Transfer of IKEA's Corporate Culture

Introduction 

Multinational Corporation in the contemporary world has new opportunities that result from the concept of globalization. It continues to see increased interactions between and among people from different backgrounds and cultures for various reasons that range from the economic, social as well as political interests. The globalization concept has liberated markets and borders that have created opportunities for multinational companies to enter into such spaces and prospects and increase their goals and objectives related to business in the world. The concept of culture, thus, becomes a critical aspect to be considered when such decisions and moves are to be made by the international business entities such as multinational corporations (Sacco, 2014). Multinational companies, therefore, need to understand their corporate culture and see how it can be implemented globally where different environment exist defined by the diverse culture that countries and regions show related to many issues. The element of flexibility and international concepts and norms that are globally accepted, thus, plays an important role that determines to a great extent whether such movements and expansion programs result into success or not. An analysis of the same, thus, is relevant not only for multinational companies but also other organizations involved in different issues in the world. Culture is presented as people’s way of life, that is, the shared values, assumptions, understanding and goals passed from generation to the others over time (IKEA.COM, 2018). The same concept and principles also apply in the corporate culture that tries to venture into the international market and stage in their pursuit to realize business goals and capitalize on the globalization concept. The possibility of corporate culture and national culture conflicting is high especially when a company ventures into a different territory. It is, hence, imperative to have a balance and review such possibilities to enhance a successful expansion program international corporate world and implement strategies that would increase the chances of success in the different countries and regions that the multinational company goes. IKEA Company is an example of a multinational corporation that has dared abroad regarding its expansion programs. The IKEA Company started from humble beginnings in the year 1943 by Ingvar Kamprad that has expanded and grown to become an international brand and company respected in the world. Kamprad humble background and entrepreneurship talent was revealed as early as when he was 17 years old where he tried different small businesses such as selling matches, Christmas decorations and seeds before Kamprad eventually settled on furnishing industry (IKEA.COM ,2018). He believed in selling commodities at lower prices that enhanced quick sale and, therefore, capitalize on the market and expanded his business philosophy and principle that lives to date as part of his company corporate culture. IKEA today is among the largest employers in the world that has over 403 stores worldwide and continues to expand into newer markets and opportunities in the world as among the largest retailers of furniture products. The strategy employed by IKEA of cost differentiation that also allows customers to fix the furniture by themselves in some furniture products has also contributed to its lowered prices and business strategy employed by the company that constitutes a part of their corporate culture. IKEA Company, hence, is a perfect choice for research and completion of the task because of the strong brand that has over time and the many branches that it has in different parts and regions of the world besides its ambitious expansion program that continues to the present times. This report notes the approaches that IKEA has used to become successful in the international market and world. It remains to experience stiff competition due to liberated markets resulting from the globalization concept and the strategies that IKEA has adopted in their corporate culture in different countries and regions that they operate their businesses. It will be done through analysis of different models and strategies relating to IKEA corporate culture and the relevant theoretical framework that applies to the IKEA’s case. The models used in the report specifically include the Hofstede’s dimensions, CAGE analysis, and SWOT analysis. 

