Executive Summary
Being incorporated in Sweden , IKEA holds more than 20% overall market share in Sweden , also able to expand successfully over the last twenty-five years in executing what no furniture distributor has ever endeavoured to turn to be an international player in an industry where it was regarded to be local earlier.
IKEA is the largest furniture retailing giant with a turnover of just 1 million Euros in 1954 and its total turnover has reached 22713 million Euros in 2009 and just 1 store in 1954 to 301 stores in 37 nations in 2009. In UAE, it has two retail stores besides in Kuwait and Saudi Arabia.
Today, IKEA is renowned for its low-priced quality furniture to major markets around the globe. IKEA is the only distributor in its field to have victoriously made itself in whole of the Europe including Eastern and Southern Europe and more noticeably in USA and in whole of the North America.
It is really astonishing how IKEA is managing this vast network of diversity and it appears to be in a characteristic bond of sorts with a robust corporate culture footed on the company’s founder.
IKEA acknowledges that cultural variances can result in challenges and misapprehensions but at the same time, they can remain as an incredible source of advantage. IKEA spreads its culture through its “IKEA Style” by organising seminars for all of its employees whereby the organisations values and roots are detailed and deliberated.
Some of the newly joined employees are allowed to make a trip to Sweden where they used to visit the shed where the founder of the IKEA established his business at the start. Some of the employees are even made as an ambassador of the culture they belong. (Hoecklin 35).
Impact of cultural diversity on individuals and organisation
Identity Structures
The mixed group of identities that are seen in the business organisation and the muscle of individual’s connection with particular identities and for instance , despite all people have a gender identify , they differ greatly in the extent to which this identity is significant to them in their own self –definition. (Cox & Beale 33).
Prejudice and Discrimination
Prejudice refers to the prearranged negative demeanours towards individuals on some group identity. When prejudice demeanours get transformed into demeanours, the discrimination happens. Since discriminations and prejudice are pertinent to a number of group characteristics in business organisations and since, they can be specifically damaging to interpersonal associations. (Cox & Beale 96).
Stereotyping
The state of mental process in which the individual is regarded as a member of a group and the info that one has kept in one’s mind about the group is attributed to the individual is known is stereotyping. There exist significant differences between valuing cultural differences and stereotyping. Since, stereotyping is pertinent and persuasive across a wide spectrum of group identities in business organisations, it is important to know more about it as it is decisive for developing capability to manage diversity. (Cox & Beale 78).
Often, Stereotyping is footed on false notions and anecdotal corroboration or even on consciousness without any direct experience with a group. It denotes about the negative characteristics to members of a group. It engrosses the postulation that characteristics assumed to be common in a cultural group which will be applicable to each and every member. For example, Hamed is an UAE Muslim and hence, he is not aggressive by White, female American standards. (Cox & Beale 81).
Ethnocentrism
It refers to the predisposition to regard members of one’s group as the focal of the universe, to deduce other social groups from the outlook of one’s own group and to assess the behaviours, beliefs and values of one’s own group to somewhat more positively than those of out-groups. (Cox & Beale 33).
Resistance to change
To know more about the business strategies for administering diversity is a major achievement in bypassing resistance to change initiatives. The resistance to initiating organisational change initiatives associated to diversity frequently happens since these initiatives are regarded as just other stranded efforts in an apparent endless succession of “hot” interference efforts for making organisations to be more vibrant and competitive. This kind of resistance is footed on very genuine concerns, particularly insofar as they spotlight on the necessity to assimilate different intervention efforts and to make sure that they all are connected to in general business strategy of the business organisation. (Cox & Beale 42).
Informal Integration
It refers to the impact of diversity, for instance s, the differences in group identity, on informal networks for communication and socialisation and on informal processes of sponsorship and development. Thus, the communication styles practiced by IKEA facilitate to comprehend the nature of host culture like culture of UAE and to operate with behavioural setups and local cultural restrictions in UAE. (Cox & Beale 34).
Communication
There are instances where differences due to intergroup may result in communications barriers or breakdowns. As per Tannen (1994), members of various cultural factions frequently have poignant variances in styles and languages of communications. If diversity in work groups is not well administered, these variances present may act as a bar to understanding and thereby making preserving rapport and trust more difficult. (Cox & Beale 42)
Differences in Management styles
If a management trainee is recruited in an IKEA store and if he has to be trained as a entry level manager ,then he will be given training in each of the hourly jobs where he will be learning how the IKEA store is being run , how each department of IKEA functions and rests on a variety of management styles. (Tanke 2000:160). Theory X and theory Y are developed by Douglas McGregor which has two generalised assumptions about human behaviour.
Theory X is based on the assumption that people in general are lazy and they must be pushed in productive demeanour on the job. Theory Y is based on that assumption that people can be self motivating and enjoy work if a proper atmosphere exists. McGregor was of the view that majority of people’s nature adjusts to Theory Y, where as majority of management styles are based on theory X. (Tanke :209).
