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IKEA in Middle East & North Africa

Pete Caruso, Brendon Dempsey, Brendan Dickinson, Lynley Joynt & Kathleen Luckey

Affordable solutions for better living

Company Overview

1943: Founded by Ingvar Kamprad ◦ Locations throughout the world Headquarters: Delft, Netherlands

Home Furnishing Retailer Located 40 countries with 338 stores 154,000 employees globally Global Sales 2011: €24.7 billion


Company Overview

Home Goods Industry ◦ Furniture and home accessories ◦ Scandinavian design ◦ Flat-pack, self-assembled pieces

Lower prices every year Design own furniture ◦ Close to 2,000 suppliers ◦ Use seasonal manufacturers


Company Overview

Mikael Ohlsson: President and CEO ◦ Has been with IKEA for 34 years ◦ Stepping down in September 2013

Peter Agnefjall: New CEO ◦ Goal: Boost growth even further ◦ Increase pace of store openings ◦ Open more stores in China


IKEA Group of Companies Organization Chart

Stiching IKEA Foundation

Stichting INGKA Foundation

(Netherlands)

IKEA Holding Co. Swedwood (Sweden)

IKEA of Sweden (Sweden)

INGKA Holding B.V. (Netherlands)

Inter IKEA Systems and Holding

(Netherlands and Luxembourg)

IKEA Group


Company CEO

Mikael Ohlsson

North America Division

Headquarters and Europe

Division

Middle East Division

Finance Marketing Sales Human Resources

International Management Development

Product Customer Service

Asia Pacific Division

Caribbean Division

Executive Management

Group

Company Organization Chart


International Management Strategy

Based of the company vision statement

IKEA strives to “create a better everyday life for the many people by offering a wide range of well-designed functional home furnishing products at prices so low that as many people as possible will be able to afford them”


Accomplishing the Vision

Keep it simple Employ standardization as often as

possible ◦ Product Design/Strategy ◦ Pricing Strategy

Product and Pricing strategies reflect simplicity and standardization


Product Design and Strategy

Items are designed to appeal to universal tastes ◦ Design takes into account styles from all over the

world and combines them in a single design ◦ This single design is then distributed to all stores

IKEA furniture comes un-assembled; customer assembles product after purchase ◦ Cuts costs, no assembly team to pay ◦ Savings passed on to customer


Product Examples


Pricing Strategy

Lowest possible price is the goal IKEA combines the savings from cheaper

overhead to help provide low prices ◦ Examples: No assembly team, flat-packaged goods to save on shipping

IKEA prices are 30-50% cheaper than at other furniture stores worldwide

5-10% market share of world furniture industry


Spreading the Message Marketing plan is

very simple and universal

Most of marketing budget is allocated for company catalogue (About 70%)

Internet, television, and other media marketing has small portion of budget ◦ Has increased in recent

years


Compensation

Title Salary (in USD)

Sales Manager $90,000 Human Resource Manager 40,000 Finance Manager 130,000 Marketing Manager 68000 Product Manager 105,000 Customer Service Manager 60,000


Strategic Skills

25%

10%

25%

10%

15%

15%

Strategic Skill Areas Politcal Economic Leadership and Interpersonal Skill Diversity Functional Teams


Corporate Structure in Middle East


Structure Continued…

Standardized, in accordance with IKEA’s management style and strategy

Focus is on core aspects of the company

Extraneous business practices do not have a place in the IKEA model


Labor Laws

Some formal structure exists but is costly ◦ Employer discretion

Typically: ◦ 10-11 hour work days ◦ 6 days per week, Friday off for religious observance ◦ 3 weeks vacation after 20 years employment


Financial Laws & Regulations

Improving, especially United Arab Emirates and Saudi Arabia ◦ Financial Services Authority in Dubai, UAE ◦ Capital Market Authority in Saudi Arabia


Political Laws

Islamic law is foundation

Dangers of expropriation/indigenization ◦ Indigenization: get a foot in the door but build potential competitor ◦ Expropriation: organizations involved in transportation or utilities are targets

Key Considerations

Geography & Demographics ◦ Importance of oil in the area ◦ Arabic for written communications ◦ Majority Muslim

Economic ◦ Gulf Cooperation Council


Key Considerations, cont’d Financial ◦ Cost of living for expats ◦ Transfer of funds

Political ◦ Corruption Perceptions Index ◦ Terrorism—amateur, religiously motivated


Key Considerations, cont’d Industry ◦ Keep traditional styles and offer comfort

Competition ◦ Thomasville, Crate & Barrel

Workforce Demographics & Labor Market ◦ Rate of employment well below world benchmark


Cultural Considerations Hofstede’s Cultural Dimensions

Germany Arab World

Power Distance 35: Power is decentralized and decisions are often made as a group. Control is frowned upon and leadership is to be challenged. Communication is direct so that people may learn from their mistakes. The middle class is powerful.

80: Everyone has a place in society and that is not up for debate. There are inequalities and power is centralized, giving a boss the authority to act as an autocrat.

Individualism 67: Self-actualization is highly valued. Individuals are loyal to their employers and those they like, and they uphold their duties. Families are small units with focus on parent-child relationships.

38: Culture is collectivist. Extended family is important and people have a lifelong commitment to their “in-group.” Decisions are shared in that they impact the entire group and any “loss of face” has an impact on everyone’s reputation. Loyalty is acted upon before laws, so connections are honored more than individual qualifications.


Masculinity/Femininity 66: Performance is important. People “live to work.” Self-esteem is strongly tied to work and status. Managers are firm and unwavering. Children must specialize their education by age 10.

52: Falling in the middle, work is valued because it is another reflection of who a person is and how they fit into society, but at the end of the day, background is the number one identifier and priority. Conflicts are resolved by fighting them out.

Uncertainty Avoidance 65: Planning is necessary before action is taken, and attention to detail is also important. Reliance on experts to fill in knowledge gaps is common.

68: Beliefs are strongly held and strict codes are adhered to. Unorthodox ideas are not tolerated. Security, precision, and punctuality are valued. Rules are usually in place, even if they are not followed.

Long-term Orientation 31: Traditions are respected and people seek to establish “truth.” Quick results are preferred, resulting in impatience, and there is a smaller tendency to save.

Not ranked: Hofstede has not calculated a rank, but based on other elements, one could say that the orientation is short-term because tradition, protecting face, and return of favors are all highly valued.


Cultural Considerations

Sustainability Direction

Guiding principles ◦ What is in the best interest of the Child? ◦ What is in the best interest of the worker? ◦ What is in the best Interest for the environment?

Through these principles they continue to follow towards their sustainability direction; “the Ikea business shall have an overall positive impact on people and the environment”


Product and Materials

• IKEA wants their customers to confidently and freely choose among all of their products knowing that Ikea is committed to sustainable practices.

• IKEA Sustainability Product Scorecard Criteria • Material used • Energy used


Suppliers

Suppliers must keep up with industry specific requirements

Supplier Code of Conduct- IWAY ◦ Labor ◦ Working Environment ◦ Payment


Transport Service Providers

Industry Specific Start Up Requirements ◦ Trucks Age(no older than 10 years) ◦ Environmental Performance Update ◦ EPS Score of 100 in Europe, 50 in Russia ◦ Work towards reducing CO2 ◦ Safety


Food Suppliers Requirements for food suppliers deal with

food safety, traceability, testing, and labeling.

One person appointed as responsible for food safety systems ◦ crisis management ◦ recalls ◦ food safety training for all co-workers on a regular basis


Catalogue Suppliers

Comply with the IKEA Catalogue Sustainability Requirements

Requirements that better the environment wood fiber must comply with Ikea wood

requirements ◦ no elementary chlorine used for bleaching processes, all transport of fiber, pulp, and paper must be documented


Co-Worker Policies Co-Workers are most valuable Resource,

Want to ensure safe and healthy work environments

The managers are to lead by example and to live and explain the Ikea values. ◦ togetherness ◦ humbleness ◦ simplicity ◦ cost-consciousness ◦ common sense


Community Involvement

Fully engaged in communities where they do business

Help in immediate humanitarian relief efforts during major emergencies

Organizations must be approved by Ikea managers ◦ Charity Policy and Community Involvement Guideline



PERFORMANCE FRAMEWORKS •Budget (sales/production/purchasing/ops/SGA)

•Balanced Scorecard

•Economic Value Added (basically profit-cost)

•Quality Management

•Customer Value Analysis

Performance Measures


PERFORMANCE MEASURES Customers

Stakeholder

Strategies

Operations

Capabilities

CUSTOMER SATISFACTION CUSTOMER RETENTION FINANCIAL RETURNS TO STAKEHOLDERS STAKEHOLDER RETENTION AND BEHAVIOR MARKET POTENTIAL MARKET GROWTH RATE MARKET SHARE CUSTOMER ACQUISITION CUSTOMER PROFITABILITY STRATEGIC GOALS & OBJECTIVES PRODUCT/SERVICE QUALITY PROCESS QUALITY AND CAPABILITY WASTE PRODUCT/SERVICE COSTS ORGANIZATIONAL CAPABILITIES INFRASTRUCTURE CAPABILITIES STAKEHOLDER CAPABILITIES


• 5-7% increase in Middle East Market Share • Increase Customer Profitability 5% • Increase Customer Satisfaction Rating • Increase Customer Retention • Improve Stakeholder Capabilities though

various strategic partners • Reduce Product Costs by 5% • Remain within Budget for full fiscal year

FY 2013 Goals for Success

STONEHILL COLLEGE

IKEA in the Middle East International Management Plan

Peter Caruso, Brendon Dempsey, Brendan Dickinson, Lynley Joynt, and Kathleen Luckey Professor Boyd 29 November 2012

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Executive Summary

This plan centers on the concept of managing IKEA stores in the Middle East. In the first section of this management model, a brief overview of the company is provided. This includes the company’s highlights, history, store concept, their Chief Operating Officer, and future goals. Organizational charts are provided, one being a chart showing the corporate structure, and one depicting the hierarchy starting with the CEO and tricking down to the Middle East division. The next section discusses IKEA’s international management strategy which is followed by an organizational chart. To truly understand the international management strategy one must consider the overall goal for the company. The company hopes to provide home furnishing to as many people in the world as possible at the lowest cost possible. IKEA has developed their international management strategy to allow them to take every measure possible to reach this goal. As it turns out, the best way to reach as many people as possible is to keep things simple. The company has put itself on a strict regimen of standardization since its inception to allow itself to meet this goal all over the world.

