Expansion difficulties with IKEA

Expansion difficulties with IKEACross heathen ManagementIndividual paper workQuestionAlthough IKEA is a highly successful global thespian it has recently experienced problem in its expansion in Russia (Vasilyeva, 2009). Based on the material in capital of Mississippi (2002) discuss critic every in ally how IKEA has succeeded in instilling its Swedish ports of managing into its inter topicistic subsidiaries, considering also whether cultural factors have any relevance to its current difficulties in Russia.IntroductionBefore going in the question i.e. the problems IKEA is facing in Russia, we lead discuss about IKEA, Sweden and IKEA in France, Ger many another(prenominal), Spain and United States of America.Discussing about IKEA, we will k at one time the history prototypic, IKEA, as we all know is a Swedish troupe. It was started by Ingvar Kamprad in 1943, and since has grown to become worlds largest retailers of furnishing. IKEA got its name from the initials of quaternity w ords, the startle two from the name of the founder, Ingvar Kamprad. Making I and K, and the second two from the letter of Emltaryd and Agunnaryd, the farm and the village he grew up in. IKEA started by selling pens, wallets watches etc, scarce out of all the furniture it sold got the greatest response, so, it opened its setoff depot in Sweden in 1958. And in Norway and in Denmark in 1963 and 1969 respectively. growWe will define the IKEAs and the Swedish glossiness based on Hofstedes four proportionalitys.The four proportions arePower spaceUncertainty reverseance individualisation and collectivismMasculinity and femininity.More or less the IKEA and the Swedish subtletys and same, the impartial reason existence that IKEA is a Swedish ships gild. Now according to the Hofstedes dimensions we hind end compare and tell about the cultures.We will start from the Power distance dimension, this dimension is about the distance between the employees and the managers of the compa ny, in short, equal transaction are also seen as normal in whatever cultures and heretofore inequality is seen as normal in some. In Sweden, the managers and the organisational employees scored in truth moo, i.e. there power distance is very low, they all are considered to a greater extent or less equal. They scored 31 making it a follower of low power distance where 104 is the maximum and 11 creationness the minimum.The second dimension we will talk about is Uncertainty avoidance, by Hofstedes definition and from the effrontery case study (Jackson, 2002), it says that, this refers to a preference for structured situations versus unstructured situations. This dimension fly the coops from being comfort equal to(p) with flexibility and ambiguity to a need for uttermost(prenominal) rigidity and situations with a high degree of certainty. Here once again Sweden scored 29, which is low, compared to an separate(prenominal) countries resembling Spain and France scoring 86. 8 b eing minimum here and 112 being the maximum.Third in the list is Individualism and Collectivism, this factor or dimension is about the mentality or way of working of employees, that is, are they employ to work as a individuals or as a group. This is again a in-chief(postnominal) factor, which several(predicate)iates between the cultures. In this dimension Sweden scored 71, and here 6 being minimum and 91 being maximum. This means the Swedish culture is more individualistic.The fourth one is Masculinity and femininity, now again, according to the give case study, Hofstede (1980a) distinguishes hard value such as assertiveness and competition, and the slow or feminine values of personal relations, quality of life and notion for about others, where in masculine society gender role specialization is emphasized. So in this dimension, Sweden scored 5, which is the lowest and 95being the highest. This implies us that Swedish culture is a very feminine culture, that is they are very soft and caring word form of people.So to sum up all, we can say that Swedish culture is a low power distance, again low on incertitude avoidance, high on individualism and a feminine culture. IKEA being a Swedish company fallows the similar culture, but, being a global player and having its existence in other diametric counties it dependd a group of cultural differences. IKEA had an organizational culture similar to Swedish culture, but when it went to France or Spain or United States of America, it faced little problems there and a peck in Russia.Cultural DifferencesA global player is a company which works worldwide likewise, IKEA is a global player. It is a Swedish company and as talked about, its organizational culture is similar to the Swedish national culture. IKEA of all time wanted to maintain its unique Swedishness. This was essential to maintain because it was there war-ridden advantage everywhere other competitors and along with this, it wanted to adapt to the oth er different national cultures it was working in. Well that is the sign of the global player. IKEA fitted gross(a) in this.Over the stratums, IKEA spread its market in the main in Europe, northwards