INTRODUCTION
The purpose of this paper is to analyse, evaluate, understand and assess the challenges in the integration of cultures, cultural diversity, brand culture, consumer psychology as well as consumer behaviour when Swedish multinational corporation IKEA started their operations in China (Focus: Shanghai) by applying the Hofstede's theoretical framework which would help identify national culture features and comparing it with Trompenaar's theoretical framework. The goal of this study is to determine whether IKEA's brand culture is suitable in Shanghai as well as how it performs through the understanding of the cultural backgrounds of the Chinese society.
ORGANISATIONAL AND NATIONAL CULTURE
An organisation basically means an individual
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Culture directs the organisation to goal attainment. Newly appointed employees must be taught what is regarded as the correct way of behaving. Culture has a number of elements that are implicit and explicit as stated by (Groeschl & Doherty, 2000). According to (Schein, 1985), there are three levels of culture, namely; artefacts, values and assumptions.
(Newman & Nollen, 1996) describes national culture as a central organising principle of employee's understanding of work, approaches to it as well as ways they expect to be treated. There are three vital cultural characteristics that influence commercial activities, i.e. Tolerance for uncertainty, Competitiveness and Individualism (Steensma, Marino, Weaver, & Dickson,
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The researcher has also found that IKEA is not doing as well as they hoped as their price is considered high to the Chinese people. This confuses people as it contradicts with IKEA's brand culture of improving people lives by providing quality products at lower prices.
Overall, however, they are performing fairly well and have achieved some success, that is to say, there is continual growth, profit and expansion of stores in China. IKEA should dispel any misunderstandings, especially about its brand's culture and help their employees avoid or tackle any cultural shocks that could hinder its operations due to its Swedish organisational culture and roots.
Furthermore, it is best for IKEA to improve its development speed in order to make the supply chain and logistics efficient enough to reduce prices, and at the same time, dispel any misunderstandings about its brand's culture. Finally, the continual improvement of the organisation as a whole as well as quality of its products is paramount for IKEA to achieve a better position in the Chinese and Shanghai
Triandis, H., & Wasti, S. (2008). Culture. In D. Stone, & E. Stone-Romeo, The influence of culture on human resource management processes and practices (pp. 1-24). Psychology Press
The management of cross-cultural is another challenge, which have to face during the develop entering into market process. According to (Dong and Liu, 2010, p. 233) mentioned that “Cultural distance between the home and host country can have significant influence on selection, training and performance management system.” When IKEA develop the Chinese market, it affected by different culture background as well. As the case mentioned (China teaches IKEA limits of homogeneity, 2009) that, in other countries, IKEA stores are far away to the city with a lower rental and larger place for the consumers. However, in China, IKEA sets their stores close to the city, where are easier able to arrive by public transportation. Because of the different consumption habits, Chinese customers prefer to choose the methods of home delivery to shop. Furthermore, owing to lacking of DIY (do it yourself) culture, the consumers have a highly demand on the workers of furniture packaging. From the HR managers’ perspective, this home assembled services are more common used in China, thus, they need to adjust the recruitment plan to hire more assembled furniture workers. Meanwhile, it can be acknowledged that “scientific evidence indicates that certain human resource (HR) practices are positively related to organizational performance.” (COMBS et al., 2006) For example, in China, IKEA HR managers
The sources of IKEA’s successful entry into the furniture retail business were IKEA’s low prices and resilience. First, Ingvar Kamprad, the founder of IKEA, began selling furniture in his mail order company. Then he was faced with a social problem and turned it into a business opportunity. Since 1935, furniture prices rose faster than any other retail good at 41%. Kamprad responded by creating a line of furniture priced so that all could afford it. The present furniture cartel attempted to stifle Kamprad’s growth and success. The cartel banned Kamprad from selling directly to the consumer at shows, then managed to persuade the manufacturing cartel to stop supplying Kamprad with furniture. Kamprad responded by supplying elsewhere and now could charge even lower prices. IKEA’s success was due largely to low prices and Kamprad’s ability to capitalize on bad situations.
and will work their best to achieve them. With this management style, IKEA can use various methods of communications (see E5). However this type of management style could make decision-making slow and is not appropriate to some businesses such as, manufacturing industries. The organisational structure, culture and the management style of IKEA have to perform successfully so that, together they can achieve the company’s objectives. For example, to increase profitability: the communication within the organisation have to be clear so that, staff can understand what jobs have to be carried out; staff have to be motivated to perform the job; the relationship between managers and staff have to be strong and committing; the organisation have to encourage staff to create new ideas and share them amongst others; democratic managers have to listen and act on the opinions of workforce, democratic managers have to make sure that the workforce is well aware of the objectives of IKEA, etc.
