Intercultural management: cultural differences in IKEA's business

Résumé du document

Globalization is today part of most companies. If they want to become more influent, they have to enter new markets and open new subsidiaries. But for this, they have to study the market well that they want to enter because there can be some economical, political and cultural differences. This can fail some partnerships or ventures if some aspects are not taken into account.

To be successful, these companies have to support their brands by intensive advertising campaigns, some constantly renewed products and attractive packaging. It is the only means to impose a distinct brand image and make the customers faithful.

IKEA, the world's largest home furnishing retailer, is however still unknown in some locations and has to consider the different barriers it can have to face and see how it could handle with them to enter these markets.

We will in the first part make a presentation of the company, then we will study what the issues were due to cultural differences that IKEA had to face and in the third part, some possible recommendations and the five dimensions of Hofstede.

The IKEA Group is one of the largest home furnishing companies in the world. The company offers a wide range of well-designed, functional home furnishing products at low prices so that nearly everybody can be able to afford them. IKEAS's motto is "Affordable solutions for better living".

The acronym IKEA comes from the initials of the founder's name (Ingvar Kamprad), the farm where he grew up (Elmtaryd) and his home village (Agunnaryd).
The company was founded in 1943 by Ingvar Kamprad. It originally sold only pens, watches, jewelry, picture frames and so on. He added furniture to the range in 1947 and some personal designed ones in 1955.

The company has today 264 stores worldwide, in more than 44 countries, in Europe, North America and Asia. 21 new stores should be opened before the end of the year in 11 countries. It is also one of the only international companies to have opened stores in Israel and some Southwest Asia Nations.

Extraits

[...] He added in the range some furniture in 1947 and some personal designed ones in 1955. The company has today 264 stores worldwide, in more than 44 countries, in Europe, North America and Asia new stores should be opened before the end of the year in 11 countries. It is also one of the only global companies to have opened stores in Israel and some Southwest Asia Nations. The notoriety and success of the company is due to the fact that the customer has to assemble by himself most of the products he buys. [...]

[...] Since that, IKEA has signed a cooperative agreement with BWI, the Building and Wood Workers International, on issues concerning the working conditions and the environmental matters. Therefore, IKEA asks now its suppliers, so that the workers have good working conditions. Also, any child labor is now permitted in the factories producing IKEA's items. IKEA launched its “IKEA way on preventing child labour” and is implicated in several projects concerning children in difficulty. - Since 2003, the company is involved in helping children. IKEA donates 1 euro for every soft toy sold. [...]

[...] II) Issues due to cultural differences IKEA had faced some issues to enter the US market. Indeed, it is a huge one which sets some problems and challenges for IKEA because the US is big and so there are some cultural differences between the states and the other countries. The thing is that for instance, IKEA had not thought that there could be difference of living according to where you live and what your wishes are. For instance, in 2004, the company realized it had not taken into account the California's Hispanics. [...]

[...] III) Recommendations and the five dimensions of Hofstede A turnover has been necessary by the designers, the engineers and the managers of the different IKEA stores in the US. The products were finally adapted to the US market with only inche measurement; they chose new and bigger store locations which are less poorly and better located. The head of IKEA North America explained “Americans want more comfortable sofas, higher-quality textile and bigger glasses.” The prices have decreased to correspond to what can pay Americans and to be more in the same price range of their main competitors, such as Target or Wal-Mart. [...]

[...] Intercultural management: cultural differences in IKEA's business Table of contents Introduction Presentation of the company II) Issues due to cultural differences III) Recommendations and the five dimensions of Hofstede Conclusion References Introduction Globalization is today part of most companies. If they want to become more influent, they have to enter new markets and open new subsidiaries. But for this, they have to study well the market they want to enter because it can be some economical, political and cultural differences. [...]