Theories/Models 

The use of theories and models and its application in different scenario and contexts helps people and organization understand better issues that affect them directly and indirectly. Theories and models, thus, also assist in the selection of the best approaches and ways that an organization or individual might apply to enhance the chance of successfully meeting set goals and objective that either falls in the economic, social as well as political setups. The three models will be used in the analysis of the strategies employed by IKEA in its international expansion programs that include Hofstede’s dimensions, CAGE analysis, and SWOT analysis as earlier mentioned. The first approach to Hofstede’s dimension presents different variables that include Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long-Term Orientation, and Indulgence. The Hofstede’s dimension model was designed in the year’s of the 1970s that analyzed different cultural dimension resulting from the study of IBM workers from different countries and backgrounds. The study by Hofstede researched 116,000 people that came from over 50 countries that gave him in-depth knowledge and understanding in issues related to the culture of different countries and regions as well as the aspects that contribute and determine the essential factors in the various cultures before the cultural model was officially published. The first variable in Hofstede’s cultural model of Power Distance presents the gap that exists between the people in power and those distanced from power as well as the level of acceptance of such a scenario (Minkov et al., 2018). The second aspect, Individualism, notes how people prioritize their interest first relating to personal and family life as opposed to the interests of the society at large. It is thinking about self first in all aspects of life. The third, Masculinity, shows how genders issues are prioritized in society and more so the different roles and opportunities presented in the society between the different genders. Patriarchal societies show more opportunities in aspects of life in the economic, political as well as social elements that favor the male gender at the expense of the female gender that often has limited opportunities to progress and access resources in the society that can empower them. High masculinity countries or region, hence, show high-level gender disparities in opportunities presented in the society while in low masculinity countries they show less differences when the two genders are compared concerning accessing opportunities and resources to enhance development. The fourth aspect in Hofstede’s dimension is Uncertainty Avoidance. It shows the extent to which people feel threatened by the uncertain and risky situation in life. Countries or regions that show high uncertainty avoidance more often formulate strict and stringent laws that intend to protect their citizens from possible exploitation from different dealers and stakeholders involved in different interests that attracts its people (Messner, 2016). Next, Hofstede Long-Term Orientation analyses how countries and its people strive towards achieving long-term goals and investments and the factors that contribute to such adventure in the future. Finally, Hofstede Indulgence ideas note how people socialize and have fun as part of their recreation life. It records the aspects and factors that determine the type of fun as well as the options that are available in a country or region. 

CAGE framework as the second model to be analyzed also presents different options that help in the understanding of cultural elements in the corporate world and beyond in different countries and regions. Cage is an acronym for Cultural, Administrative, Geographic, and Economic distance. The first variable of Cultural notes the dynamics that exist in critical issues defining culture such as language, social norms, and religion as well as family values among others (Orta, 2013). The second, Geography, notes geographical features such as climate and weather, population, natural elements such as forests and mountains among others as well as geographic territories and distance from other natural resources such as ocean and lakes in the area. Finally, the Economic variable in the CAGE model notes the wealth discrepancies and differences noted when countries are compared and factors that possibly contribute to the observed changes resulting from the comparison. The two models of CAGE and Hofstede have similarities in concepts and ideas relating to culture. Therefore, they form a useful framework for comparison and analysis of differences between two countries or cultures that the IKEA business through its expansion programs into newer territories and such analysis, thus, would provide an essential part that the concepts related to corporate culture have in the globalized world. 

Lastly but not least SWOT analysis that is an acronym for strengths, weakness, opportunities, and threats that business encounter would show how IKEA expansion programs in newer territories have and how they impact on the strategic capabilities of the approaches employed by IKEA. Each variable in SWOT analysis is analyzed independently and, therefore, it provides and has implications on different strategies differently (Ahmadi, Dileepan & Wheatley, 2016). 

