Friday, May 3, 2013
CROSS-CULTURAL ISSUES IN INTERNATIONAL BUSINESS-IKEA
CROSS-CULTURAL ISSUES IN INTERNATIONAL BUSINESS-IKEA Cross-cultural issues in International business The attributes of regional development and globalization has been of immense benefits because they have resulted in the consideration of establishing an increase in the performance of business organization. The establishment of ideal business organization is extremely critical and has resulted in the generation of more profits and incentives for the expansion of business proceeds. These attributes of development have also been enhanced by the fact that technological advances and intercontinental trade has taken toll in the recent past. In addition to the above realization, various companies have emerged as competitors to the international companies and this brings to the limelight the concerns of international cultural differences. Generally, the expansion of business incentives into various international economies is faced by critical concerns and the leading source of concern is highlighted as the attribute of cross cultural differences. The aspect of culture is an extremely essential factor that results in the development and performance of the business incentives and if further influences the development of the business practices (Schwartz, Licht & Siegel, 2008). In this regard, cross cultural consideration should be considered as extremely critical factor that enhances the success of international business. In the view of this realization, the performance and establishment of IKEA can be analyzed on the perspective of cultural differences between the international countries under which they operate. Since the establishment of the company in Sweden, the company has witnessed the attribute of growth and expansion and it is currently operating in thirty three nations across the globe and this leads to the consideration of the attribute cross cultural management. In reality, the concept of cross cultural management has been essential for IKEA because it has assisted the company in finding solutions to the challenges that face its operations and expansion capacities. The establishment of the operations of the company have noted the increase in the concerns for the company to adapt to various cultural needs and this has resulted in the developed of different costing and pricing incentive (Ray French 2010). Eve though target pricing is sometimes used by the company, low cost pricing has been adopted as an ideal incentive to help it expand its market scope to the population while offering high quality products to the customers. Another crucial aspect of adaptation to the cultures is the attribute of adapting to different cultures is the conduction of the practice to offer the customer’s non-assembled furniture using very attractive packaging kits and this has helped the company in saving costs by more than 6% because of the consideration of transportation space. Another aspect of engaging the attributes of culture in their management and operations involves the business practice of franchising and acquisition. In fact, majority of the international business expansion of IKEA have been initiated through the attributes of franchising and this is been considered as an extremely critical incentive that largely contributes towards the betterment of businesses. Franchising is ideal because it embodies the consideration of the national culture and the prevailing ethical practices. IKEA has considered franchising to an extremely crucial attribute of managing cross cultural differences because it provides the international business with the incentives regional cultural practices and management thereby enhancing the blending and further providing the benchmark for strategic management, formulation of policies and product development (Schneider and Barsoux, 2003). The results from the research conducted have revealed the various designs of the furniture offered by IKEA has essential depiction of the cultural concerns therefore, culture has an ideal consideration in highlighting the attributes of designs for the products. In this regard, cross cultural management is extremely crucial for the international business due to the consideration of innovative products and designs. Over the period, national and international businesses have continued to experience increasing disparities that is connected with the expansion and interaction with different cultural practice. Different cultural backgrounds have various concerns on the activities of the organization and they influence the organizations in different capacities. The influence on the organizations can be both beneficial and detrimental and they are usually manifested in the changes of etiquette, norms, behaviors, expressions, non-verbal communication and group mechanics. The attributes of the differences in cultural depictions are generally influenced by the consideration of the management styles and the prevailing corporate culture (Tian & Borges, 2011, Sultana, M, Rashid, Mohiuddin & Huda Mazumder, 2013). In view of the above citations, the operations of IKEA have been of considerable concerns because it has been influenced by essential aspects and this has resulted in the rapid growth of the company. IKEA has emerged as one of the leading global home furnishing companies that have the capacity to control the global market through the use of their branding technique and also through the onsets of its capacities to include the different cultures. The inclusion of the culture like, “do it yourself” has been identified as beneficial practice for the company