explain what specific action or change you recommend for each supply chain element selected. Explanation of the Results of Performance Improvements Regarding Product or Service: (2 pages) Explain the following: How will your product or service be improved as a result of these changes to the supply chain activities? How are you altering the specific features or attributes of your product or service? Why are these specific changes important to your customers? How do these changes enhance the value proposition and competitive position of your company? What lasting capabilities and improvement are you introducing into your company through these changes? How will you measure the scope and impact of your improvements? What are your key performance indicators? Assessment of the Impact on Human Resources: (1–2 pages)Detail how your plan impacts your company’s HR and human capital strategy by explaining how the organization’s structure supports the new process configuration you are recommending. Your response should address the following questions: Are the roles and responsibilities in your organization properly defined and aligned to enable these changes? Who will perform these new/modified process activities, and what changes to their jobs do you anticipate? Is decision-making authority assigned so that the process changes you propose can be implemented and properly managed under the current structure? Who will own the process and the results? Based on the current structure, will they have the authority to make changes as necessary? Are the individuals with the right skills in place to implement these changes? If not, how will you attract the talent necessary to implement your changes? How will you retrain the existing employee base? How will you handle attrition? How will you reduce the risk of impacted protected classes? Changes:Explain changes to the compensation and incentives at your company that are necessary to reinforce your recommendations and increase efforts for continuous improvement throughout the organization. Explain how your plan motivates employees, customers, and suppliers better. Write a 10–12-page paper in Word format. You may rearrange the above sections if it improves the quality of your paper. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M6_A2 .

Download and read the rubric to understand the expectations.

For assistance with any problems you may have when completing this assignment—OR—to offer your assistance to classmates, please use the Problems and Solutions Discussion area located through the left side navigation link.

Module 6 Assignment 2 LASA 2—Company Analysis Report

Unit 6: Module 6 – M6 Assignment 2

Module 6 Assignment 2: LASA 2—Company Analysis Report

Review the following scenario:

You may choose one area of the company, such as a manufacturing plant or product design, to focus on if you can make a strong case. Your recommendations should have the following features.

· Repeatable: If you “fix” three things in a manufacturing plant, you should be able to tackle the “next” three in iteration.

· Scalable: If they work in one plant, they should work in all of them.

· Replicable: Your process for improvement should be repeatable in different, disparate parts of the organization.

This is a key initiative at the “C” level, and your recommendation will reach the board of directors.

Your paper must include the following sections:

· Strategic Overview: (1 page)
Provide a brief description of the following elements:

· The company, including its products or services

· Marketing strategy: target market segments, value proposition, market position, and source of competitive differentiation

· Organizational structure

· Any other relevant facts

· Analysis of the Supply Chain: (4 pages)
Analyze the supply chain for your identified company by explaining the following key elements of the supply chain:

· Identify key inputs, including less tangible assets, such as human resources and information. How are these key inputs sourced, reconfigured into a product or service, and delivered to your customers?

· Identify the key processes that add value, and evaluate the supply chain performance relative to the competition.

· What are the key inputs for each process? How are these inputs processed or configured into the final offering for your customers?

· What is the value added at each step?

· What is the role of information technology and e-commerce in serving your customers?

· What are the key performance measures for evaluating your supply chain?

· Research online sources to explain how the performance on these measures compares to that of your competitors?

· Plan to Improve Operating Processes: (3 pages)
Create a plan for improving the performance of three specific operating processes in your company. Your plan should address the following:

· Identify three elements of the supply chain that you recommend as targets for improvement.

· State the performance improvement opportunity for each element, and indicate how it will improve process speed, quality, efficiency, and productivity.

· Explain what specific action or change you recommend for each supply chain element selected.

· Explanation of the Results of Performance Improvements Regarding Product or Service: (2 pages)
Explain the following:

· How will your product or service be improved as a result of these changes to the supply chain activities?

· How are you altering the specific features or attributes of your product or service?

· Why are these specific changes important to your customers?

· How do these changes enhance the value proposition and competitive position of your company?

· What lasting capabilities and improvement are you introducing into your company through these changes?

· How will you measure the scope and impact of your improvements? What are your key performance indicators?

· Assessment of the Impact on Human Resources: (1–2 pages)
Detail how your plan impacts your company’s HR and human capital strategy by explaining how the organization’s structure supports the new process configuration you are recommending. Your response should address the following questions:

· Are the roles and responsibilities in your organization properly defined and aligned to enable these changes? Who will perform these new/modified process activities, and what changes to their jobs do you anticipate?

· Is decision-making authority assigned so that the process changes you propose can be implemented and properly managed under the current structure? Who will own the process and the results? Based on the current structure, will they have the authority to make changes as necessary?

· Are the individuals with the right skills in place to implement these changes? If not, how will you attract the talent necessary to implement your changes? How will you retrain the existing employee base? How will you handle attrition? How will you reduce the risk of impacted protected classes?

· Changes:
Explain changes to the compensation and incentives at your company that are necessary to reinforce your recommendations and increase efforts for continuous improvement throughout the organization. Explain how your plan motivates employees, customers, and suppliers better.

