Globalization

of IKEA

By: Georgia Logan

IKEAIKEA was created in

1951 in a small village in Sweden.

• Offer well designed, and functional home furnishings at prices that almost everyone can afford.

Eco

nom

y and

Polit

ics

• Sweden has one of the highest standards of living in the entire world.

It is governed by a constitutional monarchy.

• As part of the EU they must follow the rules and regulations on legal matters.

Busi

ness

Pr

act

ices

• Must be punctual.

• Periods of silence are common, and no one tries to fill them.

• Decisions are made by a group consensus – which may take a while to come to.

• Try hard to avoid conflict and no room for small talk.

• Allowed to receive gifts up to $200 in value, and then thought of as a bribe.

IKEA

in t

he w

orl

d As of 2013 IKEA had 345 operations in 42 countries.

• Germany alone contains 46 stores, and the U.S. has 38, while Sweden only has 18.

Exp

andin

g t

o

Chin

a

In 1998 IKEA formed a joint venture in China.

Modified furniture to fit the smaller apartment style, and the stores changed their layout to represent these apartments.

Moved stores out of the suburbs to the cities where people could access them with public transportation.

Busi

ness

in

Chin

a

• Punctuality is highly valued.

• Conversations must be guided by the most senior person in the room.

• Small talk is a way to establish a relationship, which then leads to business discussions.

• Silence is also acceptable in China, and should be expected.

Proble

ms

wit

h

Exp

andin

g

• The main problem was that the the low prices seen in Europe and North American were still high compared to Chinese standards. In order to fix this, IKEA

opened local factories to decrease it’s production/transportation costs.

• They also targeted the younger, middle class population.

• https://www.youtube.com/watch?v=j1F4dVuzAi4

Proble

ms

cont.

Another big problem that IKEA faced was competitors taking their catalogs and copying the products.

• Chinese laws didn’t protect against this kind of problem.

• IKEA fixed this by using social media outlets and targeting youth again.

Furt

her

Issu

es • IKEA has been trying to

become for eco-friendly, and has charged customers for using plastic bags.

The Chinese didn’t understand this and didn’t want to pay extra for the bags or bring their own.

Furt

her

Exp

ansi

on • IKEA has continued to

expand, and has most recently opened stores in Qatar and Lithuantia.

• The have continued to face problems with host country culture differences.

References

• Culture Crossing. (n.d.). Culture Crossing. Retrieved April 20, 2014, from http://culturecrossing.net/basics_business_student_details.php?Id=19&CID=197

• About IKEA. (n.d.). History. Retrieved April 20, 2014, from http://www.ikea.com/ms/en_AA/about_ikea/the_ikea_way/history/index.html

• Couching tiger tames the dragon. (n.d.). How IKEA adapted its strategies to expand and become profitable in China. Retrieved April 19, 2014, from http://businesstoday.intoday.in/story/how-ikea-adapted-its-strategies-to-expand-in-china/1/196322.html