When one takes a detailed look at IKEA they will notice that standardization is everywhere; not just in their furniture which is designed to appeal to universal tastes but also in their corporate structure and policies. In many of the countries IKEA operates in, the corporate structure remains largely unchanged. There are many considerations that must be taken into account when expanding operations to the Middle East. On the legal front there are three different types of laws to be considered: labor, financial & regulatory, and political. Apart from laws, there are some key macroeconomic issues to be addressed in the Middle East, as well as cultural factors. The geography of the Middle East makes it a hot spot for oil production and trade is critical. Economically, the MENA region, that being the Middle East and North Africa, are not members of world economic organizations. Cities that are well developed can be costly for expatriates living there. The Middle East has been deemed “politically explosive” due to corruption and terrorism. There is a very unified and traditional culture, so demographically the workforce is not diverse. When creating a management plan, the industry in which IKEA operates and the competitors it is up against have been important considerations, as well. Management must be aware of how to motivate and direct employees given all of these differences.

IKEA is trying to reach their sustainability initiative of having the IKEA business have an overall positive impact on people and the environment. They achieve this by focusing on the best interests of the child, worker, and environment. They start with making sure their products and materials are safe using the IKEA sustainability product scorecard criteria. The suppliers of IKEA must keep up with the industry specific requirements of IWAY, providing healthy and safe working environment because IKEA expects suppliers to respect fundamental human rights, and to treat their workers fairly and with respect. IKEA’s transport service providers are to keep up with the supplier code of conduct in order to work towards a better environment. Food Suppliers and catalogue suppliers must keep up with IKEA’s Sustainability requirements to ensure the best for their customers and the environment. IKEA considers the co-workers to be their most valuable resource and aspire to provide safe and healthy working conditions to promote the growth of the company. IKEA participates in many organizations as well as being fully engaged in the local communities of where they do business. The managers must be ready to lead and make decisions that ensure a positive impact on the people and the environment. Success & Performance Criteria: IKEA Middle East intends to perform an extensive analysis of its current performance based on (5) main criterion: Customers, Stakeholders, Strategies, Operations, and Capabilities. By analyzing various measures, IKEA Middle East hopes to gain a better understanding of its core competencies and position itself for future success by achieving the following in fiscal year 2013:

• 5-7% increase in Middle East Market Share • Increase Customer Profitability 5% • Increase Customer Satisfaction Rating • Increase Customer Retention • Improve Stakeholder Capabilities through various strategic partners • Reduce Product Costs by 5% • Remain in Budget for full fiscal year

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Company Overview

Company Highlights Name: IKEA Location: Headquartered in Delft, Netherlands Company Annual Revenue: €2.97 billion (2011) Company Annual Sales: €24.7 billion (2011) Number of Employees: 154,000 co-workers globally Type of Business: Home furnishings and household goods Company Description

Ingvar Kamprad founded IKEA in 1943, using his initials, the name on the farm in which he grew was born, Elmtaryd, and a village nearby, Agunnaryd for the acronym. At the start of his company, Kamprad sold everything from pens and wallets to nylon stockings by going door-to-door and selling directly to his customers. By 1945, IKEA began running advertisements in the local newspapers in Southern Sweden and there were the beginnings of a rudimentary catalogue. Furniture first came into the IKEA product range in 1947, and by 1951 was the sole focus of the company. The first IKEA furniture catalogue was published that same year and two years later, due to competitive pressure, a showroom was opened so customers could look at the furniture before making a purchase. In 1955, IKEA began designing their own furniture which allowed the company to focus on low prices and improve product function which ultimately led to the success of the company. In an effort to reduce costs even further, IKEA began designing their furniture to be flat-packed. With such success, IKEA began opening retail outlets first in Sweden, and then branching out to all over the world.

Today, IKEA is the world’s most successful mass-retailer of Scandinavian-style home furnishings and other household goods. Their mission statement is quite broad stating, “Our vision is to create a better everyday life for the many people” but back this statement up with their business idea of “offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”1 In order to do this they boast 338 stores in 40 countries and play host to over 776 million shoppers every year.2 As a company, IKEA aims to lower prices across their offerings by an average of two to three percent each year, with its signature cost cutting strategy being the flat packed product that customers assemble at home. Yet, unlike some competitors, IKEA has a focus on sustainable innovation and business growth through their “low price but not at any price” internal mantra.3 As mentioned above the company designs its own furniture, which is made by close to 2,000 suppliers in more than 50 countries around the globe. Finding the right manufacturer for each product is a key component to IKEA’s success. Purchasing managers often seek out seasonal manufacturers with spare off-season capacity. For example, they had sail makers make seat cushions, window factories produce table frames, and ski manufacturers build chairs in their off-season.4 This, along with the simple Scandinavian design of their products, allows IKEA to keep a low-cost strategy.

IKEA stores are usually large building with older ones being blue with yellow accents, and newer ones using more glass and skylights to both cut energy costs and boost the morale of workers. Most retail outlets are designed in a one-way layout leading encouraging customers to see the store in its entirety. When shopping here, customers will first walk through the furniture showroom making note of their selected items. The customer then collects a shopping cart and proceeds to an open-shelf market hall for smaller items and then visits the “self-serve” furniture warehouse to collect previously noted showroom products in the famous flat pack form. The vast majority of their retail centers are located just outside city centers where the land is cheaper and there is more traffic access. Another feature of the IKEA stores is the unusually long opening hours. Most are in operation 24 hours a day with restocking and maintenance being carried out throughout the night. Public store hours also tend to be much longer than other retailers, with many outlets staying open well into the evening in many countries. IKEA Saudi Arabia has some of the longest opening hours worldwide, being from ten in the morning until midnight, seven days a week. Many stores are also adding the added convenience of restaurants, food markets and children play areas called Småland so customers can get everything they need at IKEA without breaking the bank.

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Currently, President and Chief Executive Officer Mikael Ohlsson heads IKEA. Ohlsson started with IKEA in 1979 in the carpet department in the Linkoping, Sweden store.5 Before starting his assignment as CEO in September 2009, he also served as a store manager, country manager, marketing manager, and manager director for IKEA in Sweden. Ohlsson was also the regional manager from 2000 up until 2009 when he became President and CEO. He has also been a part of IKEA’s executive management group since 1995. It was just recently announced that after 34 years with IKEA, Mikael Ohlsson will be stepping down in September 2013 and will be replaced by company veteran Peter Agnefjall. The new CEO is now currently IKEA’s Swedish President and has been an executive at IKEA in some capacity since 1995.

This new CEO has many goals for IKEA that will take place over the next couple of years. Agnefjall has already said that he will aim to boost growth even further in the coming years. It has been planned for the 2014 to 2015 year, IKEA would increase the pace of new store openings to twenty to twenty-five per year first and foremost in existing markets.6 This was an increase from both the 2010-2011 and the 2011-2012 years where IKEA opened seven and eleven stores respectively. In the past three to four years they have had very good sales growth, but it has mainly been from existing stores. Because the state of the global economy, IKEA had previously held back on store expansion, but are now ready to increase the pace again. Starting next year, IKEA plans to open three new stores in China every year, being that China is the largest market in the world. Sales and revenue have only been increasing despite the global financial crisis. For the most part furniture retailers have been hit hard because consumers have cut back on their discretionary spending, but IKEA is relatively recession-proof since their budget-friendly furniture and home accessories attract more cost-conscious consumers in tough times. The present and future goals of IKEA seem to align with one another for the most part. Both plans focus on sales growth and cutting costs which get passed along to the consumer. The main difference between the present and future goals is that going forward, IKEA plans to expand more rapidly.

Company Organization Chart

IKEA Group of Companies Organization Chart (See Appendix)

Total Company Organization Chart (See Appendix)

International Management Strategy

IKEA is the largest retailer of home furniture in the world. Their reputation is one of low cost furnishings that improve the lives of consumers. This has been their mission and their vision for years. Their concept and vision statement was developed by their founder, Ingvar Kamprad. It states that IKEA strives to “create a better everyday life for the many people by offering a wide range of well-designed functional home furnishing products at prices so low that as many people as possible will be able to afford them”.7 Now, as the company continues its global expansion, this vision remains at the heart of their strategy.

The Middle East is a time tested market for IKEA, who opened their first store in Saudi Arabia in 1983. They experienced considerable success and now operate three stores in the country. Beyond these stores, IKEA operates in Kuwait, Israel, ant the United Arab Emirates.8 In fact, the company has been operating in the Middle East longer than it has operated in the United States where they opened their first store in 1985.9 The company has simultaneously expanded all over the world. Keeping the company on track throughout this expansion has meant an international management strategy that is well thought out and carried out. There are a few key pieces of this strategy, some which can be taken directly from the vision statement above. This includes their product strategy and pricing strategy. Perhaps the most important piece of their strategy is standardization which the company feels enables their pricing and product strategies. Every aspect of the strategy is built off the ideals of Ingvar Kamprad and come from his background growing up in southern Sweden.10

Since the company’s inception, the use of standardization has been prevalent. It is a cornerstone of their international management strategy and allows the company to keep product costs low so that prices stay low. It is a strategy that has worked for them in the past and should continue to be employed as the company furthers its Middle Eastern expansion. Standardization involves the degree to which a product or service must be modified to

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fit the needs of the market it is being distributed to. There are four primary choices a company can make that deal with the degree of standardization. A company can choose to launch a product without any modification into a market, they can modify a product to fit local preferences, or they can design new products for new markets. Lastly, they could choose to create a universal product which combines all preferences into one product design that is flexible and marketable in large array of markets. This universal catalogue offering is the same model the designers for IKEA use.