because it has necessitated the involvement of the other stakeholders in the operation of the organization. Further evidence has shown the dominance of Swedish culture has also been used as the leading perspective for increasing the conduction and performance of the business activities (Kawar, 2012). This is evidenced by the branding and naming of IKEA products on the basis of Swedish names to depict their origin and Swedish culture. The management and leadership of IKEA have essential identified that culture is an extremely beneficial aspect that enhances the realization of competitive advantage and may also result in the development of disadvantage to the corporation. It is ideal for the corporation to identify various cultures present in its region of operations because this will enable the conduction of cultural convergence that further results in the development of cultural advantages. Over the period, the analytical results of the studies conducted in IKEA has reveled that universal management practices have adopted the interventions of cross cultural differences and this has resulted into the development of a set of principles and practices aimed at increasing the performance of the organization. Within the organization, the management and other executive staff members have adopted the paradigm that has qualified them to be the leading participants in the fulfillment of the organizational mission statements of providing low priced commodities to the consumers. Examples of the IKEA culture The development of the company has been adopted as the incentive that has largely resulted in the establishment of critical factors and the leading concern is the necessity to set the standards and pace in the market. As a matter of market performance, IKEA has realized the necessity for the company to establish the balance between suppliers need for profit and the optimal design for low prices and this has resulted in the mergence of the efficiency culture in the organization. Efficiency is extremely essential because it results in the development of the company and further necessitates the consideration of satisfaction of the customers through the onsets of innovations and product development. IKEA has been vibrant in establishing international offices because of expansion but the company has ensured that its parameters are closely observed because this provides the benchmark for international operations. Over the years of operations, the founder of the organization has enacted measures of innovation and employee empowerment thereby resulting into the creation of an existing culture in the organization (Baraldi, 2008). This is denoted as the ‘’the IKEA way” and it has been spread to the other international branches. The company has identified it self with the establishment of ideal cultures and attributes has resulted in the formation of the culture that guides the operations of the organization. Given the origin of the company is Sweden, the international branches have adopted the incentive of using Swedish culture to conduct the businesses and this is evidenced by the naming of the commodities and the incentives of the operational activities adopted. The consideration of sticking to the Swedish cultural roots is a clear demonstration of cross cultural management. The evidence of cross cultural management is also evidenced in the consideration of distribution and marketing mix that involves the consideration of target pricing. As an aspect that began upon the establishment of the organization in Sweden, the international branches and other national stores have adopted the paradigm that has necessitated the consideration of increased pricing activities (Svenungsson, 2012). The aspect of using low pricing strategy has been immensely essential and the onsets of the business have adopted the business target pricing as the perspective for conducting business. Target pricing involves the aspect of setting pricing before the development of the products and this procedure has dominated IKEA stores. This attribute of target pricing has been adopted as an essential tool in cross cultural management. The establishment of IKEA has largely depicted the culture of encouraging the consumers and other stakeholders to learn. Learning culture has been identified as one of the leading factors that have necessitated the onsets of development and this has further resulted in the engagement of ideal practice. It is extremely beneficial for the organizations and other stakeholders to work and learn because this encourages the realization of innovation and development of the projects (Svenungsson, 2012). IKEA has emphasized on the conduction of innovation because this has necessitated consideration of high level of participation and performance. The dominance of the Swedish culture has been of critical concern because it has necessitated growth and development of the company. Despite the high levels of expansions that the company has witnessed, the company has continued to observe the Swedish practices that include the aspects of open, informal and caring management style. In reality, management style is a culture and the organizations should adopt this attribute as the factor for enhancing corporation and uniformity in the company’s international outlets. The consideration of establishing style and culture has proven o be efficient for the company because it has resulted in the establishment of competitive advantage over the competitors. Cross cultural management attribute has been used for the purpose of gaining insights into the conduction and management. The existence of this management style has