Write a 10–12-page paper in Word format. You may rearrange the above sections if it improves the quality of your paper. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M6_A2 .

By Saturday, June 15, 2013, deliver your assignment to the M6: Assignment 2 Dropbox.

This assignment is worth 300 points and will be graded using a rubric. Download and read the rubric to understand the expectations.

Values-based service quality for sustainable business

false

Enquist, Bo

;

Edvardsson, Bo

;

Samuel Petros Sebhatu

Managing Service Quality

(

2007

385-403

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Enquist, B., Edvardsson, B., & Samuel, P. S. (2007). Values-based service quality for sustainable business. Managing Service Quality, 17(4), 385-403. doi:http://dx.doi.org/10.1108/09604520710760535

Values-based service quality for sustainable business

falseEnquist, Bo; Edvardsson, Bo
; Samuel Petros Sebhatu. Managing Service Quality
17. 4
(2007): 385-403.

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The purpose of this research is to present a model for values-based sustainable service business grounded in the concept of values-based service quality. Based on a literature review and interpretations of five narratives from a values-driven company, IKEA, the paper proposes a model of values-based service quality for sustainable service business. The study distinguishes four dimensions of values-based service quality and five dimensions of sustainability. These are all incorporated in the proposed model. This is a fundamental study of the role of values-based service quality in creating sustainable service business based on value-in-use for customers and the desirable values of corporate culture with which products and services are associated.

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1. Introduction

The growing interest in ecological issues in Western society has stimulated the adoption of a broader perspective in a range of economic and social fields. [24] Gummesson (1994) was one of the first researchers within service research to suggest that an ecological perspective was important in the development of what he called “green service management” – whereby “ecology” would be added to the general list of quality dimensions and come to be accepted as part of the review process of the “Baldrige Award” and similar prizes. In his book Total Relationship Marketing , [25] Gummesson (1999) introduced the concept of a “green relationship”, which was to include individual consumers, wholesalers, retailers and, ultimately, society as a whole.

Significant impetus was provided to ecological awareness in society by the so-called “Brundtland report”, Our Common Future ([4] Brundtland, 1987). This report was published as an United Nations (UN) World Commission on Environment and Development report, contended that a balance between environmental issues and social development would be required if long-term economic development was not to be jeopardised ([4] Brundtland, 1987; [16] Elkington, 1997, [17] 2001). Another UN initiative, the so-called “Global Compact”, was launched in 2000 with a view to bringing commercial corporations into partnership with UN agencies, organised labour, and the institutions of civil society in support of ten principles in the areas of human rights, labour rights, environmental protection, and anti-corruption. Many of the largest trans-national companies are members of the “Global Compact”, including the case company of the present study, IKEA. Moreover, many commercial companies are now adopting the principles of “corporate social responsibility” (CSR), which incorporates environmental and social perspectives in pursuit of sustainable development ([19] Enquist et al. , 2006).

An increased awareness of the nature and importance of “value” has accompanied the enhanced awareness of ecological issues and CSR described above. In this regard, [41] Vargo and Lusch (2004) argued that a service-centred view of the relationship between suppliers and customers implies that “value” must be defined by, and co-created with, customers – rather than being embedded in notions of output, defined products, or service attributes. According to this view, “value” is perceived by the customer in terms of “value-in-use”. [13] Edvardsson et al. (2006) enlarged on this notion by arguing that corporate values also provide value-in-use to customers. These authors agreed with [27] Johnston and Clark (2001) in contending that excellent companies are distinguished from average companies by the values they represent and maintain, and not merely by value-for-money outcomes and economic assessments. This combination of corporate values and value-in-use for the customer forms a certain “value logic”. An important component of such “value logic” is a commitment to the provision of quality ([12] Edvardsson and Enquist, 2002).

The present study explores the relationship between the concepts of values-based service; service quality and sustainability. The study is premised on a stakeholder perspective of leadership, responsibility, and ethics ([37] Pruzan, 1998), incorporating [16] Elkington’s (1997) concept of a “triple bottom line” (economic, social, and environmental) for sustainable development. Drawing on narratives from the world leading furniture firm, IKEA, the aim of this paper is to present a framework for values-based service quality for sustainable service business. The service culture in IKEA is of a special character, a culture for sustainable business embedded in the history of IKEA. That is a strong reason why we have chosen IKEA as our empirical study. The CEO of IKEA Anders Dahlvig says: “We firmly believe it is possible for IKEA to be a good company showing respect for people and the environment, and at the same time selling products at low prices.” ([26] IKEA (2005, p. 6), Sustainable and Environmental Report)

The remainder of this paper is organised as follows. Section 2 presents an analysis of the concepts of values-based service quality and sustainability. Section 3 presents five narratives (and explanatory interpretations) derived from the global enterprise IKEA. Section 4 presents a discussion of the findings from the narratives, together with the presentation of a conceptual model of “values-based service quality for sustainability”. As well, it examines the generalizations of our model with help of another values based company “

Starbucks

“. The final section presents the conclusions of the paper with regard to research contribution, managerial implications – with five suggestions for managers, and suggestions for future research.