Time has shown that there is a demand for this sort of universal catalogue that IKEA offers. This strategy has been used in practically every operation they have started with very minimal alterations. For as long as IKEA can, they should continue to use the standardization model as it provides at least four main benefits. First and foremost, the company experiences a large cost savings. Savings come from the decreased importance of research and development. The company also realizes a time savings finding that it will not need to spend as much time researching the product and developing a marketing plan for it. Things become a sort of “plug and play” scenario where the company simply has to begin distributing. Additionally, standardization can be good for the long term health of the company since in most scenarios the company can benefit from economies of scale. Lastly, the company becomes able to reach more markets and with a more rapid pace than competitors. Products like the ones IKEA produces need only be shipped to the new location and can immediately begin selling.11 When IKEA enters into the Egyptian market they will be able to save time, money, and effort by being able to distribute products they have already developed that have proven to have a universal demand.

IKEA should also plan to maintain their current product strategy when entering Egypt and other Middle Eastern companies. This strategy includes using universally-standardized products across different regions. As discussed above, standardization leads to a number of cost cutting benefits. It also leads to consistency through the supply chain.12 Many of the suppliers IKEA employs have been manufacturing for the company for years. This means they have a relationship that has been developed thoroughly. At this point, the supplier knows exactly what IKEA is expecting from their products as far as quality, durability, and costs are concerned. The lower number of products in the catalogue as a result of the product strategy also allows IKEA to limit the number of suppliers it has since there will be fewer specialized parts. A decreased number of suppliers in the supply chain will lead to a decreased probability of experiencing issues along the supply chain. Another aspect IKEA has incorporated into their strategy is a type of grouping of products. The company understands that certain styles will be somewhat less successful in different markets. To counter this, IKEA has generated a group of products, a “Base Range”13, which is the group of products that will be sold everywhere, and a second “Extra Range” which includes product offerings that have been modified to meet the needs to specific markets. While this may sound contradictory to the strategy previously discussed it is actually quite fitting. The products themselves are unchanged; IKEA just makes a decision on whether or not a store will carry the merchandise. Another major part of IKEA’s product strategy is the company’s flat-pack merchandising system, which IKEA was the first to introduce.

Flat-pack merchandising involves packaging goods unassembled, selling furniture in boxes, and having customers assemble the goods at their homes or offices. This method has implications across the company. First, it means the manufacturing process strictly involves providing the basic elements. There is no need for an assembly team which in itself leads to instant savings. Furthermore, the company saves on shipping. Since all of the furniture pieces are compressed into flat stacking boxes, more units can fit on a single shipment which helps shrink distribution costs, which can be a crutch for international firms. Lastly, it allows the company to more efficiently store inventory, another cost-reducing benefit. The company should maintain this strategy in the Middle East since in cities (where IKEA typically places its stores) space is at a premium.

The company should also plan to utilize their current pricing strategy. The strategy is focused on providing products at a low cost. As discussed, the standardization policy and product strategy are all designed to cut costs leading to a cheaper price for customers at the register. Therefore, one is able to see how important this piece of IKEA’s strategy is to the firm. IKEA has made this an integral part of how they conduct business so that “as many people as possible will be able to afford them.”14 When one considers the benefits of these things, as well as the flat-pack, assemble at home, feature, one will find that IKEA is able to offer products at prices 30-50% lower than other companies who offer fully assembled furniture pieces.15 IKEA tries to continue their standardization

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practices through their pricing strategy as well. It is felt that standardized low prices around the world will allow the company to gain the maximum possible market share. It also helps to ensure that the IKEA image is universal all over the globe. Their market share number turns out to be about 5-10% which is substantial considering the number of competitors in the furniture industry.16

Another key piece of IKEA’s strategy comes from the layout of the company’s store. Rather than simply providing the goods to customers the stores provide a shopping experience. Once again, this layout is mostly standardized. It can change based on store size requirements and also culture requirements (such as a prayer room in Middle Eastern countries). It is one of the most unique pieces of their marketing mix.17 Though the company sells furniture, IKEA tends to look at itself as a service provider since they provide a unique shopping experience to customers rather than just goods.18 Many IKEA stores also include an in-store restaurant that typically sells Swedish cuisine in homage to their company roots. Shopping at IKEA is unlike shopping in any other store. Customers walk through the building which has furniture set up as it may appear in a home or office. By doing this, IKEA believes it providing shoppers with ideas and acting as a styling consultant, which is seen as a service.

As one may notice, standardization is relied upon heavily by IKEA. However, this idea extends beyond just the products and pricing. Standardization is used in developing the company’s policies. It helps to mold the company’s communication and marketing strategy and also the workplace standards and policies. Much of how IKEA spreads their message is through the company’s catalogue. This form of marketing communication takes up a large majority of the company’s marketing budget. The company doesn’t spend extra time or money developing individualized catalogues for individual regions. Instead, the same catalogue goes out to all corners of the IKEA empire, despite cultural differences. Issues can obviously arise using this method, and one particular instance involving Saudi Arabia, will be discussed later in this report. Up until this point, IKEA has had far less in invested in marketing channels like the internet and television. However, in more recent years, the amount being dedicated to these channels has increased.19 Having a universal message like this facilitates managing stores and the company’s image. Every worker in the company will be on the same page since the message changes very little if at all country to country.

Another piece of IKEA’s management strategy that is important to look at is it’s pact with employees, known as IWAY. Like every other piece of the international management strategy, it is standardized. IWAY is a policy that was introduced in 2000 and promotes good working conditions for all co-workers and suppliers. The IWAY program also promotes environmental consciousness throughout the supply chain. “Co-workers” is the term that IKEA has chosen to use in place of employees. This is done consciously to reflect IKEA’s way of doing business, including shared values, like cost-consciousness and simplicity.20 IWAY also encourages all co-workers to seek out opportunities to advance themselves and further develop their skills. However, as is discussed in the course text, this can be difficult for individuals in some cultures. The idea of furthering oneself and developing their own personal skills is a key piece of the achievement motivation theory. This theory says that individuals have a desire to achieve for their own benefit. Even though IKEAs policies to this point have reflected a sort of collectivist drive, this one particular policy shows a more individualistic foundation.

The culmination of these many aspects allows IKEA to accomplish the goals set forth in their vision statement. We see that the company seeks to “build a better everyday life” for its consumers by providing the unique shopping experience that they do, including design and decorating tips and suggestions. We also see that the company hopes to provide this better life “for the many people by offering a wide range of well-designed functional home furnishing products,” as evidenced by their universally standardized designs. Ultimately, IKEA strives to keep “prices so low that as many people as possible will be able to afford them,” and this is the most heavily relied on aspect of the IKEA strategy.

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International Management Organization Chart

See Appendix.

As has proven to be the case with much of IKEA, standardization reigns supreme even within the corporate structure of the company. Operations in the Middle East will likely follow the same structure that exists throughout the rest of the company. The process is streamlined and efficient and is another way for the company to accomplish its vision. One of the major considerations that will be made in the Middle East that with be different than in any other region is the role of gender in the workplace. In countries like Saudi Arabia, government policies and regulations are based off of religious customs that are deeply embedded in the culture. These customs have laid out a clear boundary between women and work. This is something that will be discussed later in the report but it is important to note that laws in Saudi Arabia prohibit women from operating vehicles which would greatly inhibit a woman’s ability to get to and from work. It can be expected that this gender gap will exist in neighboring countries.21

Since IKEA’s structure focuses on the core aspects of the firm, it looks as though standardization will pay off. There are a number of extraneous branches of business that could certainly find their way in to the structure of IKEA but this would go against the company’s vision. It would also conflict with one of the company’s main ideals which is a focus on simplicity. For these reasons, IKEA’s management structure fits well for the firm. The structure fits within the value structure of the company which serves to further their business model.

International Management Issues

Key Laws

Labor Laws

When it comes to acquiring a workforce, fixed term labor contracts are not terribly strict, although employers will use their discretion and may not always uphold legal provisions.22 It is not unusual to find discrimination against women in the hiring process, if not for the fact that they are considered subordinate to men, then because maternity leave can be costly to an employer. Those who are hired will not expect to have any collective bargaining rights as employment protection legislation does not exist.23 The cost of formally firing a worker is due to the procedural implications, including severance payments, which are legally required.24 However, in Saudi Arabia, Kuwait and United Arab Emirates where IKEA has locations, employers are not legally bound to notify a member of staff of their termination before it occurs, nor must they offer another employment opportunity.25 In the MENA region, employers will often disregard policy and deny members of staff the rights they supposedly have, creating an overarching environment of uncertainty and instability.

As a multinational corporation, IKEA may be able to protect its workers more so than other organizations within the same countries, but it should still be aware of customary policies. Civil service and public service firms are subject to labor regulation, but many other industries, such as oil where foreign labor is involved, will not offer protection to employees.26 Holistically, protection can be restricting to a business in the sense that it typically only applies to “insiders.”27 Where protective measures do exist, they are often not enforced. For example, Saudi Arabia could legally set a minimum wage but as chosen not to do so, along with neighbors Kuwait and United Arab Emirates.28 Employees are accustomed to working around 10 to 11 hours per day, 6 days per week.29 Overtime, however, is limited and compensated in these countries, especially when interfering with religious obligations such as Ramadan.30 After 20 years of employment with an organization, workers in the aforementioned countries should expect just 3 weeks’ vacation time.31 If IKEA seeks to take a more liberal approach to its labor policies, as it surely has with its Western operations, it must be wary of the opposition these ideas could receive.

