IKEA: Managing Cultural Diversity

Group Name: UFOsGroup Members: Daniela Derflerová

Markéta FialováBarbora HulínováJana KubičíkováOlga Šrámková

The IKEA Facts• Founded 1953 by Ingvar Kamprad, Sweden• Expanded soon abroad• Today over 550 millions visitors in close to 300

stores annually• Steady growth by 12% a year

Turnover Growth

Source: http://franchisor.ikea.com/showContent.asp?swfId=facts9

Number of Stores

Source: http://franchisor.ikea.com/showContent.asp?swfId=facts9

IKEA operates in more than 35 countries!!!

Current Stores

Near Future StoresSource: http://uberpedia.org/wiki/IKEA

The IKEA Way• Low costs• Long production lines• Self-assembly at home• Self-transport• Convenient boxes• Catalogues• Remaining Swedish (design, management)• Modern ideals (durable, easy to live with,

natural and free style, color, joy)

• Balanced focus on product range, sourcing, cost leadership, distinctive image

• Studying new consumer trends with regard to possible value added

• Yin/Yang metaphor• Durable partnerships with suppliers based on

cooperation and active contribution to both cost reduction and quality enhancements

Business Principles

• Informal, open and caring management style• Hierarchy not emphasized: 3 levels of responsibility• Pragmatic approach to problem solving, consensus

based decision making, discussion, explanation• „learning by doing“• Managers share information, knowledge and skills• Coworkers should feel important• Eliminating status barrier

Management Style and Practices

Cultural Diversity Issues: Germany

• IKEA in Germany since 1974• Conflicts with company‘s culture:

• „dutzen“= calling co-workers by first names (undermining respect)

• “Taking on responsibilities for yourself” x need exactly defined rules and instructions

• Believe Swedish do not assess risks sufficiently, too much result-oriented

• Love formality• Love administration=> sense of security

Cultural Diversity Issues: USA

HR point of view:• Swedish and American managers• Decentralized or centralized organization• Responsibility within the organization • A way of educating American managers• Treating employees (coworkers)

! Ideal IKEA US director – American, who accepts Swedish culture and has a great understanding for the IWAY

Local market obstacles:• 36 stores opened since 1985 • USA culture different to Swedish• Problems at the beginning caused by different

needs of Americans• Problems with IKEA´s culture

! IKEA has to accept a different culture and at the same time keep its own. Otherwise it will either not succeed on the US market or it will not be IKEA anymore

Cultural Diversity Issues: USA

HR point of view:• Informality = sign of weakness or indecisiveness• In general they need formality in:

rules and hierarchyjob descriptions and written proceduresformal training better than „learning by doing" not perceived as credible)

• Minimum of non- French employees (otherwise French customers make complaints- nationalism)

Cultural Diversity Issues: France

Other obstacles:• Bureaucracy on retail trade• Relations with Labor unions- initial distrust in

IKEA´s management style which was seeking consensus

(The style changed in more affirmative one: the relations have improved)

• Head of IKEA Jean Luis Baillot (Swedish wife, worked in Älhmult)

• Different purchasing power

Cultural Diversity Issues: France

Comparison of Purchasing Power

Source: Damien Badier, Carole Rousset

Advertising

• Humoristic and chocking style– UK: “Stop being so English”– Switz.: “Stop being such snobs“– USA: “America is a big country, someone has to

furnish it”– FR: “The French need more space, more love, more

well-being and more purchasing power. For all those reasons, vote IKEA”

• Sometimes banned

http://www.youtube.com/watch?v=NLZMWoOBOoA&feature=PlayList&p=1436C85F22364F0F&index=2

SWOT-IKEA Way

• Strengths– Unique image on the local

market, Swedish style (modern and simple)

– Effective strategy in time of global crisis (low costs)

– Popular among younger generation

– Quality and eco products at reasonable prices

– Catalogues- convenient

• Weaknesses– Relatively low adaptation to

the local markets (USA)– Lack of Swedish managers

abroad => need of local competent managers

– Relatively expensive delivery service

– Often conflicts on top management level, cultural diversity issues

To which extent should be kept „The IKEA Way“ approach and to which extent adjustment to foreign market?

SWOT-IKEA Way• Opportunities

– Expansion to South America and Asia markets

– Already well establish brand name

– Trainee programs– Wider range of

products– Cheaper row materials

and labor in time of crisis

• Threats– Global crisis-

purchasing power of customers

– Cheap competition copying IKEA style (low prices, simple design)

Conclusions• In the EU countries no need to significantly

adjust product portfolio (as opposed to USA)• Adjustments needed on managerial level policy-

in order to attract the best local managers • Introduce attractive Swedish management

trainee programs• Find a common talk with local managers, take

their opinions into account

Any questions???

Thank you for your attention!

Sources

• IKEA: Managing Cultural Diversity.Integrative Case• Badier,D, Rousset,C.Strategies adopted in the

international market, The case of IKEA in France.2007.Bachelor Degree Project.University of Skövde

• http://bizcovering.com/major-companies/ingvar-kamprad-and-ikea/

• http://www.ikea.com/ms/en_CA/jobs/join_us/index.html• http://www.essays.se/about/

The+case+of+IKEA+in+France/• http://www.ikea-group.ikea.com/?ID=11