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:

4. Number of Stores
Source:

5. IKEA operates in more than 35 countries!!!
Current Stores
Near Future Stores
Source:

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
Balanced focus on product range, sourcing, cost leadership, distinctive image, vertical integration, mass marketing and so on
Yin/Yang: balance of strategic sourcing and marketing mix
Partnerships: willingness of suppliers to comply with Ikea quality standards, Ikeas guaranteed purchase of all parts produced, technical assistence

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
„learning by doing“: making mistakes is considered a part of this
Coworkers should feel important: take part in decision making, can express their ideas
Job should be done in the most direct way, disaste for bureaucratic procedures
Eliminating status barrier: managers‘ titles do not appear on business cards, company cars are the same economy models for all, regardless of the position

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
(žán luí, bajo)

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

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

17. SWOT-IKEA Way Opportunities Threats
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)

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. Thank you for your attention!
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 in France.2007.Bachelor Degree Project.University of Skövde