2. Conceptual analysis

2.1 Values-based service quality

A customer-oriented view of service quality is that a service should correspond to customers’ expectations and satisfy their needs and requirements. However, this does not imply that a service provider should simply comply with the overt wishes of customers. It is also necessary to detect and understand non-verbalised customer needs, and this requires insight into the individual circumstances and unstated needs of customers if service quality is to be linked to effective solutions to customers’ problems ([9] Edvardsson, 1998). However, [11] Edvardsson et al. (2005a) have contended that issues associated with the most common service characteristics – intangibility, heterogeneity, inseparability, and perishability (IHIP) – have usually been considered from the perspective of the service provider, rather than that of the customer . According to these authors, the service-quality issues associated with the IHIP characteristics have usually been related to the management of service delivery from the provider’s perspective, rather than the co-production and consumption of services from the customer’s perspective. Service quality is thus perceived and determined by the customer on the basis of co-production, delivery, and consumption experiences ([10] Edvardsson, 2005).

Issues such as these raise the question of whether service quality is a single construct or an aggregation of several dimensions. [41] Vargo and Lusch (2004) conceptualized service quality from the perspective of economic and social processes, which implies that service quality must be a construct of several components. [38] Schneider and White (2004) adopted a similar multi-factorial view in perceiving service quality in a variety of ways. These included:

– conceptualising and measuring service quality from a marketing perspective;

– recognising the presence of the customer as central to service operations; and

– emphasising the importance of introducing service quality into human-resource management.

As a result of these reflections on the nature of service quality, [38] Schneider and White (2004) called for a broader perspective on services management – including the possibility of integrating service management with TQM in a comprehensive view of operations management that would enable organisations to produce high performance in terms of the “bottom line”. Similarly, [30] Lovelock (2000) adopted a multi-factorial view of service quality in talking about:

– the marketing imperative of service quality;

– the operations imperative of service quality; and

– the human-resources imperative of service quality.

In accordance with these multifactorial approaches, the present study introduces the concept of values-based service quality. This conception of service quality is in accordance with the view of [37] Pruzan (1998), who contended that there has been a contemporary shift in management perspective from a paradigm of “control” to a paradigm of “values”. He argued for a paradigm of values-based management for six reasons:

traditional power is declining in democratic societies with flat organisations;

leaders are losing contact with reality in large, complex organisations;

the language of money is too narrow;

stakeholders have a right to be heard and corporations have social responsibilities;

bright, creative, motivated, responsible and loyal employees seek meaningful work, personal development, and harmony between their own values and the organisation’s values; and

it pays off.

[41] Vargo and Lusch (2004, p. 3) have also contended that there has been a shift from a “logic of goods” to a “logic of service”:

A dominant logic begins to emerge that largely views marketing as a continuous social and economic process in which operant resources are paramount. This logic views financial results not as an end result but as a test of a market hypothesis about a value proposition.

This view is in accordance with the proposition being advanced in the present study – that social and economic processes are not only derived from the economic and utilitarian aspects of value, but also from the social, ecological, and ethical aspects of value ([13] Edvardsson et al. , 2006).

The present study therefore proposes four dimensions to values-based service quality:

“technical”;

“functional”;

“experiential”; and

“human resources and corporate climate”.

The nature and applicability of these dimensions will become apparent in the discussion of the narratives and the presentation of the model (see “3. Values-based narratives” and “4. Discussion and model”).

2.2 Sustainability

The term “sustainability” has become a commonly used and widely accepted expression in both an ecological sense and a business sense. [28] Kemp (2005) has identified five dimensions to sustainability:

an ethical dimension;

a social dimension;

a “nature-philosophic” dimension;

an economic dimension; and

a legal dimension.

2.2.1 Ethical dimension

The ethical dimension is based on the moral relationship between the societies of today and those that will follow. The ethical dimension refers to whether future generations will praise or condemn the actions of today. This idea was also a central argument of the [4] Brundtland (1987) report.

2.2.2 Social dimension

The focus of the social dimension is on social justice and the need to attend to social justice in the present, rather than putting it off until tomorrow.

2.2.3 “Nature-philosophic” dimension

The “nature-philosophic” dimension is based on the presumption that nature is vulnerable and that there are limits to the degree of interference that nature can bear before future generations will be affected by problematic living conditions.

2.2.4 Economic dimension

The economic dimension is predicated on an awareness that “sustainable development” requires sound economic theory and practice.

2.2.5 Legal dimension

The legal dimension encapsulates human rights in all aspects of human life ([28] Kemp, 2005). Two legal strategies drive sustainable progress: civil regulation; and government regulation ([42] Vogel, 2005).

These five dimensions represent a deeper reflection on sustainable development than the older concept of the “triple bottom line” of economic, social, and environmental considerations. The sustainability dimensions of [28] Kemp (2005) represent a more philosophical reflection on the practice of sustainable development. The concept of values-based service quality presented here includes sustainable thinking, as well as a stakeholder view of leadership, responsibility, and ethics. Corporate Social Responsibility (CSR) and Sustainable Development (SD) can be used as driving forces for value creation as part of service-quality improvement ([18] Enquist and Edvardsson, 2006) in sustainable service businesses. The business and normative cases for CSR should be embedded in the same values, and these should be communicated by employees who are “living the brand”.