allowed IKEA to develop complex business that comprises of retail business incentives, franchising product design and development and a corresponding supply chain like schwedwood. The prevailing culture in IKEA has identified the managers of the company as the ambassadors of IKEA and this has enabled them to initiate critical incentives of promoting the missions of the organization. One of the leading aspects of encouraging the mission of the organization across different cultures is the observation of practices to enable the international coworkers understand the complexities and the nature of the company (Kling & Goteman, 2003). This is extremely for the cross cultural managers because they will establish the ideal consideration that culture has towards the establishment of development. The Swedish managers have been labeled as ambassadors to direct and guide the franchises and other retail outlets for the organization. This has provided ideal grounds for interaction with the cross cultural managers. On the other hand, the management of the company has allowed the managers the privileged of contributing towards the making of decision in the company (Kling & Goteman, 2003). This onset of decision making has largely enhanced performance of the organization because it has resulted in the establishment of highlighting the contributions of different cultures. Given that the managers are drawn from across the cultural divide, the onsets of attaining the contributions of each manager have been expressed as the cross cultural perspective. Cross cultural management can be detrimental factor that result in the decline in the performance of the organization and this has necessitated the appointment of the Swedish national to manage the leading IKEA outlets across the global market. This is one aspect of ensuring that the attributes of cross cultural differences are contained and the prevalence of Swedish management style dominates. The appointment of Swedish managers has the capacity of promoting Swedish culture that is associated with the onsets of development and performance of IKEA franchises. In the wake of this reality, the company has ensured that it retains its initial attributes that were organized by the initiate plant (Kling & Goteman, 2003). Some of the practices that are considered to be extremely crucial and that have warranted the consent of the managers are the pricing strategies, communication strategy and the product strategy. These factors have been identified as the development pillars of IKEA and they must enhance by all the franchises across different cultural dispensations. Finally, the onsets of international development have resulted in to the development of ideal markets. In the wake of market expansion and increase in competition has prompted the emergence of cross cultural communication as a unique model of the market. Communication is ideal because it helps in communicating the objectives, experiences and knowledge of the market (Baraldi, 2008, Kawar, 2012). The attributes of cross cultural communication training, cross cultural negotiations and other consultancy services. The establishment of all these factors has been essential to IKEA. In concussion, since the establishment of IKEA in 1940s, the organization has continued to expand its market from its original country Sweden to other global nations. Ideal management incentives and innovation have been identified as some of the leading attributes leading to enhancement in performance. Certainly, the management of the organization has also realized that cross cultural management is another essential product that has played a critical role in the expansion and establishment of the organization. Cross cultural management has ensured that the establishment of franchises and other distributional channels are in accordance with the requirements of the Swedish standards. References Baraldi, E 2008, 'Strategy in Industrial Networks: EXPERIENCES FROM IKEA', California Management Review, 50, 4, pp. 99-126, Business Source Complete, EBSCOhost, viewed 29 April 2013. Kawar, T 2012, 'Cross-cultural Differences in Management', International Journal Of Business & Social Science, 3, 6, pp. 105-111, Business Source Complete, EBSCOhost, viewed 29 April 2013. Kling, K, & Goteman, I 2003, 'IKEA CEO Anders Dahlvig on international growth and IKEA's unique corporate culture and brand identity', Academy Of Management Executive, 17, 1, pp. 31-37, Business Source Complete, EBSCOhost, viewed 29 April 2013. Ray French (2010), Cross-Cultural Management in Work Organisation;2nd edition. The Chartered Institute of Personal and Development. Schneider, S. and Barsoux, J-L (2003) Managing across Cultures, Prentice Hall. London. Schwartz, S, Licht, A, & Siegel, J 2008, 'Egalitarianism, Cultural Distance, and FDI: A New Approach', American Law & Economics Association Papers, pp. 1-47, Business Source Complete, EBSCOhost, viewed 29 April 2013. Sultana, M, Rashid, M, Mohiuddin, M, & Huda Mazumder, M 2013, 'Cross-Cultural Management and Organizational Performance: A Content Analysis Perspective', International Journal Of Business & Management, 8, 8, pp. 133-146, Business Source Complete, EBSCOhost, viewed 29 April 2013. Svenungsson, M 2012, 'IKEA', IRE Journal, pp. 26-28, Academic Search Premier, EBSCOhost, viewed 29 April 2013. Tian, K, & Borges, L 2011, 'Cross-Cultural Issues in Marketing Communications: An Anthropological Perspective of International Business', International Journal Of China Marketing, 2, 1, pp. 110-126, Business Source Complete, EBSCOhost, viewed 29 April 2013.
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