Understanding the Management Control System Used by Hybrid Companies : A Case Study of IKEA and MIO.

University essay from Linköpings universitet/FöretagsekonomiLinköpings universitet/Filosofiska fakulteten; Linköpings universitet/FöretagsekonomiLinköpings universitet/Filosofiska fakulteten

Abstract: Due to the globalization, companies have to review their strategy permanently. In the same way, they need to choose the right management control system which will be in line with their strategy. Recent research has been made and it was highlighted that new strategies have been created to face up to the globalization and stay competitive. One of the new strategies is called “hybrid strategy”. It consists of combining the low-cost competitive advantage with the differentiation competitive advantage. By doing that, a company differentiates itself from its competitors with a special feature and, by the same time, has the lowest cost in its market. This new strategy came after the three generic strategies from Porter, which explains that a company needs to choose a competitive advantage if it wants to be profitable. The competitive advantages are either low-cost or differentiation. Most of the research made about the hybrid strategy was about the efficiency of this strategy. A very few research was made about the management of companies using the hybrid strategy. This is why in this paper, we would like to understand what kind of management control companies using this strategy have, more particularly do they use more a tight or a loose control. We also are looking at what kind of objectives companies using hybrid strategies have. If it is more a short-term or a long- term perspective and if it is more focused on monetary goals or non-monetary goals. For that, we compared the management control implemented in a hybrid company with the management controlled implemented in a low-cost company in Sweden. Four interviews were made at IKEA and MIO, which are two Swedish furniture companies in Sweden. To be able to draw a conclusion, we choose one hybrid company and one pure company to compare them. IKEA is the company using the hybrid strategy. These interviews gave us a lot of information to better understand the type of management control both companies have implemented. Then, the data were analyzed and discussed in order to highlight a potential conclusion. The gathered data suggest that hybrid companies and companies using a low-cost strategy have approximately the same management control system which is more tight control. About the objectives, both companies have the same. Indeed, IKEA and MIO have monetary goals and are more short-term goals oriented, at least for the lower level management. However, there are some differences that we can noticed. The first thing is that MIO uses more the informal control than IKEA. The second thing is that IKEA is more concerned by its employees. To conclude, even if IKEA and MIO are using two different strategies, they are very similar when looking to their management control. 

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