Bowell states that IKEA is establishing themselves “...as a leader in creating and running innovative sustainable places.” This means that IKEA is taking their job seriously. They want to be the ones to help and inspire their customers into following the methods of sustainability. The “People & Planet Positive Strategy” allows the customers individuals to learn about how they can make a change in their own lives by the implementation of products from the company. IKEA is in the process of adapting to the lifestyle of being environmentally friendly. It is necessary for them to become net-positive. Most appliance retailers do not maintain this type of
Each category will be analyzed using IKEA student info website, IKEA group corporate website, resources from University of Phoenix library and articles from magazines. The key questions that the author will address are
Culture can be defined as “A pattern of basic assumptions invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid, and therefore to be taught to the new members as the correct way to perceive, think and feel in relation to those problems”. Schein (1988). Organizational culture can be defined as a system of shared beliefs and values that develops within an organization and guides the behavior of its members. It includes routine behaviors, norms, dominant values, and feelings or climates. The purpose and function of this culture is to help foster internal integration, bring staff members from all levels of the organization closer together, and enhance their performance.
DataMonitor, 2007. IKEA major retail competition in the US are: Furniture Brands International Inc., Office Depot Inc., Sauder Woodworking Co., Stanley Furniture Company, Inc., and Staples , Inc. This paper will identify the key macroeconomic variables that affect IKEA and the retail industry as a whole. To better understand the effects of such variables upon the industry, two specific variables will be developed further.
Another example of IKEA’s international strategy in building good relationships with suppliers is in Asia, especially in Vietnam, where IKEA expanded its own supply base. Vietnam manufacturers offers low cost labor force and not expensive raw materials, while IKEA provides the view of creating a long-term, high-volume business relationship, and advice on finding the best according to the price raw materials, setting up and bulding factories, choosing what machines, equipments
Culture is “a system of shared beliefs and values that develops within an organisation and guides the behaviour of its members” (Schermerhorn et al. 2011). It plays an important role in any organisation. For instance, in Woolworths we can se...
This essay gives a basic idea of what organizational culture is, and emphasis on the controversial issues of managing organizational cultures. As there are various definitions for organizational culture, and none of them are universally agreed. Therefore, for an easier understanding by readers, the definition of organizational culture given in this essay focusing on levels of culture, and will be discussed t together with Schein's(1983) framework. Before talking about managing organizational cultures, the types will be introduced first. Because, there are some descriptions about managing different types of organizational cultures, in the following content.
Firstly, the history of IKEA International A/S is needed to be described. The company is based in Denmark. It is one of the world’s top retailers of furniture, home furnishings and housewares. The company designs its own items and their items are sold in more than 140 IKEA stores. The store is spread throughout approximately 30 different countries worldwide. IKEA distributes its thick catalogs once a year in the areas surrounding its store locations. Also, it peddles its merchandise through mail order. Additionally, the company offers high-quality items at low prices as their character. Then, the company buys items in bulk, ships and store items to save money for itself and its customers.
It is a “pattern of beliefs, values and learned ways of coping with experience” (Brown 1994) that manifests itself into three layers: artefacts at the shallowest, values and beliefs in the middle and basic assumptions at the deepest. It is inseparable from the organisation that cannot be easily manipulated as it is fundamentally non-unitary and emergent. Finally, organisational culture is important as it is one of the main determinants as to whether a firm can enjoy superior financial and a comparative advantage over firms of differing cultures.
IKEA is more than a furniture store they are a company driven by values (IKEA, 2014). The company seeks to make their consumers lives easier by providing them with modern, innovative, inexpensive products which they use to tackle daily home activities. IKEA Group has 298 stores in 26 different countries (IKEA, 2014). The company’s vision is “to create a better everyday life for the many people” (IKEA, 2014, para 1). Using innovative techniques for creating, producing, and marketing their products IKEA can provide consumers with durable products for reason...
...enture into overseas market comes with expectations as well as uncertainties due to unfamiliarity. Charles and Keith, the fashion retailer, has to understand clearly that what appeals in one market might not be accepted in the others and this is almost the same for all industries. Thus, a thorough research on cultural background has to be done before entering an unfamiliar ground.