Financial Laws and Regulation

The world’s constant high demand for oil to run virtually all operations has created a large concentration of wealth in the Middle East and shaped its modern character immensely. In recent years, many countries have

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adapted financial regulations to provide greater structure for a successful industry and growing economies. In Dubai, for example, the Financial Services Authority took a big step in 2007 when it launched a hedge fund code of practice; additionally, the International Financial Centre now conducts regulations in English and has made the court system more available.32 Overall, banking in the United Arab Emirates is highly controlled because “banks must have fully paid-up capital of at least AED 40 million, and must place a tenth of their net annual profits in a special reserve until the fund amounts to half the capital.”33 Evidently, borrowing is well-monitored in the United Arab Emirates, making loans and credit more reliable on the whole. In Saudi Arabia, the Capital Market Authority directs business and was one of the first regulatory institutions of its kind back in 2003.34 Nations of the Middle East have come to understand the importance of financial supervision to ensure a robust economy that can attract both domestic and foreign investors.

Political Laws

Having originated in Sweden, IKEA’s business model and management structure were subject to very different macroeconomic factors at their inception than they are now that the company has established itself internationally. IKEA had to adapt its Middle Eastern locations significantly in order to accommodate the culture and customs of the countries in that region. First, the basic system of law is entirely different. Most societies, with the exception of Israel, are based upon Islamic law. Where that is the case, the governing rules are “derived from interpretation of the Qur’an and the teachings of the Prophet Muhammad.” 35 It is said that one’s religion ought to be their way of life, meaning that their actions should reflect it; for countries operating under Islamic law, justice and fundamental values come directly from religious text and philosophy. Although civil law exists alongside Islamic law in many Middle Eastern nations, it is the religious law that receives precedence.36 This is socially accepted because it is so ingrained in the minds and lifestyles of the people. For IKEA, upper management must respect the beliefs and systems backed by Islamic law when running operations in Kuwait, Saudi Arabia, and the United Arab Emirates in order to be accepted into society.

When it comes to laws relating directly to the operation of businesses, indigenization may be mandatory and few laws can protect from the risks of expropriation. Indigenization laws can be found in countries all over the world. They mandate “that nationals hold a majority interest in an operation.”37 The idea is that locals want to maintain control and avoid a loss of their own business. Indigenization can also be strategic in the sense that it allows natives to get in on a foreign company’s “know-how”, which could later be copied and used against them. If the host country is skeptical of new foreign operations, expropriation could occur. Expropriation “is the seizure of businesses with little, if any compensation to the owners”38 and tends to occur in developing countries that are hesitant to welcome outside influence. Organizations that meddle in the transportation or utilities areas are often targeted because those industries play such a large role in the well-being of the country’s people.39 In order to protect against these risks, multinational corporations like IKEA should work with local partners to improve relations, but hold off from introducing critical or groundbreaking technology until trust is built and macroeconomic conditions are sound.

Key Considerations

Industry

Like in any other part of the world, furniture is a necessary part of a home. The population in the Middle East is extremely family-oriented, and as such, much time is spent in the home, so furnishings must be comfortable and aesthetically pleasing. With a long and accomplished history in which art was integral, traditional patterns and designs are still appreciated today.

Geography and Demographics

The Middle East North Africa region is an area with a rich history and a rich economy when it comes to petroleum. Surrounded by several major bodies of water, the area is abundant in natural resources and trade is a crucial part of the economy. Arabic is used for written communications, but many different languages can be heard, including a fair amount of French and English.40 The overwhelming majority of natives are Muslim;

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although with five major sects in the religion, tension and disagreement are not uncommon.41 The percentage of the population practicing Islam ranges from 75 in Lebanon to nearly 100 in countries like Saudi Arabia.42 Having such a heterogeneous people when it comes to religion means that the basic principles and philosophy of Islam are deeply rooted in the culture and ultimately reflect on how business is conducted. With a growing population that is expected to reach 550 million by 202543, the MENA region has much untapped potential for multinational corporations, so long as they have a thorough understanding of what to expect before they get started.

Economic

The economy in the Middle East is primarily based upon oil production, and that reliance dictates much of the policy that regulates the region. Like most countries in Europe have come together to form the European Union, several countries in the Middle East have joined forces to create the Gulf Cooperation Council, including the nations in which IKEA operates: Saudi Arabia, Kuwait and the United Arab Emirates. This group works together to grow the economy of the area. Together, member nations are progressing to achieve global standards and are in talks about a common currency that would create more open markets in the Middle East. Saudi Arabia is the only country in the region to be a member of the G20, a group of finance ministers and other government agents from 20 different countries around the world that seek to promote trade and cooperation that can grow the economy. Saudi Arabia’s presence in the G20 has put the country on good terms with member nations, and has also given it considerable influence in the MENA region. Saudi Arabia is setting an example for other Middle Eastern countries by implementing its own regulations; still much work is to be done until the World Trade Organization and International Monetary Fund will view the Middle East in a more positive and worthy light.44

Financial

Although better regulations are being put into place and countries in the MENA region are creating policies that major world economic organizations support, there are still financial issues of which companies must remain aware, both for themselves as entities and for their expatriate employees. As of July 2012, the cost of living in the Middle East could be rather expensive, at least in major cities. The United Arab Emirates has two cities, Abu Dhabi and Dubai, in the top three in the region.45 Relatively speaking, these cities rank at roughly the same level as Rome, San Francisco and Montreal.46 Israel, Kuwait, and Saudi Arabia each have at least one city in the top ten.47 It is logical that IKEA’s locations would be in these four countries; if they are more expensive to live in, consumers probably have higher buying power and are more willing and able to spend their money to furnish their homes. Expenses factored into these costs include: housing, education, healthcare, transportation, clothing, furniture, communication, groceries, recreation, and personal care. Fortunately for IKEA, approximately 5% of expenditure was allocated to furniture and appliances in this survey.48 Another potential problem is the transfer of money. A large amount of banking is done online now through EFTs, so if Internet access is spotty, limited, or even monitored, alternatives should be thoroughly investigated. A firm starting operations in the Middle East should determine how to pay expatriates; currency exchange could be difficult and employees may have a hard time getting access to their money in the short-term.

Political

As evident in labor policies previously discussed, corruption is a huge problem in all aspects of business in the Middle East. Transparency International, a non-governmental organization based out of Germany, studies corruption in countries all across the world and assigns rankings and scores based upon its findings. An examination of the numbers calculated for the four countries in which IKEA operates from 2010-2011 shows that the issue of corruption is one that cannot be ignored. The United Arab Emirates scored best on the Corruption Perceptions Index, ranking 28 out of 183 countries studied.49 Control of corruption was 80%, meaning that in 4 out of 5 cases elites and private interest groups did not interfere with normal business operations for their own benefit.50 Israel is next, positioned in 36th.51 Israel looks good relatively speaking with 5.8 points out of 10 on the CPI and control of corruption at 72%, but business was not as transparent as it could be.52 Following Israel is Kuwait, which had a rank of 54 and a score of 4.6 on the CPI in 2011.53 With 67% control of corruption, the country fares well in the area.54 Looking at Saudi Arabia, the picture is a bit more difficult. The nation ranked 57 on the CPI with a score of 4.4.55 Not surprisingly given the importance of petroleum and influence of the wealthy,

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control of corruption was calculated to be 62%.56 Transparency International’s findings demonstrate the need to be wary of corruption when conducting business in the MENA region.

There are three major political risks for companies to consider when locating abroad: transfer, operational, and ownership-control.57 Given the authority of local governments, multinational companies must be wary of moving resources in and out of countries in the Middle East, as well as possible constraints on operations. Although it is not necessary, having a local business partner may deflect government involvement, but it is crucial that the associate is trustworthy. IKEA has made a horizontal investment in each of its locations, meaning that it produces “the same goods or services as those produced at home.”58 The company manufactures its furniture, but it does that outside the region, so it is viewed as part of the service sector of economic activity.59 Due to the nature of IKEA’s business, it should have less trouble operating in the Middle East than other firms.

Corruption and turmoil in the Middle East are a result of government policy and other political issues, including terrorism. The MENA region is viewed as “politically explosive” because there is significant discontent among the people and a new regime could easily take hold, which in turn would affect investments and could lead to major changes in policy.60 The government is extremely influential, especially in Saudi Arabia. With a monarchy, “the king makes all important decisions but is advised by ministers and other government officials,” and there are no political parties.61 As the world’s largest exporter of oil, the lucrative nature of this industry gives Saudi Arabia a lot of influence in the area, including over its own people who are not the beneficiaries of the large inflows of revenues. Thus, any firm interested in starting a new operation in the Middle East must be aware of who controls policy and how their influence is exerted in other aspects of life.

Unfortunately, terrorism has become a major political concern in recent years, and some of it stems from the Middle East. Terrorism is defined as “the use of force or violence against others to promote political or social views. The ultimate goal of the violence is for government and citizens to change policies and ultimately yield to the beliefs of the terrorist group.”62 Since Western values are not widely accepted in the area, multinational corporations must be careful, especially if their brand image is associated with wealth and status. Typically, attacks on businesses are either religiously motivated and “carried out by individuals holding very strong core beliefs, or they are amateur and lack a clear set of objectives.63 If a foreign company breaks in to an industry and acquires a lot of power or starts to initiate change, it is more likely to become a terrorist target.64 When youth in these countries are uneducated and not afforded the opportunities of the affluent, terrorist organizations can easily rope them in and offer them “a better life” in exchange for the honor of defending their country and religious beliefs. A good defense for foreign companies setting up in the Middle East is a sound security system; still, basic respect for existing values and norms will prove very helpful and costs nothing.