Case 

IKEA is a respected brand in the retailing market that continues to shine beyond borders and boundaries of different countries and regions. The analysis of the history of the company shows gradual changes and progress over time that is shown in the evidence of the number of stores that it operates that have been growing decades after decades that in turn results in the creation of jobs for thousands of people as noted in the present status. The values and culture fit that IKEA has revolved around four concepts and ideologies that include togetherness, Cost-conscious, Respect, and Simplicity. The presented aspects, hence, determined the vision that the company has that states that it targets to “create a better everyday life for the many people.” From their vision, it implies that it targets the majority of the population that more often falls in the middle and lower class of the society and it is among the reasons that it has continued to multiply traversing continents and boundaries in the world. For example, their value and culture fit of cost-conscious indicates that they consider the purchasing power of the majority to determine the pricing that they offer to the market for their different products in the regions that they trade. It is a reason that justifies the many people totaling in millions that visited the IKEA stores worldwide in the different regions and countries that it operates. Their website was visited by 2.3 billion people in the year 2017 a number that continues to increase in the current time. At the same time, the number of customers that visited their store in the same period totaled to more than 900 million. It is an indicator that shows that the company truly serves the values and culture that it has put in place. The amount of profits posted by the company amounts to billions of dollars that continues to grow and expand with the expansion programs that they have spread rapidly to newer markets in different countries and regions at large that now has over 400 stores. Europe and North America have played an essential role in its expansion program where most of its retail stores are speared in the regions that constitute a higher percentage that exceeds 90 while other regions such as South America and Asian continent that have retail stores that constitute only a portion of their retail stores. They have expansion programs that target such regions as indicated in their website and strategic plans of expansion. The different cultural aspects that the different countries and regions that IKEA operates in have made developing the same strategy to be implemented in the countries that would work perfectly across the countries and regions is a difficult action and chances are high that it will not manage. IKEA, thus, embraced the strategy that helps it manage such dynamics and challenges, especially in the international business by incorporating the philosophy of franchising to help it address the concern positively. Franchising is a business philosophy and concept that allows a third party to enter into a partnership with the main business and allow it to use its trademark and engage in business by selling goods or providing services according to specifications set by the parent company (Reddy & En Xie, 2017). The franchising concept embraced by IKEA is known as the Inter IKEA system. IKEA group is the largest franchiser in the IKEA System that owns more than 90 percent of the shares in the groups that operates in more than 35 countries worldwide with over 350 stores. Companies in different countries command the remaining 6 percent. The IKEA Group has strategically chosen the right destinations and regions that it has put its franchise IKEA business mostly found in Europe and North America. It shows and posts strong economic and thriving business environment that has contributed directly and indirectly to its expanding programs and enormous profits realized by the IKEA business because of the cultural aspects in the region of North America and Europe at large that has supported the business in many aspects. The IKEA group has a strict code of conduct that they strongly emphasize irrespective of the business partnership they have and operate with and the regions that they have more stores in Europe and North America show similar cultural aspects that implement such business strategy and philosophy easy and favorable (Eskander & Aal, 2010). The code of conduct established by the IKEA group has contributed enormously in shaping and enhancing a similar culture across borders, and they have empowered other stakeholders that include customers and business partners to report any incidence that breaches the code of conduct where they have a hotline and assured confidentiality in identity. Some analysts describe IKEA values and culture as “care of the heart” because it addresses very many questions and concerns that many people inquests before they make decisions to buy a good or product. The code of conduct that IKEA has touched on actions such as willing to accept and delegate of power, leadership by example as well as humbleness and simplicity. The business trains all its employees on such essential business code of conduct that prepares them for the leadership position as well as the execution of the highest quality and standards in the products that they offer. However, IKEA has also ventured into territories that show differences in the cultural aspects different from its parent or original start point in Sweden. IKEA, however, through its number of stores spread across different regions and countries results into the question and concern of how IKEA has managed to do that. Also, what strategies specifically have they embraced that has made the company more successful in the international business arena, unlike many others that have tried and failed as noted in the present globalized world that has opened markets and boundaries for multinational companies such as IKEA among others a supported by Hsu and Chen (2018) work. Research is a critical element that IKEA incorporates in its strategies before they venture into newer markets and territories. They plan ahead of time in areas and territories that they aspire to go into and, therefore, they establish strategies that resonate well with the economic as well as other cultural elements that such newer destinations show. They think globally but act locally by incorporating cultural elements in the country that they advance their businesses. For example, they recruit and train their employee earlier to prepare them for deployment in a newer destination and, therefore, they enhance their cultural aspects beyond borders because of the training that empowers their employees with the skills and knowledge that they apply in the newer destination resulting in sustained production, growth, and expansion of the business globally. Their corporate culture is, thus, maintained with ease. Analysis of values among the potential employees plays a significant part in the decisions reached of employment where they have set and strategically designed questions in the interview process that would reveal the values that people have concerning different ideas that touch on corporate culture employee in newer countries that the company ventures. Analysis of the factors that shape IKEA decisions in newer countries, thus, would be relevant that would provide more in-depth information that shows how corporate culture goes beyond borders and territories in the international market. The countries that would be analyzed for a broader perspective of the corporate culture beyond borders include Sweden, Saudi Arabia, and Canada. Sweden, in particular, is selected by default because it is the parent company where the IKEA business started and originated and, therefore, it is the source of the corporate culture that they have spread to other countries in the world where their franchises and stores are found. The theoretical framework would help in the analysis of the success that IKEA has posted over time in its corporate culture as well as the drawbacks that arise because of the strict corporate culture that IKEA has. It would provide a balanced view on how it approached the different business environment in the developing countries as well as developed countries. 

