IKEA - Success and Problems of a Swedish Concept

MÄLARDALENS Högskola

IKEA - Success and Problems of a Swedish Concept

Handed in by:

 Manja Ledderhos

Table of Content

1. Introduction 1
1.1. Background Information  1
1.2. Aim of the Paper 1
1.3. Delimitations   1

2. Analysis of the IKEA Way  2
2.1. Corporate Culture  2
2.2.1. Lead in 2
2.2.2. Corporate culture as reflection of Swedish culture  2
2.2.3. Success of IKEAs corporate culture 3
2.2.4. Enforcement of Corporate Culture worldwide  4
2.2. Leadership  5
2.2.1. Lead in 5
2.2.2. Swedish traits in Management style 5
2.2.3. Enforcing Management Style 6
2.3. Impact on Product Range  7
2.3.1. Lead In 7
2.3.2. Sweden’s national advantage in home design 7
2.3.3. Sweden’s impact on IKEAs product 9
2.3.4. Successful spread of Swedish product design 9

3. Analysis of Problems with the IKEA way 10
3.1 Lead in 10
3.2 Scandinavian leadership at all subsidiaries.  10
3.3. Corporate culture versus cultural sensitivity 11
3.4. Standardisation versus adaptation to national conditions  12

4. Recommendations 12

5. Conclusion 13

Reference List: Books and Articles 15
Reference List: Internet  16

1. Introduction

1.1. Background Information

IKEA is a well known Swedish company where almost every European person under 30 has purchased something from to decorate their flats. In only a few decades the company “went from the woods of southern Sweden to 31 countries around the world”¹ and has become a large Multinational cooperation (MNC) with an interorganisational network.² Higher tariffs, transport costs and the loss of economies of scale in domestic production further encourage production abroad.³ The Swedish market is comparably small and IKEA had to expand in order to keep their steady growth rates. The success came as a surprise to many since the furniture business is originally a local business.⁴ IKEA is the only company in their field, that has been able to expand so widely. The company seems to offer something that is unique to people and that appeals to them as something preferable. The background of the company seems to play a role in managing this uniqueness where Swedish influence on leadership, corporate culture and product offer leads towards the successful “IKEA spirit”. While the internationalisation of IKEA is one of the reasons for their great success, it seems that it is also the source of trouble. It seems that today’s “game of global strategy [is] increasingly … a game of coordination”⁵. The difficulties that IKEA faces is to keep their unique “IKEA spirit” and still be successful around the world.

1.2. Aim of the Paper

The aim of the paper is to look at the sources for IKEAs success where special emphasis will be given to the Swedish impact on leadership, corporate culture and product offer and the success they have with it. Internationalisation puts challenges on the above success areas and those need to be evaluated, as well.

1.3. Delimitations

IKEA is a very complex company and I couldn’t concentrate on all of the given information. For example, I did not write about the purchasing network and relationships to suppliers. Also, customer contacts are not dealt with in depth.

2. Analysis of the IKEA Way

2.1. Corporate Culture

2.2.1. Lead in

IKEA sees their employees as important asset. This follows the Processual argument were “the intelligence of people on the ground becomes critical to strategy, not top-down command”.6 The founder of the company, Ingvar Kamprad once said: “For me the thing most essential at IKEA is the employee”7. With this focus, the company has build a strong corporate culture. By definition this is a “pattern of shared values and believes that gives the members of an organization meaning and provides them with the rule for behavimy in the organization”8. The corporate culture at IKEA reflects the characteristics of its Swedish background, and it is enforced throughout the world. Inside their company culture, employees generally enjoy to work for the company and give a good service through this. 

2.2.2. Corporate culture as reflection of Swedish culture

The way that employees at IKEA handle each other can be compared to the general Swedish culture where emphasis is given to family like attributes with shared responsibilities and informal structures.

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1 http://www.IKEA.com/about_IKEA/timeline/splash.asp, (21.02.03).

2 Forgens/Holm/Thilenius (1997). p.477.

3 Buckley/ Casson (1998). p. 555.

4 Grol/Schoch (1998), p.3.

5 Porter (1985). p. 56.