Workforce Demographics & Labor Market

Along with the basic governing principles in the Middle East, countries have their own approach to labor legislation that IKEA must abide. According to a report released by the Social Protection unit of the World Bank, labor regulation can be a hindrance to nations in the Middle East North Africa, or MENA, region. In 2008, the rate of employment in the area weighed in at 46%, compared to the world average of 60.3%.65 There are two explanations for this; the first being that women make up a large portion of the population but are excluded from the workforce, and the second being that as more young people seek formal education, not enough high-skill jobs are being created because of the influence of oil production.66 Thus, when hiring employees locally, IKEA will not have a diverse applicant pool among natives since the majority of people working are older and probably more traditional men. In recent years, diversity in the region has increased as an influx from poor Arab countries, as well as non-Arab countries like India and Korea, has moved in to capitalize on opportunities in OPEC members.67 In the United Arab Emirates, for example, nearly seventy percent of the population is foreign.68 The volatility that comes with this immigration can be challenging for human resource managers.

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Cultural

When it comes to culture, Germany where IKEA is headquartered and the Arab World could not be much more opposite from one another. The chart in the Appendix compares both cultures using Hofstede’s Cultural Dimensions.

Competition

Due to the nature of Middle Eastern culture, brand loyalty exists in most industries because people are wary of change and tend not to be receptive to foreign companies looking to challenge the status quo. Therefore, competition is not a major obstacle, and there are few regulations to encourage it. In terms of other companies in the home furnishing industry, IKEA has a few competitors from the United States, including Thomasville and Crate & Barrel. While Crate & Barrel is only present in the United Arab Emirates, Thomasville has several locations in Saudi Arabia, as well as in Kuwait and other nearby countries. IKEA can differentiate itself on price, location, and proper adaptation to customer preferences in the region.

International Management Policies and Processes

From the company’s beginnings, IKEA’s strategy was to focus on concentrated cost reduction in a way that elevated their business to a higher form. Ingvar Kamprad, the founder stated early on that wasting was not an option at IKEA. They believed that expensive solutions to problems were generally the work of mediocrity and had no respect for a solution until they knew what it cost. As the global recession hit the core markets of IKEA in 2008 especially hard, they had to set out on a new strategic path. Their new strategy was to offer even lower prices to consumers, while positioning themselves for long-term growth. They were able to accomplish this new strategy by a simple method; they focused relentlessly on separating good costs from bad costs, which men productive investment from unnecessary expense. After figuring this out, the company invested 100 percent of its net savings on building up the essential qualities of its business or lowering the price of its products. To date, the results have been impressive, with about 10 percent annual top-line growth as well as having stable margins, even with the issue of price reductions and economic pressure of the past few years.69 This strategy initiative was able to be started by having set policies and processes that the company had to follow. As a company, IKEA has always been clear with their goal which is to create a better life for people. They offer home furnishings at low prices so that as many people as possible can afford to buy the products. They are very single minded about cost reduction. When the recession hit their policies were to offer affordable enough home furnishings when times were rough for their customers. During this period, their policies to lower their costs were to turn every euro they made back to lower prices for their customers instead of reducing their bottom line. They also chose to not cut costs but make structural changes and rethink their practices because just focusing on cutting costs only weakens a company according to IKEA.70

The changes to their policies they had to make to accomplish their strategy were first to keep investing in

their retail stores, not only new stores, but also expanding and improving their existing stores. They think that it is important to improve the way they serve the existing customers as well as it is important to take on new customers. They had four points that they had to become very good at to make this possible. The first point was lowering their operational costs. They had to have low costs wherever they could which meant they had all employees travel in the economy class and stay in moderately priced hotels. They also had no fancy offices. The second point was they had to become better at increasing volume because it allows them to lower the cost of their goods and operating costs. They needed to become better at handling people and products. With fewer than 400 stores, they had to push an extreme amount of volume through each location. Third, they had to develop a better functioning supply chain. This has become a major focus over the years for IKEA because one of their biggest challenges is maintaining the stock of their items. Because they design and produce most of their products themselves, they had to look at each part of the company and each process as a way to lower costs. Fourth, they had to empower their employees. They tried to keep the center of the company relatively lean. They did not want to make decisions centrally, but make the decisions in the stores or factories that are closer to the customers and

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suppliers.71 They must have a strong group of co-workers who can make the right decisions to support their strategies.

At IKEA they realize that their business has an impact on social and environmental issues, in particular

people’s working conditions, as well as the environment, both locally and globally. They strongly believe that they can do good business while being a good business. This is a pre-condition to their future growth, a growth that will be achieved along with suppliers that share the same vision and ambition. Their guiding principles when working with these issues are:

• What is in the best interest of the child? • What is in the best interest of the worker? • What is in the best interest of the environment? Through these principles they continue to follow towards their sustainability direction; “the Ikea business

shall have an overall positive impact on people and the environment”.72 One of Ikeas main focuses is on sustainability. The IKEA range consists of about 9,500 home furnishing products. These materials and products are subject to extensive testing. IKEA works proactively to stay ahead of the health and safety standards and regulations. They want their customers to confidently and freely choose among all of their products knowing that IKEA is committed to sustainable practices. The IKEA sustainability product scorecard criteria which each of their products must follow consists of, more from less, renewable material, recycled material, environmentally better material, separable and recyclable material, product quality, transport efficiency (products per container), energy efficient production, renewable energy in production, raw material utilization at suppliers, and product use (less use of energy and water, and less waste in customer homes).73

IKEA has a relationship with suppliers that ensure the suppliers keep up with industry specific

requirements in which they have a Supplier Code of Conduct which they call IWAY. It consists of legal compliance, where the IKEA supplier shall always comply with the most demanding requirements whether they are relevant applicable laws or IKEA IWAY specific requirements. These following criteria need to be fulfilled before starting up a business relationship with IKEA, no child labor, no forced or bonded labor, no severe environmental pollution, no severe safety hazards, a transparent and reliable system for records of working hours and wages, and insurance covering medical treatment for work related accidents to all workers. The environmental standards are the suppliers must work to reduce energy consumption, prevent pollution to air, ground and water, handle, store and dispose of chemicals and hazardous waste in an environmentally safe manner, and ensure that workers handling chemicals and hazardous waste have the right competence and are adequately trained. IKEA expects suppliers to respect fundamental human rights, and to treat their workers fairly and with respect. The suppliers must provide a healthy and safe working environment, provide health and safety training for workers, ensure their buildings are safe, have reasonable privacy, are quiet and have facilities for personal hygiene, in those instances where housing facilities are provided, pay at least the minimum legal wage and compensate for overtime, base overtime on voluntary agreements, not exceeding legal limits, allow time off and regular breaks, not discriminate on any basis, not prevent workers from exercising collective bargaining activities nor prevent from associating, and not accept corporal punishment, threats of violence or other forms of mental or physical coercion.74

The industry specific requirements for IKEA transport service providers are to ensure that they transport

service providers comply with the requirements in their supplier code of conduct as stated before. The industry specific start up requirements consist of, trucks must not be older than 10 years (5 years for vehicles less than 3.5 tons), completed environmental performance survey with annual update, a minimum EPS score of 100 in Europe and 50 in Russia, and Asia Pacific, and in North America, carriers must be a member of the EPA SmartWay program and have a score of at least 1.0. Other industry specific requirements are, practical plans for reducing CO2 emissions, including annual targets, anti-alcohol and anti-drug policy combined with clear communication, emergency phone numbers to all truck drivers, fire-fighting equipment in vehicles, driver license checks at least annually, appropriate personal protective equipment including safety vests, first aid equipment in all trucks and

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locomotives, appropriate housing facilities, working time capped at 60 hours including overtime per week, and regular rest periods and daily breaks.75

The industry specific requirements for IKEA food suppliers must be followed by IKEA food suppliers. The

first of the requirements deals with food safety, traceability, testing, and labeling. It consists of, a person appointed as responsible for food safety systems, including crisis management, and recalls, food safety training for all co-workers on a regular basis, a Hazard Analysis Critical Control Point System in place, a Global Food Safety Initiative third party approved food and safety management certification, full traceability for all ingredients in IKEA products including packaging material, routines for analysis from raw material to finished products, verified declared shelf life products, verified declared content and nutritional values, and appropriate, legal labels and packaging for all IKEA markets. The general product requirements are no use of genetically modified food ingredients, restrictions on levels of industrially produced Tran’s fatty acids, palm oil only from members of the Roundtable of Sustainable Palm Oil, and restrictions on additives such as AZO colors and MSG. They also require that there be an animal welfare and species protection consisting of no ingredients form force-fed animals and those that have been subject to routine administration of antibiotics or hormones, compliance with specific animal welfare standards that have been approved by IKEA, no fish from endangered stocks, membership in the “Salmon Dialogue”76 if supplying salmon products, and no lobster or tiger prawns/scampi unless certified by an international organic standard.