Literature Review
As per research study conducted by John Kotler and James Heskett who were the professors of Harvard Business School in American companies, there were close relationship long-term economic performance of the company and strong corporate culture. Thus, Kotler and Heskett findings corroborate the concept that it is the specific cultural traditions that decide the victory of the strategy for managing the cultural diversity (Hoecklin 35).
IKEA is following a successful strategy for managing the cultural differences as it blends the national cultural values of Sweden that with its strategy itself.
In IKEA corporate values and practices are constructed around such Swedish values as frugality , egalitarianism , simplicity , hard work , paying attention to individuals etc.Thus ,the values appears to present at the more fundamentals level of human nature that to be specific to one national culture.
IKEA adopted a careful approach and has entered into various markets rather carefully and peers into how they can harmonise present trends in a market. This “fusion” assists to reduce cultural clash with customers and employees.
The job application form of IKEA in all regions including UAE have the following statement at the top thereby establishing a clear cut policy for commemorating diversity from an employee’s initial interface with the IKEA. “In our IKEA family, we wish to have the human being as focal and to support each other.” (Parker 81).
The establishment of networked systems for communication both socially and technically that helps to adopt fastly has been a special trait of Swedish. What has been referred as “relationship management “engrossed in might communications systems has been pioneered in the Sweden. Such value added networks together with the variety of services they offer, emanate from out of the highly developed “visual spatial” intelligence that is mirrored in creating cultural diversity in IKEA. (Lessem 359).
IKEA stands as model that the creation of transnational corporate culture and identity is possible and the replica selected by IKEA for establishing its transnational corporate identify has been however condemned since it is more heavily relied towards Swedish national culture. It is to be noted that the simple transnationalisation of a Swedish culture around the world might be followed by a significant losses to corporate’s flexibility and as well as creativity.
It is rather surprising that the overwhelming success of IKEA’s strategy which means one-directional conveyance of the Swedish management technique to assimilate into other cultural atmosphere like UAE. It really connotes that IKEA’s values specifically vulnerable to cultural convergence and transnationalisation since they symbolise significant values of our present times and globalised world. (Mann & Gotz 307).
To remain successful in USA, IKEA was compelled to make transformations to the idea that had earlier worked well in Europe and Asia including UAE. In 1985, IKEA entered into the American market. In 1988, IKEA witnessed a steel fall in its sales in USA in alarming proportion. It was evident that some features of the IKEA ideology were not appreciated or understood by Americans. To adjust the IKEA culture with that of American culture, IKEA has to undertake major transformations in its cultural ideology.
Though it was a novel experience for IKEA, it has been compelled to introduce some proper cultural fine tunings in other nations also including UAE. Though, the salient structure of IKEA cultural ideology remained unchanged, some fine-tuning was needed to Americanise the concept. Due to this, IKEA penetration into the US market progressed up astonishingly. (Edvardsson & Enquist 2008:89).
About 20,000 new employees are being recruited by IKEA on yearly basis. All of these new employees are appointed at the national level and there has been much transfer between various nations’ operations. IKEA is of the strong view that diversity offers a more demanding business. (Edvardsson & Enquist 89).
Appropriate staff recruitment at the store level at UAE has been regarded as a cornerstone and specific attention is paid to experience in retailing and a service-oriented attitude of the new recruits and if they lack specific skills, adequate training is being given to them that will suit the cultural diversity of UAE. When interviewed the managers of various IKEA stores across the globe including UAE, they observed that the key role played by the IKEA culture is one of the strong factors of success. (Edvardsson & Enquist 91).
The style in which IKEA sells furniture through Swidishness or Swidishness through its furniture is the best illustration of the style that present globalisation encourages the commoditification of the cultural difference. (Radway & Janice 1994: 206)
It is to be observed that as societies integrate culturally, they become more diverse in many aspects. For instance, IKEA has brought Swedish design to UAE co-existing with UAE design. (Collier & Dollar 15).
IKEA has built a vibrant corporate culture footed on some key values of the company’s founder which are fundamentally the same in every nation in which IKEA do business. IKEA’s style of management has a universal appeal. IKEA employed a global style of management which maintained a “Swedish Flavour “which is in consonance with their own corporate practices which have an edge over other styles of management.
IKEA employs pioneering workplace efforts to corroborate its inclusive viewpoint like “pancakes with store manager “gatherings where co-employees have a chance to exchange their view in an open forum. For supervisors and managers, IKEA is having in place mandatory value workshops in regular phase. In IKEA, diversity is being ensured and also celebrated and the every employees are asked to rate the managerial skills of IKEAs managers and their rating will be used in their salary review.
