IKEA. Success and Problems of a Swedish Concept


Term Paper, 2003
18 Pages, Grade: very good

Excerpt

Table of Content

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

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

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

4. Recommendations

5. Conclusion

Reference List: Books and Articles

Reference List: Internet

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.

Sweden is a very social country where power distance is low. Looking at exhibit one, the results of Hofstedes cultural research on 50 different nations are laid out. There, Sweden is evaluated as the least masculine country. This proves that the country is guided by more feministic traits. The main goal is relationship building instead of achievements and work is done in self-contained social units. Individual careers are less important and managers are modest and helpful. In that sense, Sweden can be seen as a welfare society in which caring for all members is an important goal.[9] Related to this, power distance is also relatively small. The country ranks 6th in this area. In cultures low on the power distance scale, status differences are considered undesirable and openness, directness and two-way communication of superior-subordinate is enforced.[10]

The corporate culture at IKEA reflects the Swedish characteristics shown above. The social touch is especially emphasised upon where the company likes to see itself as a big family.[11] Bonds among employees create relationships of concern. To be coward is seen as most desirable. This shows in the company’s guideline called “IKEA mässigt” demanding that people should not stick out remarkably.[12] Decisions are made without long and difficult discussion. Kamprad remarks that the fear of making mistakes is the enemy to evolution and at IKEA responsibilities of the individual should not end anywhere. Everybody should take an effort for the company and employees are encouraged to find and enforce solutions by themselves. This also relates to low power distance at IKEA. Co-workers are encouraged to express their ideas freely and status barriers should be few. For example, at IKEA, only one type of company car exists for all employees that need to travel during their work. Also dress codes do not distinguish between people and it is sometimes difficult to see who the manager of the store is. The company operates very informal and tries to get away from status barriers in anti-bureaucratic weeks, where managers work in lower jobs.[13]

Overall there is a connection between characteristics of Sweden that Hofstede describes and the way the IKEA corporate culture functions. This adds to the very Swedish atmosphere in IKEA shops.

2.2.3. Success of IKEAs corporate culture

The way that IKEA handles their employees contributes to the general success of the company. In many companies management is only concerned about the classical goal of making profits. This puts employee into great stress since they have to respond to conflicting goals of serving management and customers.[14] At IKEA, employees are granted great freedom to solve problems right on the spot. This results in friendly, helpful and respondent personnel. Employees are greatly trusted by the company and granted “unbelievable confidence”[15].This naturally results in more commitment which lead towards a better shopping experience. Schneider introduces the following graphic where he demonstrates that satisfaction of employees and customers is interrelated.

illustration not visible in this excerpt

Figure 1: Relation of Employee and Customer experience[16]

2.2.4. Enforcement of Corporate Culture worldwide

IKEAs strategy and procedures of the firm are internalised and stored inside each part of the organisation through socialisation.[17] Sövell and Zander call this an holographic organisation were the firm is the brain.[18] IKEAs corporate culture would get lost when it is not enforced worldwide. When IKEA expands into other nations, they take their culture with them and enforce it on the new employees without adapting to local routines.

If people want to enter the IKEA family they must act accordingly to the “IKEA mässigt”. Also, employees get exposed to the Swedish and thus IKEA culture in their working place.[19] Pictures of the IKEA soul adorn the walls. In the staff lunchroom you can find a collage of photos from the annual Sancta Lucia celebration in the store, the Swedish midsummer night feast is held, some Swedes always work in each IKEA store, and the managers can usually speak some Swedish. The exposure becomes clear when listening to Sylvie co worker, speaking about her working place at a French IKEA:

“You really feel that you are in a Swedish store, because you work with Swedes and there were several Swedish persons in a Swedish atmosphere … everybody works together, I have breakfast together, and they are never any controls, they have confidence in you.”[20]

[...]


[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.

[6] Whittington (2002), p.67.

[7] French TV report

[8] Grönroos (2000), p. 357.

[9] Hofstede (1984), p. 84.

[10] Hofstede (1984), p.90-91.

[11] Salzer (1994), p. 159.

[12] Salzer (1994), p. 170.

[13] Bartlett / Nanda (1990), p, 4, 5, 9.

[14] Schneider (1998), p. 99.

[15] Bartlett / Nanda (1990), p. 7.

[16] Schneider (1998), p. 101.

[17] Bartlett /Ghoshal (1987) p. 49, 44.

[18] Sölvell, Zander (1995). p.25, 26.

[19] Salzer (1994), p157.

[20] Salzer (1994), p.163.

Excerpt out of 18 pages

Details

Title
IKEA. Success and Problems of a Swedish Concept
College
Mälardalen University  (Institution of Economics)
Course
Strategies and the New Economy
Grade
very good
Author
Year
2003
Pages
18
Catalog Number
V11506
ISBN (eBook)
9783638176507
File size
452 KB
Language
English
Tags
IKEA, Success, Problems, Swedish, Concept, Strategies, Economy
Quote paper
Manja Ledderhos (Author), 2003, IKEA. Success and Problems of a Swedish Concept, Munich, GRIN Verlag, https://www.grin.com/document/11506

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