Analysis 

The theoretical framework that talks about IKEA corporate culture across the borders displayed and revealed more information that notes the different countries that IKEA businesses are found as well as the different corporate culture strategies employed in the different regions dissimilar from its parent host country of Sweden. The majority of the countries that IKEA business has ventured into particularly in Europe and North America show many similarities culturally but also they differ in different aspects related to cultures such as foods, values, gender issues and different attitudes towards issues that touch on the economic, political as well as cultural elements in life. The success rate of IKEA maintains its corporate culture in the different countries that it operates is high that resonates well with earlier presentation and demonstration that take the cultural issues very seriously. Hofstede’s dimensions, thus, would be used to analyze the IKEA position and case noting areas that combination of strategies may be required and to understand better where challenges may occur and possible solutions and strategies that would embrace IKEA’s corporate culture across borders and boundaries. 

Hofstede’s dimensions chart compares the three countries of Sweden, Saudi Arabia, and Canada that IKEA has stores and operates its business as seen in Appendix 1 show different values and similarities in the different variables in the chart of Hofstede’s dimensions. The various countries score different results where some show similarities and insignificant differences while others show the opposite. The power distance variables indicate that is it high in Saudi Arabia as opposed to Sweden and Canada. It shows the cultural differences that exist between the two countries. The political process used by the countries also differs where principles and tenets of democracy allow people to become closer to power and instruments of power as noted in the Canadian as well as Sweden results. However, in Saudi Arabia, it becomes difficult to access those in power due to their political process and systems that differ in many aspects when compared to the two. The results of the three countries when compared would imply that the strategy used in Saudi Arabia would be slightly different from that used in Sweden and Canada. It would indicate, for instance, providing leadership position in the Saudi Arabian contexts while Sweden and Canada would encourage employees to work independently as noted in the core values of IKEA Business Company. The second variable of individualism as pointed out in the Hofstede’s results show individualism is high in Sweden and Canada as opposed to Saudi Arabia. It points to the cultural differences that exist between the two countries. The corporate culture, hence, shown between the two three countries would explain differences in Saudi Arabia as well as Sweden and Canada that would show great similarities. IKEA encourages individualism to be team members and work as a team and, therefore, its strategy that encourages recruitment regarding values and culture that people have helps it address the challenges relating to individualism by employing people that value team and group success as opposed to individuals. Its strategy, thus, in the corporate world, therefore, helps it survive and manipulate the possible differences that might be presented when it ventures in the different territories and countries for business (Heinz, 2014). Masculinity variable also posts different results of the three countries. Canada and Saudi Arabia display high levels of masculinity that implies that they are society defined by patriarchal principles, unlike Sweden where women and men play almost on the same level in issues of development in the society. 

A good example is a criticism that IKEA faced in their catalogs that had a limited number of women that prompted it to change and sustain its corporate culture in the newer markets and territories that the business expanded. Uncertainty avoidance in Sweden and Canada post low outcome as opposed to Saudi Arabia. It implies that people are ready to take risks in the two countries as opposed to Saudi Arabia. It means the IKEA would anticipate stringent rules in Saudi Arabia than the Sweden and Canada and, therefore, it would strategize properly to have plans to expect such laws that might include strategically formulating legal options in such countries to enhance and protect its corporate culture (Blomqvist, 2005). Long-term orientation posts almost similar results between the three countries and that imply that the corporate culture strategies employed by IKEA would be roughly similar in the three countries. It provides and enhances investment in the country because of the visions that the three states show concerning progress and development realized in their countries supported by stronger economic backgrounds that support investments. Lastly, Indulgence also shows different results that have fewer gaps in the differences among them when compared. IKEA, thus, would imply strategies that are almost similar but slightly changed to suit the different contexts that are presented in the three countries. The training program that IKEA has helps it more in addressing the possible corporate culture that might arise when they venture into newer markets and territories in the world. It helps to blend the different cultural aspects in the various countries with the values and corporate culture established by the company and, therefore, explains the reasons why it has succeeded in the international market in its expansion programs a concept shared in Orta (2013) piece. 

