I selected the case studies of IKEA and Home Depot, as both companies operate internationally, so effective cross-cultural management is vital for the success of each business. IKEA is the largest furniture manufacturer and retailer in the world, operating in 36 counties with 292 stores in Europe, Asia, North America, and Australia (Li, 2020). The CEO of IKEA Jesper Brodin attributes the company’s success to the unity of its team, so IKEA’s management strategy emphasizes the importance of employee satisfaction and a comfortable working environment.
The management of IKEA faced a problem with its female employees in India. In 2015, 25% of Indian women left their jobs to become stay-at-home mothers, so IKEA offered 26 weeks of paid maternal leave following the success of this measure in Sweden (Li, 2020). However, the strategy failed, as most female employees in IKEA India were temporary workers and did not qualify for the conditions of the maternity leave. Since the conditions required a full-time employee status, many Indian women had to quit their jobs at IKEA, causing a labor shortage. Thus, the problem was caused by inefficient cross-cultural management that did not account for the cultural specifics of the local workforce.
As a multinational company, IKEA should be flexible with its management strategies and promote leaders’ understanding of cultural differences. Since Jesper Brodin emphasizes the role of IKEA’s human resources for business success, cross-cultural management should focus on the needs of the company’s employees in each particular country. Two alternative courses of action might be considered to solve the problem of potential labor shortage at IKEA India. On the one hand, IKEA can offer temporary female workers job opportunities during maternity leave, such as participation in online activities, publicity campaigns, or Internet-based customer service. On the other hand, the company can design a new HR policy offering maternity leave for temporary workers. The policy will involve signing a contract specifying the salary during maternity leave and the conditions of employment.
Online job opportunities do not strain the company’s budget, as the salary is paid for the tasks performed. However, there is a risk that the workers might not have the qualifications and skills required for online-based tasks, so costly training will be needed. The option of a new policy involves a cross-cultural management strategy responding to the peculiarities of the Indian labor market. Moreover, Indian female workers will have the same benefits as the workers of IKEA Sweden. Therefore, the second option is recommended as it will ensure employee retention while respecting the cultural specifics of India and supporting employee-oriented management of IKEA.
Home Depot is a DIY home improvement company operating in the US and several countries overseas. In 2006, Home Depot opened its first store in China and expected immediate success, but ceased operations in 2012 due to the failure to adapt to the Chinese market (Zheng, 2017). The key issue that led to the failure was the lack of interest in DIY home improvement products in local culture. The company’s strategy did not involve proper cross-cultural management, so the leaders ignored the differences between the markets in the US and China.
In order to succeed in the Chinese market, Home Depot needs to be flexible and respond to the needs of the local population that are different from the demands of American customers. The first solution for the problem is to conduct research on local competitors and economic peculiarities to avoid financial risks associated with a blind entry strategy. Another option is establishing communication with potential customers to study local consumers’ preferences and understand how the Chinese are influenced by cultural traditions.
The first option might be demanding financially and timewise since the research would require the participation of several experts and significant time contribution. Additionally, the research can lead to unexpected results and provide recommendations that may be difficult to follow. The second option does not involve financial risks, as customer surveys may be performed online and provide information on local preferences. Moreover, customer assessment can help the company to choose the right timing for entering the foreign market as it reflects the economic condition of a specific business sector. Therefore, it is recommended to implement a cross-cultural management strategy, including feedback from local consumers, as it helps to detect cultural preferences and increase financial efficiency.
All in all, cross-cultural management is crucial for the success of global companies entering a foreign market and provides multiple benefits. The case of IKEA demonstrated that ineffective cross-cultural management causes labor shortages, while culturally-targeted management improves employee satisfaction and offers equal opportunities. Home Depot’s failure in China reflected the importance of cross-cultural assessment for a brand’s competitive success in a new market. Therefore, effective cross-cultural management can prevent the labor shortage and motivate local consumers to purchase the company’s products.
References
Li, Y. (2020). Business insight: Leadership and human resource management analysis for IKEA. International Journal of Multidisciplinary Research and Publications, 3(1), 74–81.
Zheng, S. (2017). The failure of Home Depot in China. Business and Management Studies, 3(4), 54–58. Web.