IKEA: Managing Cultural Diversity

1. IKEA: Managing Cultural Diversity Group Name: UFOs Group Members: Daniela Derflerová Markéta Fialová Barbora Hulínová Jana Kubičíková Olga Šrámková

2. 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

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

4. Number of Stores Source: http://franchisor.ikea.com/showContent.asp?swfId=facts9

5. IKEA operates in more than 35 countries!!! Current Stores Near Future Stores Source: http://uberpedia.org/wiki/IKEA

6. 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)

7. Business Principles • 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

8. Management Style and Practices • 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

9. 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

10. 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

11. Cultural Diversity Issues: USA • 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

12. Cultural Diversity Issues: France • HR point of view: • Informality = sign of weakness or indecisiveness • In general they need formality in: rules and hierarchy job descriptions and written procedures formal training better than „learning by doing" not perceived as credible) • Minimum of non- French employees (otherwise French customers make complaints- nationalism)

13. 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

14. Comparison of Purchasing Power Source: Damien Badier, Carole Rousset

15. 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

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

17. 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) SWOT-IKEA Way

19. 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

20. Any questions??? Thank you for your attention!

21. Sources • IKEA: Managing Cultural Diversity.Integrative Case • Badier,D, Rousset,C.Strategies adopted in the international market, The case of IKEA inFrance.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