The final of the industry specific requirements that IKEA has in place are for the Catalogue suppliers. The

catalogue suppliers must comply with the IKEA Catalogue Sustainability Requirements. The key points to the industry specific requirements start with the pulp and paper suppliers. They must comply with each of the following, the origin of wood fibers for pulp and paper must be known, virgin wood fiber must comply with IKEA wood requirements, no elementary chlorine used for bleaching processes, all transport of fiber, pulp, and paper must be documented, use of energy must be documented and energy reduction targets set, use of energy from renewable sources must be reported, and specific limits on emissions to air and water. The artwork and online service suppliers must comply with a procedure to take environmental aspects into consideration when purchasing computers and screens, reuse or recycling/destruction of discarded electronics by authorized companies, and use for energy must be documented and energy reduction targets set.77

IKEA considers their Co-workers to be their most valuable resource, when they grow, IKEA grows. IKEA is

committed to being a good employer for its many thousand co-workers around the world and want to offer a safe and healthy work environment for each individual. IKEA values togetherness, humbleness, simplicity, cost-consciousness, and common sense. They expect their managers to lead by example and to live and explain the IKEA values. IKEA uses “Voice”, a companywide survey to monitor how co-workers view various aspects of their employment. Each year the employees must fill out the survey anonymously to highlight what motivates them and what they are dissatisfied with. Results of this survey help determine what areas to improve. To ensure safe and healthy working conditions all co-workers within retail and distribution have to take a safety training course before starting work. The training includes how to use equipment and machinery, fire and evacuation training, routines to prevent and handle workplace accidents as well as ergonomics. Within each country they have their own safety committee with co-worker representatives, working actively to secure a safe working environment in every location. There is also a risk manager at each IKEA unit who is responsible for local safety routines and drills based on the IKEA Risk Manual. IKEA wants to keep each co-worker informed with what is going on at IKEA. In order to keep access to relevant information easy as well as build strong relations with co-workers, each manager is responsible for ensuring that his or her co-workers have the ability and tools to receive and understand relevant information. IKEA makes communication skills part of the basic leadership training programs as well as offer a number of tools and specialists available to support managers. IKEA has made a web-enabled service available to better reach co-workers, so they can access a range of benefit descriptions, also having a self serve application relating to wages and benefits. News and information about various IKEA activities are accessible through the internet.78

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IKEA makes sure that they are fully engaged in the communities where they do business. They participate in a wide range of activities globally, nationally and locally. To be involved with such organizations, IKEA as a Charity Policy and Community Involvement Guideline that they follow for global, national and local community support. The guidelines show principles and definitions, as well as what kind of projects IKEA prefers to support and with which type of partners they want to be involved with. IKEA has enacted that their individual units be involved in earth hour. During this individual stores pledge support to the environment by turning off non-essential exterior and interior lighting, as well as offer ranges of climate related activities for customers and co-workers. IKEA also has the IKEA Foundation. This foundation provides financial support for programs run by strategic partners, donations of IKEA products, and know how in the form of IKEA expertise. This foundation works in four dimensions. A place to call home: is supporting shelter and safety, as well as love, nutrition, and nurture children so they can survive and thrive. A healthy start: is helping children get a good start and help save lives of children. A quality education: helps to better the education for children. A sustainable family: helps with income for parents to have a regular income so their children can go to school. IKEA follows these processes to help better the communities where they do business. IKEA is very committed to emergency relief to protect children in emergencies. They provide products, investments in recovery, and financial support for children’s rehabilitation and education. IKEA helps in immediate humanitarian relief efforts during major emergencies in developing countries where IKEA retail country operations manage emergency support when needed in their countries and local communities.79 How Policies and Processes Impact IKEA’s Middle East Division

In order to successfully follow the policies and practices that IKEA has for doing business, it is necessary for IKEA management to know how leadership in the Middle East is conducted. Mid level managers in Arab countries were surveyed and found to have higher attitude scores for capacity for leadership and initiative than those from any other countries. The manager’s scores however for sharing information and objectives, participation, and internal control were all significantly lower than the scores of managers in other countries. Recent evidence has found that there is actually a similarity between Middle Eastern leadership styles and leadership styles of Western countries. Western management styles are seen because of the close business ties between the West and oil-rich areas in the Middle East. Organizational culture, level of technology, level of education, and management responsibility of Middle Eastern countries were good predictors of decision making styles.80 The IKEA managers must take this into account and focus on the strong points of Middle Eastern leadership styles while also trying to strengthen the weaker areas. They must tie this in with the policies set in place by top IKEA management. The main focus of IKEA’s policies and practices is on sustainability of not only the company but the environment and communities where IKEA is doing business. Management must keep up with the regulations and health and safety standards that IKEA has set in order to run the business in the Middle East. The management must make sure that customers do not have to worry about the products safety. Managers must keep up with the sustainability product scorecard criteria for each of the products that they sell. Suppliers must be taken into account and the relationship between the managers and the suppliers must be according to Ikeas regulations. They must follow the Supplier Code of Conduct which they call IWAY, where the suppliers must be up to date with and follow the criteria set forth by IWAY. The managers must make sure that the suppliers comply with these regulations set forth by IKEA. The managers have to look for things such as environmental standards being met, as well as dealing with waste, and working conditions must be in accordance with IWAY. The manager’s activities must also meet the industry specific requirements of the transport service providers. They must ensure that the transport service providers also follow the code of conduct set forth by the top IKEA management. The trucks that are used cannot be older than ten years, and they must have a completed environmental performance survey with annual update. The managers of the IKEA must find that the transport providers have a plan in place that will help better the environment. It is most likely that environmental sustainability in this area is not a priority, but in order to be a part of IKEA they must follow the regulations and meet all criteria. Similarly if any food is planned to be served in these Ikeas in the Middle East, they must meet the minimum IKEA standards set forth by management. The managers must combine the particular likes and dislikes

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of the culture in the Middle East with the requirements of food testing, safety, traceability and labeling that are in the code of conduct for food suppliers. Managers must blend these as best they can to account for all the criteria set forth by IKEA as well as being enticing to the Middle Eastern culture. The managers must ensure their customers with food they will like as well as food they can trust. IKEA has set forth criteria for catalogue suppliers that must be met in order to be involved with IKEA. Managers must ensure that the suppliers they are using follow these standards otherwise they will not be able to offer these catalogues to the community. Managers must be ready to make their co-workers their most important resource. They must ensure safe working environments of each individual while leading by example by teaching and living the values of IKEA. These values are togetherness, humbleness, simplicity, cost-consciousness, and common sense. The manager must be familiar with the IKEA Risk Manual because they are responsible for local safety routines and drills. There will also be interaction with a risk manager who will help in this instance. The managers must be ready to participate and be involved in the community in which they are in of the Middle East. They must follow the guidelines and be sure that they are involved in a project that IKEA approves. These managers also must be ready for any emergencies that may happen in the area of business. They must be ready to offer immediate humanitarian support for the surrounding community if they are in crisis.

Flow Chart of International Management Policies and Processes See Appendix. International Management Metrics Report

Performance Criteria for IKEA, Middle East 2013:

Costs: The Middle East division of IKEA will be responsible for establishing an annual budget for the business unit that must be approved by the Board of Directors in Q3 2012. All 2013 projected budget requirements must be submitted to the BOD on, or before, August 1, 2012. Requirements for the fiscal 2013 Middle East budget include the following:

• Sales Budget • Production Budget • Purchasing Budget • Operations Budget • Selling, General, and Administrative Expenses Budget

o Marketing o Human Resources o Legal o Finance Department o New (& Ongoing) Employee Training

Performance of the Corporate Budget above will be judged by the following:

a) Ability to stay within or below the allotted budget b) The return generated by each section of the budget (Measured using common ROI calculations and by

internally using the management frameworks included in this plan)

IKEA’s Middle East division will be analyzed and measured for the following reasons:

• To monitor and control • To drive improvement • To maximize the effectiveness of the improvement effort

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• To achieve alignment with organizational goals and objectives • To reward, compensate, evaluate, and discipline

IKEA’s Middle East division will be regularly analyzed and measured. Middle East management is expected to self-regulate using the following (4) frameworks as needed as tools to internally measure progress and performance:

1. Balanced Scorecard:

• The financial perspective: The strategy for growth, profitability and risk from the shareholder’s perspective.

• The customer perspective: The strategy for creating value and differentiation from the perspective of the customer.

• The internal business perspective: The strategic priorities for various business processes that create customer and shareholder satisfaction.

• The learning and growth perspective: The priorities to create a climate that supports organizational change, innovation and growth.

2. Economic Value Added:

EVA is both a specific performance measure and the basis for a larger performance measurement framework. EVA is a financial performance metric that is directly linked to the creation of shareholder value.

• EVA = (Net Operating Profit After Taxes) - (Capital X Cost of Capital) 3. Quality Management:

Baldridge National Quality Program to improve the quality of the manufacturing and service offerings. The main focus will be on the following (7) items:

• Leadership • Human Resource Focus • Strategic Planning • Process Management • Customer and Market Focus • Information and Analysis • Business Results

4. Customer Value Analysis:

Management is expected to take into consideration the following three equity measures and the impact that past and future actions and decisions will have on them. Maintaining or improving quality of product, marketing efforts, and customer relationships should increase Value, Brand, and Retention Equity respectfully.

• Value equity: refers to the customers’ perceptions of value • Brand equity: refers to the customers’ subjective appraisal of the brand • Retention equity: refers to the firm building relationships with customers and encouraging repeat-

purchasing IKEA Middle East management, on all levels, will understand the following points and ask the following questions on a daily or regular basis to ensure constant improvement and business success. The following (10) questions, and their relating bullet points below will provide insight into various points of improvement that will be required for companywide success. All items are explained in detail in the section titled ‘International Management Success’ to follow.

CUSTOMERS

1. Are we satisfying our customers?

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• Customer satisfaction and dissatisfaction • Customer retention and behavior

STAKEHOLDERS

2. Are we satisfying our shareholders?

• Financial returns to shareholders 3. Are we satisfying our other stakeholders?