America, Middle East, Singapore, Hong Kong, Mainland China and Russia. Germany, France and Sweden were its single biggest markets. It has also recently taken over Ha poker chipat, another competitor in the UK and France.IKEAs international headquarters are in Almhult, a remote location in Sweden where only Swedish is spoken, this is the dictate where products are designed and all the important decisions are make.Well now before we speak of Cultural differences, we will discuss about the pick up IKEAN cultures. They believe that a person learns by doing mistakes, it is seen as a way of learning. They encourage practically solving the problems. The managers from IKEA generally expected to share the knowledge they have, their knowledge and skills with the employees. Hence it states e mployees are also considered very important in the organization and are advance the work and are made feel responsible. The management style is seen very casual, informal, open and caring. Hierarchy system is roughly flat, with three levels of responsibilities at the entrepot level blood line managers and co-workers. Co- workers may be employees or associates.The managers do not give titles on their business line cards. The bureaucratic prelude and status barriers are disparaged and the managers are expected to be friendly, cause and close with the employees. The employees are also provided with a small formal breeding. In this culture humbleness is not seen as weakness and learning from experiences, though it takes a lot of time and patience but is a delimitate for moving up the ladder.Testaments of a Furniture Dealer a intensity by the founder, which sets out his philosophy is distributed through and throughout the organization. The managers are seen as and encouraged to act as missionaries. And so far one week seminar or reading is provided for the managers who have not been directly exposed to the founders philosophy. Whenever IKEA opens a new store in any other region than Sweden, the store is first run by a tight knit group of managers or til now called as missionaries who are in position to make of the decisions and are able to solve problems in typical IKEAN way. They are in charge of the store until the store is handed over to the local managers. Overall IKEA offers good and grateful working environment, job security and a caring attitude to its employees.Overseas, all this has proved relatively easy in Netherlands, but didnt work in some countries, say for example in Germany, France, United States of America and Spain. resembling in Germany, managers are not used to be called by first names and undermining managers authority. They are used to do what managers say, they usually take all the orders from the managers, they are not used t o do work by fetching owns initiative. In Germany managers suggestion are generally taken as orders. And IKEAs methods were considered as distinct or not clear.In France, unlike Sweden, informality is seen as a weakness. Being informal is considered as being indecisive. And regular no formal job titles meant loss of identity it was creating problems because they felt like they were missed in the crowd.But in United States of America, the older workers had a bit of problem working with the young American managers because of their ways of doing things. The young American managers showed a lack of elegance with the employees, but they went off with ease with the Swedish managers. But again, on the other side, there was a difference in the perception, Sweden did not believe in individual awards to maintain equality and avoid discrimination between the workers and the employees. American managers thought that it was slowing their progress in the company they had second thoughts about their future in the company, and as the payoff they lost their key American managers.To overcome these problems IKEA had to work on some stuff, like in France to attract and retain the employees, they had to provide clear colloquy with the facts and figures, just to highlight the benefits of IKEA over its competitors. And had to create some formal training programmes for the new employees, instead of the traditional learning by doing and experience methodology. And even did some changes for the other countries as well. IKEA also gave more autonomy to the local management.In the case study, by Jackson T (2002), he gave a bit more emphasis on IKEA in Spain. It is said that IKEA was a complete unknown when it entered Spain. And since then is has mixed the IKEA culture and its Swedish characters in its Spanish Subsidiaries. Firstly, a network of Swedish managers was sent to Spain to pass on their knowhow and IKEA culture to the local management. This turned out to be an extremely impo rtant stepping stone in IKEAs entry in Spain.Even the selection of the employees is important, selecting the advanced people is perfect way of preserving the IKEA culture. To select the employees who have not been dirty by the culture of other companies. Moreover awareness for IKEA culture is created through introductory programmes for the co-workers and the employees by IKEA Way, during which, participants