3. Values-based narratives

3.1 Research design

We have been studying the development of the Swedish furniture producer, IKEA, for several years. This has involved:

– the extensive perusal of documents;

– multiple interviews with IKEA managers;

– the collection of narratives about IKEA from the media, the Internet, and books;

– personal observations at IKEA stores in

Europe

, Asia, and North America; and

– supervision of several masters’ theses on related subjects.

This extensive research involvement has provided the present authors with a solid basis for selecting representative narratives for this article.

Most of the narratives chosen for analysis here are taken from the internal magazine of IKEA, entitled Read Me with permission from IKEA. In interpreting the narratives, the authors utilised findings and background material from various sources, including [12] Edvardsson and Enquist (2002); [14] Edvardsson et al. (2005b); [15] Edvardsson et al. (2005c); [13] Edvardsson et al. (2006); and [40] Torekull (1999).

3.2 Narratives and interpretationsNarrative 1: A price for most people

A story from Germany:

In the midst of an aggressive expansion plan, IKEA is facing great pressure from its competitors. So, IKEA Germany fought back by slashing its prices. On average, prices have fallen by six per cent, but in some cases by much more in 2005. In IKEA Germany, to finance lower prices, “First and foremost we’ve succeeded in reducing purchasing prices from our suppliers by increasing product volumes”, says Armin, sales manager for Germany. Increased volumes mean co-workers at every stage will have more to do – more products to make, design, transport, store and sell in a smarter and cheaper way. He has already noticed a difference in customer perceptions at IKEA. In Germany, it is important to be able to offer “back-off” products – simpler, cheaper versions of the bestsellers. Therefore, “These appeal to customers who are attracted by our bestsellers, but who are happy to buy a simpler version that performs the same function” remarks Armin ( Read Me , No. 1, 2005, p. 6).

A story from China:

The pressure from competitors in China has also challenged the IKEA concept of low prices. Ulf Smedberg, marketing manager of IKEA China, remarked, “The more popular IKEA becomes, the more competition we have. Of course healthy competition is good – it makes home furnishings more popular. But it’s bad that more and more companies are copying our products.” He insisted on not spending time, money, and energy to hunt copycats, but to focus on other aspects of IKEA “providing smart solutions for homes by implementing three criteria: good design, functionality, and low price.” Consequently, IKEA China changes its products to suit the needs of the Chinese consumers based on the changes in their standard of living. “This means IKEA needs to keep its home-life study up-to-date because change happens so fast” says Smedberg. Rena Chen a customer in Shanghai confirms this. “I will be married this year,” Rena started to tell her story. “My boyfriend and I have visited a lot of furniture supermarkets. Compared to other furniture stores, we think that the furniture at IKEA can help us to save more money”. This helped them to save enough money for their wedding and furnishing their new home. They are planning to spend more on their wedding ceremony and their taste for the high-life. “I bought many items from a pan to a bed at IKEA.” Rena continues to tell her experience, “We also bought a bed named DALÄLV. The bed is made of raw, unpainted wood”. She was impressed by its simplicity and design. “It looks so natural and simple. Meanwhile, an unpainted bed is a very green and environmentally-friendly product.” She added pleasantly, “I think that IKEA is our ‘Saving Professional Assistant.'” (([33] Miller, 2004), the testimony of Shanghai IKEA customer ([47] Zhang, 2006)).

3.2.1 Interpretation

The first narrative (made up of two stories) emphasises the fact that IKEA’s product range consists of quality items at low prices. IKEA develops all concepts, products, and product ranges at its headquarters in Sweden using multi-skilled teams that are responsible for managing all problems in achieving attractive customer solutions ([15] Edvardsson et al. , 2005c).

The IKEA values revealed in the narrative are:

– Low prices. The price tag comes first – to ensure that as many people as possible are able to afford the goods.

– Economies of scale. Purchasing and transporting is conducted in a cost-effective and cheap fashion.

– Simplicity and responsibility. Designers and packaging specialists ensure that material quality and logistics are based on customers’ needs. Cost saving also saves environmental sources.

– Solutions to real-life problems. The aim is to produce well-designed and functional home-furnishing products.

– Innovative thinking. The focus is not on the furniture as such but on the value in use at home.

The interpretation of the above narratives, from the perspective of values-based service quality, focuses on perceived quality and performance.

The dimensions of values-based service quality illustrated here are: “functional”; and “technical”. Functional quality ensures that the design is attractive to customers, but the overall customer experience in the form of individualised customer solutions is essential to success.