• Stakeholder satisfaction and dissatisfaction • Stakeholder retention and behavior

STRATEGIES

4. What is happening to our customer base?

• Market potential • Market growth rate

5. Is our company strategy working?

• Market share • Customer acquisition • Customer profitability • Product/service profitability • External factors that affect customers

6. Are our individual strategies being properly executed?

• Strategic goals and the objectives necessary to achieve them. OPERATIONS

7. Are we serving our customers and stakeholders effectively?

• Product and service quality 8. Are we operating efficiently?

• Process quality and capability • Productivity • Waste • Product and service costs

CAPABILITIES

10. Are we developing the abilities we need to; execute our strategies?

• Organizational capabilities • Infrastructure capabilities • Stakeholder capabilities

International Management Success

Several factors will be examined when evaluating the success of our Middle East division of IKEA. Before outlining the basis for evaluating our regions performance, we will fist note how each countries operations will be broken down an analyzed. The overall IKEA Middle East evaluation will be a combined analysis of each country we are operating in, as well as new markets that we will be opening in 2013 (Egypt).

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• United Arab Emirates • Israel • Kuwait • Saudi Arabia • Egypt (2013)

IKEA Middle East senior management will monitor and take responsibility for the entire division or the Company, while country-specific store and regional management will be responsible for evaluating performance on the store-level and country-level.

With financial performance being the heart of our company’s success plan, ongoing financial performance measures will be taken and evaluated for existing stores and markets. As new markets, such as Egypt, begin to open, a specific set of performance measures will be used to evaluate their initial performance and measure the long-term sustainability of the region.

Success, although a vague concept on its own, will be determined by how well our business unit reacts to market conditions and triumphs over competition. On a macro level, we will evaluate our firm’s market share in both the Middle East as a whole, and in the countries that we are currently doing business. The equity of our firm’s brand, value, and customer retention are also of the upmost importance and should not be lost in the financial measurement of our firm.

In addition, we will continuously gauge and monitor our progress in several key success areas including:

Customers, Stakeholders, Strategies, Operations, and Capabilities

Progress in these key areas will provide IKEA Middle East with a day-to-day set of goals to evaluate and obtain. Improving the way we do business in these key areas will provide consistent improvement in the company that will allow our group to be “successful” and sustainable; and most importantly, align ourselves with our worldwide corporate missions and objectives while still adhering to Middle East-specific cultural requirements.

Customers: A question that both IKEA Middle East Corporate and each individual store can ask every day is “Are we satisfying our customers?” Management can gain insight and begin answering this question though interaction with the end customer and user. As much of the management team will be made up of foreign IKEA executives, not accustomed to Middle East culture, it will be important to practice cultural sensitivity when contacting the customer. Management can authorize a focus group to be carried out or another approach to gaining customer feedback can be used such as survey or in-store observation. Customer retention is another key success item that can be monitored on a micro or macro level by management and by store personnel. Customer retention is an important measure as it allows the company to evaluate how well they are keeping current customers coming back to the store and how often. Customer loyalty programs, customer rewards, or even just keeping in touch with customers through e-mail marketing or other forms of communication can help the firm’s retention rate. It will be important for IKEA Middle East to be aware of each countries cultural norms as to not be too intrusive and to make sure that programs used to retain and attract customers are not viewed at offensive or invasive.

Stakeholders: IKEA Middle East management must constantly be asking “Are we satisfying our stakeholders and shareholders?” The term ‘Stakeholders’ includes shareholders and employees but also suppliers, the community, government entities and any other organization that is important to the company. Financially speaking, it important to provide a return to shareholder (and employees) otherwise they may cease to exist. Generally speaking, improving the business first is the best way to satisfy all stakeholders because as the business grows so does the return for shareholder, the orders for suppliers, the tax revenues for the government, and the value to the community. Stakeholder contribution is also important as it identified the value the various stakeholders are providing and the contribution to various aspects of the business. Stakeholder contributions include products and services that are crucial to business or value generation from key employees. These internal and external measures are very important, especially for the international business.

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Strategies: IKEA’s Middle East business unit must also ask strategic questions and measure their results on a consistent basis. New strategies regarding market potential and market growth may arise from asking the simple question “What is happening to our customer base?” For example, keeping a close eye on Israel’s customer base is important as it provides insight into company and market performance. For example, a rise or decline in customers may not be the fault of the firm, it may have more to do with an impending crisis in the country (such as a war) or a cyclical trend such as the Jewish holiday Hanukah. Strategies must be developed around these trends and to address the markets potential; market share, customer acquisition, customer profitability, and product profitability are all measures that can be referenced on a macro level and can help answer the question of “Is our company strategy working?” On the store-level or country-wide, strategic goals and objectives must be implemented to address individual goals. The success of these goals can be analyzed when answering the question “Are out individual strategies being properly executed?”.

Operations: Every function of the IKEA Middle East organization can find operational success if able to affirmatively answer the question “Are we operating efficiently?” Process quality analysis can lead to improved efficiency and increased capabilities and productivity, increasing the value of a dollar spent in the operations category. Reducing waste is another method used to increase output and reduce costs; two functions that can lead to increased profitability and sustainability.

Capabilities: The core capabilities of IKEA Middle East are what will ultimately allow the firm to carry out its day-to-day tasks in an effort to become successful furniture and home goods provider in the Middle East market. A key question addressing a firm’s capabilities that must be asked by management is, “Are we developing the abilities we need to execute our strategies?” The various capabilities, many of which have been discussed previously in this business plan, are IKEA Middle East’s organizational capabilities, infrastructure capabilities, and stakeholder capabilities. Organizational capabilities are the firm’s ability to manage people to gain a competitive advantage. The aforementioned organizational chart shows the format and protocol for IKEA’s Middle East management team, but more importantly it is the way that the management system and structure works that determines its organizational capabilities. The ability of the managers, the ability to move workflow, knowledge, and understanding though the management chain, and the ability to instruct and manage others all leads to the success of the firm though its organizational characteristics. Infrastructure capabilities refer to the basic physical and organizational structures needed for the operation and the services and facilities necessary for the business to run. These structures include technology in IT, communications, energy, logistics, etc. The ability to carry out the actual processes comes from the firm’s infrastructure and is crucial in any businesses success. Stakeholder capabilities is often times referred to as ‘relationship capital’; it is the value of any and all business relationships and the understanding of how those relationships work together can lead to an understanding of the important capabilities that they hold. Stakeholders might include vendors, suppliers, employees, community members, or even investors and financial partners. The ability to understand their capabilities is important but it is even more important to have an understanding of how to leverage those capabilities in a way that provide value to the firm.

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Endnotes

1 “IKEA Stores Mission Statement,” About.com, accessed 14 November 2012, http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/IKEA-Stores-Mission-Statement.htm. 2 “2012 Facts and Figures,” Inter IKEA Systems BV, accessed 14 November 2012, http://franchisor.ikea.com/FF2012.pdf. 3 “Company Profile: IKEA,” Innovation Leaders, accessed 14 November 2012, http://fp05-527.web.dircon.net/ikea_company_profile.html. 4 Christopher A. Bartlett, Vincent Dessain, and Anders Sjöman, “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A),” Harvard Business School, 906-414(2006): 3. 5 “Bio Box: IKEA CEO and President Mikael Ohlsson,” Boston.com, 28 October 2010, accessed 16 November 2012, http://www.boston.com/news/world/europe/articles/2010/10/28/bio_box_ikea_ceo_and_president_mikael_ohlsson/. 6 Anna Ringstrom, “IKEA Set to Boost Expansion with New CEO,” Reuters, 17 September 2012, accessed 18 November 2012, http://www.reuters.com/article/2012/09/17/us-ikea-idUSBRE88G17K20120917. 7 “Our Business Idea,” IKEA.com, 2012, accessed 23 November 2012, http://www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_business_idea/index.html. 8 “Our Business Idea” 9 “IKEA Fans,” IKEAfans.com, 2009, accessed 24 November 2012, http://www.ikeafans.com/ikea/ikea-history/ikea-history.html. 10 “The IKEA Concept,” Inter IKEA Systems B.V., 2012, accessed 24 November 2012, http://franchisor.ikea.com/concept.html. 11 David Eskander and Mohamed Kotaiba Abdul Aal, “Does IKEA Culture Apply Abroad? A Study of IKEA in Saudia Arabia,” Case Study, Karlstad: Karlstad University, 2010. 12 Eskander and Abdul Aal 13 Eskander and Abdul Aal 14 “Our Business Idea” 15 J. Usunier and J. Lee, Marketing Across Cultures (5th edition), New York: Prentice Hall, 2009. 16 Eskander and Abdul Aal 17 Eskander and Abdul Aal 18 Eskander and Abdul Aal 19 Eskander and Abdul Aal 20 Eskander and Abdul Aal 21 Eskander and Abdul Aal 22 Angel-Urdinola, Diego F. and Kuddo, Arvo. The World Bank, Social Protection & Labor. (July 2010). Key characteristics of employment regulation in the Middle East and North Africa (SP Discussion Paper NO. 1006). Retrieved from The World Bank website: http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Labor-Market-DP/1006.pdf , 5. 23 Ibid. 24 Ibid. 25 Angel-Urdinola, 64-65. 26 Angel-Urdinola, 6. 27 Ibid. 28 Angel-Urdinola, 55-56. 29 Angel-Urdinola, 58. 30 Angel-Urdinola, 57. 31 Angel-Urdinola, 60. 32 Middle East: Regulatory structure and powers. (n.d.). QFinance. Retrieved 21 Nov 2012 from http://www.qfinance.com/regulation-checklists/middle-east-regulatory-structure-and-powers 33Ibid.

http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Labor-Market-DP/1006.pdf


http://www.qfinance.com/regulation-checklists/middle-east-regulatory-structure-and-powers