are given lectures on IKEAs history, human preferences ideas, and many more and by formalised scriptures, handbooks and other IKEA documents.The IKEAs culture, i.e. the methods they fallow, are very different from the normal style in Spain. IKEA is taking a more sound and conscious approach in developing the organization and adjusting it for the local needs. In this case, the first step was by recruiting a Spanish human resource manager. They even provided off-the-job training courses, this was done on the strong demand of the co-workers. over again the important point is t hey adapted a flexible salary approach is developed in order to attract and retain competent employees.Problems in RussiaIKEA entered Russia almost after 5 decades of its international existence. Year 2000 was the entry year for IKEA in Russia. But unfortunately it had to face a lot of problems in Russia. IKEA has opened 12 stores in Russia till the date in all over the country. It has invested around $4 billion in the Russian market. IKEA truism Russia as a lucrative market it was like a grand mine for IKEA. IKEA was on the verge of becoming the potent symbol of Russian consumer boom. It started attracting the young generation of the country. It was also building giant shopping malls in various cities of Russia. Overall the start was looking good. But the problems they faced were mainly the corruption in the country.Corruption was the biggest and the most disturbing problem that IKEA had to face. Russian President Dmitri A. Medvedev also acknowledge on the fact that corruption is Russias national problem. On 23rd June 2009, IKEA announced that it is suspending its future investments in Russia for the time being. The official reason was given by IKEA country manage, Per Kaufmann, was the unpredictability of administrative processes in Russia. But some of the observers even believe that corruption within the country and demand for bribes was the other important reason for the decision made. The founder Ingvar Kamprad was staunch on his decision that he was going to solve the problem without grownup bribes.For example, in year 2004, when IKEA was about to open a outlet in capital of the Russian Federation, the officials there detain the opening by giving reasons like, the parking of the store was near the gas pipe line, and because of the safety reason, they could not open it on the given date. The same thing happened with the outlet in Samara it was delayed 8 times and still has not opened. It was about to open in November 2007, it has been 2 years and sti ll it is at the same place.They gave a different reason every time, the recent reason was, and the store was not hurricane resistant. And was not safe, but there was data of so power hurricanes in that area. And even at the time of opening a first store in the out skirts of Moscow, they needed electricity, the officials increased the rate of the electricity, as a reserve plan, they had generators, but the generator company, also increased their rates. IKEA tried to sue the company for this but unfortunately, it lost the case and in return had to pay a amount as compensation to them.IKEA also had to face accusation made by Russias anti-trust watchdog when it investigated and accused that IKEA urges the tenants at its mall outside Moscow to use services of selected companies.James Franker, head of Moscow based ruddy Star Asset Management also said a some things on the Russian economy like, They need GDP growth to help them expand, and thats reversed and he also commented about the informal taxation being very high in Russia.ConclusionAt last in the conclusion, we can say that, IKEA follows a totally different culture, it also had to face a lot of problems in other countries as well, but in Russia it had a lot more serious problems. The main problem being the corruption of the country. As given to us, Transparency International ranks Russia 147th out of 180, with countries like Kenya, Syria and Bangladesh. IKEA has stopped the investments in Russian furthermore due to such problems. In a situation where Ingvar Kamprad wants to be firm on his stand of not giving bribes, let us see what IKEA has in its future in Russia and around the world.BibliographyCase study- Jackson T (2002), International HRM A cross-cultural approachRey French, cross cultural management in work organizationIkea, http//www.ikea.com/ms/en_US/about_ikea/facts_and_figures/ikea_group_stores/russia.html.http//www.kwintessential.co.uk/resourses/global-etiquette/sweden.htmlIkea upbeat Russia aft er 10 years of problem, Alex Anishyuk, Moscow times,http//www.cdi.org/russia/Johnson/2009-160-7.cfm.why is Ikea fed up with Russia, Jason Bush, http//www.businessweek.com/magazine/content/09_28/b4139033326721.htm.Ikea turns sour on Russia,http//www.businessweek.com/globalbiz/blog/europeinsight/archives/2009/06/ikea_turns_sour.html.Ikea plans to halt investment in Russia, Andrew E Kramer, http//www.nytimes.com/2009/06/24/business/global/24ruble.html.Ikea tries to build public case against Russian corruption, Andrew E Kramer,http//www.nytimes.com/2009/09/12/business/global/12ikea.html?_r=1pagewanted=2