Narrative 2: “IKEA Family”: more than a club

In two years, “IKEA Family”, with a special shop-in-shop in each store and a new interior design magazine will be a familiar concept throughout the IKEA world. One-fifth of customers have a closer relationship with IKEA than the others. They are responsible for between 60 and 70 per cent of total turnover and make up to three times as many visits to the store as the other customers. It’s for these special people that the “IKEA Family” customer club exists. For instance, Jen Segrest, a 36-year-old freelance web designer, and her husband, make the 10-hour round-trip from Middletown, Ohio, to IKEA in Schaumburg, Ill., near Chicago. “Every piece of furniture in my living room is IKEA – except for an end table, which I hate. And next time I go to IKEA, I’ll replace it.” says Segrest. To lure the retailer to Ohio, Segrest has even started a blog called “OH! IKEA”. The banner on the webpage reads “IKEA in Ohio – Because man cannot live on Target alone”. “With ‘IKEA Family’ we aim to give our best and most loyal customers more of IKEA. The club is one way of taking care of this important customer group” says Göran Nilsson who heads work on “IKEA Family”. At the moment, “IKEA Family” has existed in a few countries and in different guises since the mid 1980s. In the fall of 2005, the new version of “IKEA Family” was introduced in six countries: Sweden, Denmark, Austria, France, Germany and Italy. By the fall of 2007 “IKEA Family” will be in full swing in all stores. “IKEA Family” doesn’t aim to recruit new customers. The move has three main aims: to strengthen members’ ties with IKEA; to encourage them to visit IKEA stores and the website more often; and to increase turnover across the entire IKEA range. The aim is to recruit 80,000 members worldwide. The range company IKEA of Sweden uses its database to contact customers, who have bought a particular product, in order to develop and improve the product through customer feedback. Unlike many other customer clubs, “IKEA Family” doesn’t have a bonus system. “Customers join because they have an interest in interiors and feel that IKEA contributes to improving their life at home. “IKEA Family” offers are more about knowledge and activities than collecting bonus points”, explains Göran. “Profits from store sales will be put towards ‘IKEA Family’ activities at local stores. The more products that are sold, the more activities can be organised. This, in turn, leads to increased sales across the whole IKEA range.” ( Read Me , No. 4, 2005, pp. 8-9; [6] Capell et al. , 2005; www.verybigdesign.com/ikea/).

3.2.2 Interpretation

This narrative reveals that IKEA is driven by economic values, social values (co creation and loyalty), and communications (sharing). The values of IKEA revealed in this narrative are:

– Long-term relationships. “IKEA Family” is concerned with knowledge and activities that contribute to improving customers’ lives at home.

– Equality. The “IKEA Family” promotion does not have a bonus system; all customers are treated equally and have the same opportunities for access.

– Co-creating value. The product is developed and improved through customer feedback.

– Shared development. Sharing values, ideas, and working together.

Contemporary service quality is focused on favourable customer experiences ([11] Edvardsson, 2005c). The “IKEA Family” customer club, in association with other IKEA promotional activities – such as the IKEA catalogue, webpage, interior-design magazines, and “experience rooms” at IKEA stores ([15] Edvardsson et al. , 2005c) – express this conception of service quality in various ways. The narrative illustrates that IKEA provides its customers with inspiration, suggestions, and solutions to real-life problems at home. IKEA also enables its customers to test the solutions before purchase and consumption ([11] Edvardsson et al. , 2005a). This reflects the view that service quality resides in the perception of the customer and is experience-based. The dimension of values-based service quality illustrated here can thus be classified as “experiential”.Narrative 3: IWAY: a service-quality process

“We have found thousands of deficiencies – from broken fire extinguishers to serious chemical hazards, and poor accommodation for employees”, says Sven-Olof Kulldorf, IKEA Group purchasing manager. IKEA is continuously engaged in a dialogue with its suppliers in order to set action plans for their improvement work. An important part of this is the educational part, whereby IKEA takes its responsibility by training the suppliers in how to improve their situation, and more importantly, the reason why they should be conducting these changes. Suppliers are beginning to realise that improvements such as fair wages and the correct handling of chemicals pay off.

IKEA has partnered Impactt, a UK-based organisation specialising in improving labour standards, in a project that focuses on reducing overtime working in a sustainable way. The aim of the project is to find ways to reduce the need for excessive overtime whilst maintaining appropriate wage levels. This is achieved by assisting factories in raising their productivity, and improving human resources management and communications. A supplier in northern China, who has worked for IKEA for 10 years, is part of the Impactt project. The factory has over 500 employees and approximately 70 per cent of its production volume goes to IKEA. An IWAY audit was conducted just prior to the project, which showed many problems, including 55 non-compliances. Some of the high priority issues to deal with included: getting the factory to accurately record working hours; enabling all workers to receive at least the local minimum wage; improving conditions and hygiene in dormitories, toilets and washing facilities; and installing a fire alarm system etc. Many of the non-compliances were at management level, and the project gave the supplier the opportunity to enhance its systems and problem-solving skills. Since the project started, two additional IWAY audits have been carried out; one being attended by representatives from the International Federation of Building and Wood Workers (IFBWW). The IWAY audits have shown that the number of non-compliances has significantly decreased during the year. Still, the supplier needs to deal with some issues that must be addressed long-term, such as a further reduction of working hours and an insurance plan for all employees. However, participating in the Impactt project has enabled the supplier to move significantly in the right direction ( Read Me , No. 2, 2003, p.8; IKEA Social and Environmental Responsibility Report, 2004).

3.2.3 Interpretation

The narrative reveals that IKEA is driven by a combination of economic values (cost efficiency), social values (solutions to local problems), and environmental values (high standards). The values of IKEA revealed in this narrative are:

– Cost-effectiveness. The suppliers have to be cost-effective and have to meet quality standards.