SWOT analysis also helps IKEA to strategize and incorporate its corporate culture in the different destinations that its business goes. IKEA has significant strengths that rely on its experience in the business that has taken more than 70 years experience. It, thus, can rely on experience in the different territories that it has expanded to formulate corporate strategies that would help the business realize its full potential and successful adventurers in the business (Křupka, Kantorová & Haile, 2018). Its core values and corporate culture also makes it well placed to expand as it considers issues of cost and pricing as well as simplicity that has contributed to the rapid expansion and growth in the present times. The weakness that IKEA shows may arise from the low-cost strategy that might hinder it from maximizing on profit and opportunities that they would make especially in countries that have high purchasing power and stable economies. The chances that IKEA has included the expansion programs that they have that enables them to further grow into newer territories and markets that would imply more profits and business of the company allowing it realize its corporate business goals and objectives with ease. The threats include stiff competition from other retailers that offer the same products in the retail business such as Woolworths and Amazon among others. The unstable political climate in some areas that it ventures into might also become a threat to its expansion programs. IKEA, in general, has developed corporate strategies that allow it to implement its values and organizational strategies in different areas successfully. 

The CAGE analysis option also would provide information that can contribute positively to IKEA’s decision relating to formulation and implementation of corporate culture in the different destinations that its business operates. 

Cultural Distance 

The Cultural distance aspects between the three countries show similarities and differences in diverse aspects. Sweden and Canada show many similar cultural attributes as opposed to Saudi Arabia. It implies that IKEA can implement a strategy that can serve between the two countries of Sweden and Canada. Religion, in particular, plays an essential role that determines the Saudi Arabia culture and, therefore, the strategies that IKEA has to develop must consider such elements to enhance its corporate culture abroad. 

Administrative distance 

The level of political engagement such as democracy in Saudi Arabia is low when compared to Sweden and Canada. It implies that it expects to encounter oppressive laws and rules in the society that tries to shut down the voice of the people and their ideas. The policies that guide business in such countries is harsh and stringent rules formulated that include the shareholding percentage for foreign companies among others. It indicates that IKEA has to strategize and develop corporate culture and strategies that would enhance it to overcome possible barriers related to administrative issues noted in different countries that might also include shareholding aspects in the countries. 

Geographical Distance 

The three countries are located in different continents in the world far from each other. The present development of infrastructure in Europe, as well as middle-east and North America, makes importation and exportation of different products easy as infrastructure is well developed and builds. However, IKEA also must strategize on the best approaches to eliminate waste and other negative impacts that might arise from geographical distance that might impact the corporate culture negatively. 

Economic Distance 

The GDP of the three countries show a positive indicator concerning growth with time. It creates the best opportunity for business and investment a factor that contributed to IKEA’s decisions in venturing into the newer markets. The economic factors play an essential role that determines the ultimate success of any business and IKEA is not exempted. Growing economies show more prospects for business and, therefore, can contribute to the formulation of corporate strategies that enhance a company corporate culture in the different region that it invests such as noted in the three countries of Sweden, Saudi Arabia, and Canada. 

Conclusion 

The report has studied corporate culture and how IKEA has traversed countries and borders successfully implementing its corporate culture. Hofstede’s dimensions, CAGE analysis, and SWOT analysis have provided a framework that different variables and concepts relating to corporate culture have been analyzed enhancing further understanding of the subject and the international instruments contributing to such changes. The three countries used in the study that is Sweden, Saudi Arabia, and Canada have shown different cultural attributes by IKEA have made to overcome challenges that result from the expansion of its business programs into newer territories by incorporating strategies such as training of their employees’ before deployment as well as franchising business option. 

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