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Case study: IKEA

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Jayanthi Selvaraj

on 9 March 2017

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Transcript of Case study: IKEA

Case study: IKEA
Hofstede's take on Sweden
Overview
Founded in Sweden in 1943 by Ingvar Kamprad
Designs and sells ready-to-assemble furniture
147,000 employees, 37 countries, 301 stores

Less Swedish? More Transnational?
Depending on the product market
Can have a mixture of both = “English in a Swedish accent”
Challenges faced in France, Germany, USA
Convergence
More transnational = Fewer Expatriates
Training + Socialization of TCNs and HCNs
Maintaining Swedish Integrity + Inclusive to diversity = Geocentric
Global Project Teams
Global Talent Management

GTM Strategy Recommendations
Germany
Current inter-cultural/ HR challenges
German workers are not used to the lack of formality (Grol and Schoch, 1998)

Germany PDI score: 35; Sweden PDI score: 31 (Hofstede, 2001; p.87)
German employees adhere to defined instructions; German workers felt a need to make IKEA's 'Testament' more precise. (Grol and Schoch, 1998)
German management style = frequent employee supervision and reviews from manager (Birkinshaw, 2002)
Swedish management style = Notion of supporting employees based on setting targets and allow employees to creatively fulfill goals (Birkinshaw, 2002)
German employees find Swedes more result-orientated (Grol and Schoch, 1998)
Sweden = CME model (Hofstede, 2001; Hall and Soskice, 2001)). BUT 1990-2005, move from CME to a LME model (Schneider & Paunescu, 2012)
Germany still adopts CME model (long term interests) (Hall & Soskice, 2001)
Workers believe that Swedish management does not sufficiently assess risks (Grol and Schoch, 1998)
Swedish culture = high tolerance of uncertainty -> less resistant to change and more able to accomodate new ways of thinking (Birkinshaw, 2002)
France
Current inter-cultural/ HR challenges
French culture view infomality as weak -> people are accustomed to strong hierarchy; Older employees (35yrs+) find it hard to adjust to IKEA's culture because they are used to French formal, explicit procedures
France PDI value: 68; Sweden PDI value: 31 (Hofstede, 2001; p.87)
Cross-cultural adaptability decreases as age increases (Chang et. al, 2013)
French did not like the fact that there are no formal job descriptions (Grol and Schoch, 1998). However IKEA may justify job descriptions as limiting an employee's capable range of work
Elitism in France encourages employees to do only what they are told (job description). Therefore the lack of specificity from IKEA may generate concerns
France works under individualized pay-increases
There has been complaints from French consumers that there are too many employees of non-French origins
Easier communication?
More french want high pay?
IKEA got into trouble with unions as they did not trust or understand IKEA's management style. Since then, IKEA's management has taken a more affirmative attitude, and relationship with union has improved notably
French unions are strong because under law, all union delegates represent all employees, union members or not, in firms over 50 staff in both work + health & safety councils (The Economist, 2014)
IKEA France is run by a Frenchman whose wife is Swedish and worked in Almhult (Grol and Schoch, 1998)
Company & case study introduction – Soma
Discuss the characteristic features of IKEA’s management style and HR policies. - Tarun 
What inter-cultural/HR challenges did the company face in France, Germany? How should the company adapt its HR policies to local cultures and employee expectations? - Jayanthi
What inter-cultural/HR challenges did the company face in the USA? How should the company adapt its HR policies to local cultures and employee expectations? - Jayanthi
Should it not consider bringing in more non-Swedes into top management position? Should it become less Swedish and more multi-cultural/transnational, particularly as it moves into Asia and the emerging economies? - Tarun
What global talent management strategy would you advise the company to adopt to improve its global reach, and resolve the tension between ‘global integration’ and ‘local responsiveness’? - Soma

Company background
Ingvar Kamprad
IKEA’s Values
Leadership by example
Constant desire for renewal
Togetherness and enthusiasm
Cost-consciousness
Striving to meet reality
Humbleness and willpower
Daring to be different
Accept and delegate responsibility
Simplicity
Constantly being “on the way” = Kaizen?
Management style
“Informal, open and caring” = Egalitarian
Everyone is a ‘co-worker’
Laissez-faire + encouraging innovation
Result Oriented + Cost Focus
Don’t assess risk?
Emphasis on knowledge sharing
Strong emphasis on their culture
Low-Context
Managers as ‘missionaries’ = ‘Educators’
Educate = Patience + Common Understanding +Example
Recruitment: Skill not qualification
Working Environment: Pleasant, Job Security
Learning & development : Knowledge Sharing
Career advancement: Hard for Non-Scandinavians, no formal career paths

HR Policy
USA
Current inter-cultural/ HR challenges
America PDI value: 40; Sweden: 31
"Potato-field" entry strategy
Issues with furniture design -> adapt to american needs
Store layout issues
American = want short term results; Swedish = go with the flow
Involvement of senior management
GTM strategy should be aligned to company strategy
Culture should be guarded
“Think global, act local” = CHR
GTM as a function in its own
Full transcript