– Shared development. The approach represents shared development of future relationships between IKEA and its suppliers.

– Leadership. The suppliers are made aware of their role in maintaining working and living conditions, wages, and safety.

– Accountability. The suppliers are responsible for social and environmental conditions, in accordance with IWAY.

In terms of the dimensions of values-based service quality, the narrative is about “improvement” in the supplier chain and “functional” value.Narrative 4: Preventing child labour

For many years, IKEA has been working to prevent child labour in India by fighting its root causes. The complexity of the child labour issue requires input and influence from many different parties in order to achieve a sustainable solution. A consistent approach and long-term efforts are essential to tackle the root causes, thus creating the broad-based support that is necessary for enduring improvements. Now, solar lamps herald a brighter future for people in villages without electricity. The aim is to offer this to the Indian state of Pradesh and around 200 villages in all. The project is a collaborative venture between the IKEA and Inter IKEA Groups and the local company, Winrock International India. “This is one need the villagers themselves could not meet.” says IKEA Children’s Ombudsman, Marianne Barner. “Our cooperation with Winrock gives people access to good quality lamps at a good price and with a service guarantee. It’s one way of providing help for self-help.” In villages with no electricity, solar lamps are a healthier and more environmentally friendly alternative than paraffin or blazing fires. Indirectly, the lamps can also help combat child labour. “If children can do their homework in the evenings and maintain their interests in education, they’ll be less inclined to start work at an early age,” says Marianne. More over, in August 2000 IKEA and UNICEF initiated a joint child rights project in these villages. Alternative Learning Centres (ALCs) is one of these projects which focuses on creating awareness and mobilising these rural communities around strategies designed to prevent child labour. School enrolment drives are conducted and ALCs are established as a transitional measure to formal primary schooling. Quality educational opportunities for children are essential to prevent child labour, and thus the IKEA initiative complements the government’s efforts to enrol all six to twelve year olds in the project area in primary school. As a result, in 2004, over 80 per cent of the 24,000 children previously out-of-school in these 200 villages are attending primary school. The remaining 20 per cent are covered by 99 ALCs, which are promoted as a bridging strategy to coax children into mainstream education. Moreover, the lamps also enable village women in India’s impoverished “carpet belt” to earn much-needed extra income by sewing at home in the evenings. “Their earnings are a valuable addition to a family’s economy. This also reduces the pressure on the children to work”, says Marianne ( Read Me , No. 4, 2005, p. 5; IKEA: Projects we support , available at: www.ikea-group.ikea.com/corporate/responsible/projects.html).

3.2.4 Interpretation

The above narrative reveals the social values held by IKEA. The firm’s initiative to combat child labour also aims to provide financial independence to poorer women in India. The values revealed in this narrative are:

– Shared development. The initiative effectively invests in the future of the company’s supply chain.

– Responsibility. The initiative assists in creating a sustainable future.

– Transformation. The initiative assists in educating children to create sustainable future generations.

In terms of service quality, the narrative reveals the value of responsibility – not for philanthropic reasons, but for sustainability of business. From a stakeholder’s perspective, business cannot be separated from ethics ([20] Freeman, 1994). The dimension of values-based service quality revealed in this narrative is “improvement”. Narrative 5: The antibureaucracy week

“Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA concept,” says Ingvar Kamprad, founder of IKEA. He retired in 1986 as Group President, but continues to work tirelessly for the company as a critical store customer, a watchdog for the IKEA concept and quality, a visionary, and a constant source of inspiration. The humble origins of IKEA created a unique IKEA culture founded on respect for money, an innovative mindset and the courage to assume responsibility. IKEA regularly stages “Antibureaucracy Weeks”, during which executives work on the shop floor or tend the registers. “In February,” says IKEA Group President Anders Dahlvig, “I was unloading trucks and selling beds and mattresses”, at IKEA Kungens Kurva in Stockholm. For several busy days he wore an “I’m new to IKEA” badge and saw IKEA from a different perspective than usual: replenishing, working in self-serve and selling beds. “He did a great job and was eager to learn,” says Anna Karlsson, who took care of him. “He was particularly interested in our packaging and how it could be improved. But I hardly gave a thought to the fact that he’s Group President.” says Anna. Anders started his day in the goods bay. “It was tough getting up for work at 4 am,” he admits. “But it was fun and it gave me lots of new ideas.” “One is that packaging could be much more functional. Customers often rip cartons open to check that everything is there, or is the right colour. This costs money and takes time to repair,” he says. Maybe the most valuable of all the experiences Anders took with him was from self-serve. Anna thinks work experience weeks for IKEA managers are an excellent idea: “They give managers a much better insight into the realities of store work.” Now Anders is back to the realities of his own work: meetings, decisions and a full diary. But the legacy of his work experience lives on. “It was very thought-provoking. I learnt a lot about our range, about what works and what doesn’t in the store. I hope I can the experience in a year or two,” he says. This is also a bequest of Kamprad who walks through around 20 stores each year with IKEA co workers – company executives, managers, associates – who observe, discuss, laugh, listen and take notes on his advice throughout the 12-hour tours ( Read Me , No. l, 2005, p.15; www.ikea-group.ikea.com/).