Recommendation
Tools for Managing Diversity
Empowerment
Diversity exists in a business organisation when there exists varied cultural, demographic and personal differences among the employees who work there and the customers who receive services or products from there. (William 2005:395). Diversity refers to characteristics of individuals that mould their identities and their experience in the workplace. Diversity refers to the magnitude of variances among members of an organisation or a group.
In many ways, people are diverse. Within the workforce, people differ in their ethnicity /race, gender, religion, ability and age. There also exists differences in their sexual , military status , values ,expectations , socioeconomic status , lifestyle , work style , and position or function within the organisation .( Lussier 2006:242_. Keys (1995) emphasises that through empowerment of employees a business can achieve organisational process and can attain an excellent quality service.
Further, TQM spotlights on managing the whole organisation to yield quality to customers and significant ingredients include employee empowerment, client satisfaction and continuous enhancement in customer satisfaction. ( Kirst –Ashman & Hull 167).
Diversity Training Programs
IKEA’s dedication to the ever prolonging development of its employees was mirrored in the IKEA’s policies on development and training of its employees. The company is having in place a wide-ranging professional and training program to strengthen and promote the advancement of its workforce.
Its workforce could make use of many available resources including classroom sessions, books and online instructions to cater their needs in acquiring advanced knowledge or increasing their skills. IKEA is also having specialised training programs in provinces like health, diversity, environmental and safety consciousness. (Pearce 709).
Mentoring/Networks
Mentoring has been used an important tool of IKEA’s employee knowledge program . IKEA launched a program namely “partners for growth” which was a twelve months mentoring effort that teamed IKEA’s junior managers with senior managers from different locations of IKEA. Mentoring is anticipated to train and prepare junior managers for the top positions in the future and to assist IKEA to cater its needs in coming years. (Pearce 709).
Summary
IKEA intends to have a workforce that mirrors the diversity of a neighbourhood. For instance , IKEA store in Atlanta has a mixed workforce which includes Asians , whites , Hispanics and African –Americans. Its stores office in Atlanta also does have a diversified workforce as logistic manager of its store is a German whereas its workers include workforce from Denmark , Guyana , Canada and Spain.
Thus , diversity in IKEA is one facet that to move around its Swedish roots but at the same juncture acknowledging varied cultures. Thus , IKEA is having a diversified workforce where its entire workforce is called co-workers and its managers are involved in helping the company to market its products towards target customers . IKEA is strongly believing in variety of workforce from varied backgrounds will fortify its organisation setup and thus making their company a really true ,strong , global company. ( Ritzler 2007).
Conclusion
If one takes into account the lessons learnt by IKEA when they globalised their business strategies and by relying on particular theory and research in the gamut of cross cultural diversity it could be concluded that in spite of real globalisation process , cultural differences prolong to divide the globe into provinces and conditions and the possibility of perusing a global style of management and standardisation of products , operating methods and services on the global level.
Hence, variances in perceptions, communications and values which make significant to comprehend the nature of host culture and function with local cultural restrictions and behavioural patterns.
These issues may make constraints in the fields like product development, marketing, HRM, organisational structures and other management problems. Comprehending behavioural variances is a crucial factor as it defines the style in which organisations do businesses. Hence , international companies like IKEA must assess their business practices to make sure that regional norms in UAE in behavioural characteristics are being given great significance.
Thus , IKEA tradition encourages the realisation of every individual potentiality and respecting everyone’s diversity and IKEA visualises this as an integral aspect of its competitive advantage. Recruitment strategy of IKEA relies heavily on values and diversity and not on its earlier retail practices. IKEA’s dedication to diversity is corroborated by the fact that it offers translations for non-English applicants both during the recruitment phases and during the induction phases and IKEA’S workplace slogan is “ dare to be you.”
Thus , IKEA’s rational cultural diversity and workplace efforts have assisted to maintain the lower labour turnover rate in the industry and it also helps to increase its performance and profitability year after year.
Works Cited
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Edvardsson Bo & Enquist Bo. Value-Based Service for Sustainable Business: Lessons From IKEA. New York: Taylor & Francis, 2008.
Hoecklin , L.A. Managing Cultural Differences For Competitive Advantage. Hyderabad: University Press, 2000.
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Mann, Clarence J & Gotz, Klaus. Borderless Business: Managing the Far-Flung Enterprise. New York: Greenwood Publishing, 2006.
Parker, Barbara. Introduction to Globalisation and Business: Relationships and Responsibilities. New York: Sage Publishing, 2005.
Pearce. Strategic Management : Formulation , Implementation and Control. New Delhi. Tata McGraw Hill, 2008.
Radway, Lawrence & Janice. Cultural Studies: Vol 8, Issue 2. New York: Routledge Taylor & Francis Group, 1994.
Ritzler , Karl W. ( 2007). Swedish Standards Drive IKEA. 18 December 2010 Web.
Tanke, Mary L. Human Resources Management for the Hospitality Industry. London: Cengage Learning, 2000.