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34 Ibid. 35 F. Luthans, and J.P. Doh; International Management: Culture, Strategy, and Behavior, 8th Ed., McGraw-Hill Irwin, 2009, p. 42. 36 Marquardt, Michael J. and Engel, Dean W., Global Human Resource Development, (Prentice Hall, 1993). Middle East and North Africa: Cultural Factors Impacting HRD. 37 Luthans, 344. 38 Ibid. 39 Ibid. 40 Marquardt. 41 Ibid. 42 Ibid. 43 Ibid. 44 Middle East. 45 Cost of living - Middle East July 2012. (2012, July). Xpatulator.com. Retrieved 27 Nov 2012 from http://www.xpatulator.com/cost-of-living-article/Cost-of-Living-Middle-East-July-2012_356.cfm 46 Ibid. 47 Ibid. 48 Ibid. 49 Corruption by country/territory. (2011). Transparency International. Retrieved 21 Nov 2012 from http://www.transparency.org/country 50 Ibid. 51 Ibid. 52 Ibid. 53 Ibid. 54 Ibid. 55 Ibid. 56 Ibid. 57 Luthans, 344-345. 58 Luthans, 345. 59 Luthans, 346. 60 Luthans, 340. 61 Luthans, 82. 62 Luthans, 343. 63 Ibid. 64 Luthans, 344. 65 Angel-Urdinola, 3. 66 Ibid. 67 Marquardt. 68 Ibid. 69 Caglar, Deniz. Strategy Business, "How Ikea Reassembled Its Growth Strategy." Last modified 2012. Accessed November 28, 2012. http://www.strategy-business.com/article/00111?pg=2. 70 Caglar 2012 71 Caglar 2012 72 INGKA Holding. Ikea Iway, "IWAY Standard." Last modified 2008. Accessed November 28, 2012. http://www.ikea.com/ms/en_US/about_ikea/pdf/SCGlobal_IWAYSTDVers4.pdf 73 Holding 2008 74 IKEA, "The Ikea Group Approach to Sustainability." Last modified 2011. Accessed November 28, 2012. http://www.ikea.com/ms/en_US/about_ikea/pdf/group_approach_sustainability_fy11.pdf 75 Ikea 2011 76 Ikea 2011

http://www.xpatulator.com/cost-of-living-article/Cost-of-Living-Middle-East-July-2012_356.cfm

http://www.transparency.org/country

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77 IKEA, "Products and Materials." Last modified 2012. Accessed November 28, 2012. http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/products_and_materials/index.html. 78 IKEA, "People and Environment." Last modified 2012. Accessed November 28, 2012. http://www.ikea.com/ms/en_US/the_ikea_story/people_and_the_environment/index.html. 79 Holding 2008 80 Luthans, Fred. International Management: Culture Strategy and Behavior. Eighth Edition. New York: McGraw Hill, 2012. 6. Print.

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Appendix

IKEA Group of Companies Organization Chart

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Total Company Organization Chart

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International Management Organization Chart

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Compensation Chart Title Salary (in USD) Sales Manager $90,000 Human Resource Manager 40,000 Finance Manager 130,000 Marketing Manager 68000 Product Manager 105,000 Customer Service Manager 60,000

Skills and Knowledge Pie Chart

25%

10%

25%

10%

15%

15%

Strategic Skill Areas Politcal Economic

Leadership and Interpersonal Skill Diversity

Functional Teams

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Cultural Comparisons Hofstede’s Cultural Dimensions Germany80 Arab World80* Power Distance 35: Power is decentralized and

decisions are often made as a group. Control is frowned upon and leadership is to be challenged. Communication is direct so that people may learn from their mistakes. The middle class is powerful.

80: Everyone has a place in society and that is not up for debate. There are inequalities and power is centralized, giving a boss the authority to act as an autocrat.

Individualism 67: Self-actualization is highly valued. Individuals are loyal to their employers and those they like, and they uphold their duties. Families are small units with focus on parent-child relationships.

38: Culture is collectivist. Extended family is important and people have a lifelong commitment to their “in-group.” Decisions are shared in that they impact the entire group and any “loss of face” has an impact on everyone’s reputation. Loyalty is acted upon before laws, so connections are honored more than individual qualifications.

Masculinity/Femininity 66: Performance is important. People “live to work.” Self-esteem is strongly tied to work and status. Managers are firm and unwavering. Children must specialize their education by age 10.

52: Falling in the middle, work is valued because it is another reflection of who a person is and how they fit into society, but at the end of the day, background is the number one identifier and priority. Conflicts are resolved by fighting them out.

Uncertainty Avoidance 65: Planning is necessary before action is taken, and attention to detail is also important. Reliance on experts to fill in knowledge gaps is common.

68: Beliefs are strongly held and strict codes are adhered to. Unorthodox ideas are not tolerated. Security, precision, and punctuality are valued. Rules are usually in place, even if they are not followed.

Long-term Orientation 31: Traditions are respected and people seek to establish “truth.” Quick results are preferred, resulting in impatience, and there is a smaller tendency to save.

Not ranked: Hofstede has not calculated a rank, but based on other elements, one could say that the orientation is short-term because tradition, protecting face, and return of favors are all highly valued.

* Egypt, Iraq, Kuwait, Lebanon, Libya, Saudi Arabia

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Flow Chart of International Management Policies and Processes

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Works Cited

“2012 Facts and Figures.” Inter IKEA Systems BV. accessed 14 November 2012.

<http://franchisor.ikea.com/FF2012.pdf>.

Angel-Urdinola, Diego F. and Kuddo, Arvo. The World Bank, Social Protection & Labor. (July 2010). Key characteristics of employment regulation in the Middle East and North Africa (SP Discussion Paper NO. 1006). Retrieved from The World Bank website: http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Labor-Market-DP/1006.pdf , 5.

Bartlett, Christopher A., Vincent Dessain, and Anders Sjöman. “IKEA’s Global Sourcing Challenge: Indian Rugs and

Child Labor (A).” Harvard Business School 906-414(2006). “Bio Box: IKEA CEO and President Mikael Ohlsson.” Boston.com. 28 October 2010. accessed 16 November 2012.

<http://www.boston.com/news/world/europe/articles/2010/10/28/bio_box_ikea_ceo_and_president_mikael_ohlsson/>.

Caglar, Deniz. Strategy Business, "How Ikea Reassembled Its Growth Strategy." Last modified 2012. Accessed

November 28, 2012. http://www.strategy-business.com/article/00111?pg=2. Corruption by country/territory. (2011). Transparency International. Retrieved 21 Nov 2012 from

http://www.transparency.org/country. “Company Profile: IKEA.” Innovation Leaders. accessed 14 November 2012. <http://fp05-

527.web.dircon.net/ikea_company_profile.html>. Cost of living - Middle East July 2012. (2012, July). Xpatulator.com. Retrieved 27 Nov 2012 from

http://www.xpatulator.com/cost-of-living-article/Cost-of-Living-Middle-East-July-2012_356.cfm. Eskander, David and Mohamed Kotaiba Abdul Aal. “Does IKEA Culture Apply Abroad? A Study of IKEA in Saudia

Arabia.” Case Study. Karlstad: Karlstad University, 2010. IKEA, "The IKEA Group Approach to Sustainability." Last modified 2011. Accessed November 28, 2012.

http://www.ikea.com/ms/en_US/about_ikea/pdf/group_approach_sustainability_fy11.pdf IKEA, "People and Environment." Last modified 2012. Accessed November 28, 2012.

http://www.ikea.com/ms/en_US/the_ikea_story/people_and_the_environment/index.html. IKEA, "Products and Materials." Last modified 2012. Accessed November 28, 2012.

http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/products_and_materials/index.html. “IKEA Fans.” IKEAfans.com. 2009. Accessed 24 November 2012. <http://www.ikeafans.com/ikea/ikea-history/ikea-

history.html>. “IKEA Stores Mission Statement.” About.com. accessed 14 November 2012.

<http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/IKEA-Stores-Mission-Statement.htm>.



http://www.transparency.org/country

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http://fp05-527.web.dircon.net/ikea_company_profile.html

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INGKA Holding. Ikea Iway, "IWAY Standard." Last modified 2008. Accessed November 28, 2012.

http://www.ikea.com/ms/en_US/about_ikea/pdf/SCGlobal_IWAYSTDVers4.pdf.

Luthans, Fred. International Management: Culture Strategy and Behavior. Eighth Edition. New York: McGraw Hill, 2012. 6. Print.

Marquardt, Michael J. and Engel, Dean W., Global Human Resource Development, (Prentice Hall, 1993). Middle East and North Africa: Cultural Factors Impacting HRD.

Middle East: Regulatory structure and powers. (n.d.). QFinance. Retrieved 21 Nov 2012 from http://www.qfinance.com/regulation-checklists/middle-east-regulatory-structure-and-powers.

“Our Business Idea.” IKEA.com, 2012. Accessed 23 November 2012. <http://www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_business_idea/index.html>.

Ringstrom, Anna. “IKEA Set to Boost Expansion with New CEO.” Reuters. 17 September 2012. Accessed 18 November 2012. <http://www.reuters.com/article/2012/09/17/us-ikea-idUSBRE88G17K20120917>.

The Balanced Scorecard - Steven Salterio & Alan Webb – CA Magizine – Print Edition, August 2003

The Performance Prism: The Scorecard for Measuring and Managing Business Success - Andy Neely, Chris Adams, Mike Kennerley - Pearson Education 2002

“The IKEA Concept.” Inter IKEA Systems B.V. 2012. Accessed 24 November 2012. <http://franchisor.ikea.com/concept.html>.

Usunier, J. and J. Lee. Marketing Across Cultures (5th edition), New York: Prentice Hall, 2009.

http://www.ikea.com/ms/en_US/about_ikea/pdf/SCGlobal_IWAYSTDVers4.pdf

http://www.qfinance.com/regulation-checklists/middle-east-regulatory-structure-and-powers

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