3.2.5 Interpretation

This narrative reveals that IKEA is driven by a combination of communication values (meeting co-workers), economic values (smart solutions), and social values (sharing). This narrative also illustrates leadership – through a willingness to experience different working environments. The values revealed in this narrative are:

– Innovative thinking. The initiative encourages smart solutions for better designs.

– A “down-to-earth” approach. The initiative encourages managers to experience various workplaces with co-workers.

– Real-life meeting. The initiative encourages non-bureaucratic leadership based on the reality of the workplace, rather than a theoretical approach.

From a service-quality perspective, this narrative is about human-resources management (HRM) and the establishment of a favourable “corporate climate”. HRM and corporate climate should be apparent through clear leadership, and the “antibureaucracy week” achieves this.

3.3 Summary of the five narratives

Table I [Figure omitted. See Article Image.] summarises the values identified in the five narratives. The values are classified as “economic”, “social”, “environmental”, and “communication” – in accordance with [13] Edvardsson et al. (2006). The link between values and service-quality processes is posited as one in which values act as drivers for service-quality improvement processes. The dimensions of values-based service quality are presented in the right-hand column.

It is apparent from the table that the “economic values” are mainly linked to low costs and low prices – thus enabling more people to afford the products. “Social values” are grounded in good design and functional furniture being made available to more people. “Environmental values” are based on smart transportation solutions, environmentally friendly materials, and creating a sustainable future. “Communication values” are revealed in the themes and words used in promotions by the company – for example, “standing on the side of the many”, “individualised solutions”, “simplicity” – and in the various customer-support tools that facilitate individual decisions and co-created customer solutions.

The five dimensions of sustainability suggested by [28] Kemp (2005) can also be used to interpret the narratives. Table II [Figure omitted. See Article Image.] summarises the elements of the five dimensions that are revealed in the narratives.

4. Discussion and model

Values-based thinking not only includes economic, ecological, and social perspectives (the so-called “triple bottom line”), but also a stakeholder perspective (of leadership, responsibility, and ethics). Such values-based thinking can drive sustainable development according to [28] Kemp’s (2005) five dimensions of sustainability (ethical, social, “nature-philosophic”, economic, and legal), as identified in the narratives presented here. The logic of values as a driving force for value creation facilitates innovative service quality to a greater extent than that achieved if the focus is limited to the functional and technical aspects of service quality.

[1] Berry et al. (2006) have argued that many companies make incremental improvements to their service offerings, but that few succeed in creating service innovations that generate new markets or reshape existing ones. IKEA has been especially innovative in its supply chain and has ensured that all solutions reflect its corporate culture – whereby the service culture drives the service strategy ([12] Edvardsson and Enquist, 2002). This is in line with the views of [1] Berry et al. (2006), who argued that service innovation should begin with corporate culture.

Figure 1 [Figure omitted. See Article Image.] depicts a model of “values-based service quality for sustainable service business”. This model is derived from: the above analysis of the five narratives of IKEA; and the work of [13] Edvardsson et al. (2006).

The analysis of the five narratives suggests that values-based service quality has four dimensions – “technical”, “functional”, “experiential”, and “HRM and corporate climate”. Values-based service quality for sustainable service business must be rooted in the values that form the provider’s corporate culture. These values must be communicated to the employees and to the wider public through marketing communication. All five dimensions of sustainability ([28] Kemp, 2005) are depicted in the model. These five dimensions must be present to secure a sustainable business and to promote values-based service quality.

The generalization of this study, based on the findings, can be applied to other firms, but not to all companies. The CEO of IBM, Samuel J. Palmisano, talks about “The Globally Integrated Enterprise” ([35] Palmisano, 2006). He describes a global supplier and value chain relationship from a major enterprise perspective. He argues that business is changing in fundamental ways – structurally, operationally and culturally – in response to globalization and new technology. The major companies are no longer multinational (MNCs) but global (the globally-integrated enterprise) ([35] Palmisano, 2006, p. 127). He also points out that the globally-integrated enterprise can deliver enormous economic benefits to both developed and developing countries ([35] Palmisano, 2006, p. 133). The “global collaboration” where different stakeholders interact in different developing and learning processes. This shift from MNC to globally-integrated enterprises provides an opportunity to advance both business growth and societal progress. We argue that the companies which have seen these opportunities to make a “new social compact” ([5] Brugmann and Prahalad, 2007), between companies and NGOs, and which are driven by strong values and have these business models built in can apply our thinking. Let’s take a concrete example of another globally integrated enterprise: Starbucks.

Starbucks is a values-based company with strong commitment to all its stakeholders; customers, shareholders, partners (employees), suppliers, strategic partners, local communities and global society. The four dimensions of values-based service quality are present and will secure three of the cornerstones of the strong Starbucks concept: i.e. the coffee bean, the Starbucks experience and the relationship with its employees as partners. Technical and functional quality are related in order to secure the quality processes of selecting and handling the coffee bean: Starbucks purchases and roasts high-quality bean coffees and sells them along with fresh, richly-brewed, Italian-style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment – primarily through its company-operated retail stores ([39] Schultz and Jones Yang, 1997), but also by securing the quality processes in its supplier and value chain. Experiential quality can be symbolised by the concept of the Starbucks experience, which amounts to more than the store. It is an inviting and attractive third place, and oasis, giving the customer respite from pressure, home and work. “When your average sale is only $3.50, you have to make sure customers come back, and ours do – on average eight-ten times a month” ([39] Schultz and Jones Yang, 1997, p. 247). The values-based quality dimension “HRM and corporate climate” is related to workplace and society: One of the main goals of Starbucks management is to create and provide a great work environment by promoting a respectful workplace culture, fostering diversity and inclusion, taking care of partners’ (employees’) well-being, providing opportunities for training and career growth, and ensuring a safe workplace ([39] Schultz and Jones Yang, 1997). Starbucks has had programs to incentivize its employees into becoming shareholders of Starbucks and Schultz has thus introduced the label of partner instead of employee. Starbucks also works hard to support and encourage its partners’ voluntary efforts. Starbucks can also be seen to be securing a sustainable service business. This is dealt with in the code of conduct of Starbucks labeled C. A. F. E. Practices (Coffee and Farmer Equity Practices), which was established in 2001 to deliver a premium coffee farmed, distributed and cultivated in an ethical, social and environmental way, secured by the five dimensions, from the ethical dimension to the legal dimension. What are the core pillars of Starbucks’ values? These pillars are not of a general nature and must be contextualized. Starbucks’ value pillars differ from those of IKEA. The four strong pillars of Starbucks are: profitability (profitability is essential for future success); passion (enthusiastically develop a satisfied customer-base all the time); responsibility (contribute positively to a great workplace, communities and environment); and excellence (apply the highest standards of excellence to purchasing, roasting and the fresh supply of coffee).

There are several companies which act as globally-integrated enterprises and simultaneously have a strong values-based service brand ([13] Edvardsson et al. , 2006). These enterprises could apply the findings from our model. Examples of values-driven companies outside of IKEA and Starbucks include H&M, the Body Shop, Target, and Timberland. These companies actively communicate with their customers about values and work actively to instil their values into their suppliers and value chains, including social compact partnerships with NGOs and society ([5] Brugmann and Prahalad, 2007).

5. Contribution, managerial implications and future research

5.1 Research contribution

The main contribution of the present study is a new model of values-based service quality for sustainable service business (see Figure 1 [Figure omitted. See Article Image.]). The scope of the study includes not only the “logic of value creation”, but also the “logic of values” ([12] Edvardsson and Enquist, 2002; [13] Edvardsson et al. , 2006). Four dimensions of values-based service quality were identified – “technical”, “functional”, “experiential”, and “HRM and corporate climate”. The model also includes the five dimensions of sustainability identified by [28] Kemp (2005) – an “ethical” dimension; a “social” dimension; a “nature-philosophic” dimension; an “economic” dimension; and a “legal” dimension.

All in all, the dimensions of values-based service quality and the dimensions of sustainability form the basis of the model of values-based service quality for sustainable service business, which is the main contribution of this paper.

5.2 Managerial implications

The narratives presented in this paper have demonstrated that service quality is not only built on technical and functional dimensions, but also on the values enshrined in the company culture and the brand. If company values match customer values, then resonance will develop, and this will provide the impetus for a new understanding of service quality. If company values do not match, then dissonance will occur and customers may switch, destroying value.

First, managers must focus on their customers with a view to understanding their values, as well as how to relate to these customers’ values. Values linked to company culture, products, services and brands should be perceived as attractive in the eyes of the customers.

Second, in designing and managing service quality, managers should take into account the dimensions of sustainability – beginning with ethics and concluding with legal statements. This ensures that customers receive value-in-use and that the interests of all stakeholders are taken into account.

Third, the effective cultivation of service quality for sustainable business involves the adoption and communication of attractive values, while simultaneously avoiding any association with negative values.

Fourth, we argue that instilling values into a company, by managing a values-based culture and communicating these values to the customers, is a strategy to be and should be adopted by all companies. In some industries, in some markets, and for some customers, values are more important than they are in other contexts.

Fifth, it seems as if values-based companies are more successful than other companies when we make comparisons with other companies within the same industry. To be linked to “the wrong values” may hurt a business tremendously. Thus, companies should pay careful attention to, and design in the values linked to, sustainable business, corporate social responsibility, and lean production and consumption.

5.3 Future research

Future research should investigate whether the dimensions of values-based service quality and the dimensions of sustainability, as presented in the model of values-based service quality for sustainable service business, are applicable to other companies and service industries – including financial services, telecommunications, transportation, and education. These service industries represent a wide range of services – from standardized to customised, and from discreet to continuous – and would thus provide interesting findings in respect of this important subject.

BusinessWeek online

Proceedings from QUIS 3, Quality in Services Symposium, Kalrstad, Sweden, June 1992

Sustainable and Environmental Report Världsmedborgaren

The Global Citizen

The China Business Review

Starbucks – A Case Study

Financial Times

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