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How Ikea Manages Cultural Issues in China Operations Essay Sample

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How Ikea Manages Cultural Issues in China Operations Essay Sample

Countries categorized as individualistic are characterized by the “I” cultures. Such societies expect its members to take care of themselves and immediate families. Whereas success in individualistic societies brings pride and stature, failure brings the feeling of guilt and in most cases leads to loss of self-respect. It is for this reason that individualistic societies value tasks than relationships. Collective societies, on the other hand, are synonymous with the “We” culture. In such societies, one’s welfare alone is not sufficient, but the entire society’s well being. Collective societies coexist in groups formed early in life and maintained throughout one’s life. These groups, usually consisting of friends, business partners, and extended family, provide protection to loyal members. In contrast to individualist societies where tasks are treasured than relationships, collective societies treasure relationship among members than tasks. China’s IND score is 20, while that of Sweden is 71. This is a clear indication that Sweden is a more individualistic society than China.

IKEA, while operating in both countries, has taken into consideration these cultural differences. According to Chaletanone and Cheancharadpong (2008), IKEA’s success in China is a result of sensitiveness to the country’s culture among other factors such as “psychic distance and learning, strategic decision making process, degree of adaptation of retail offer, entry strategy, characteristics of organization and management characteristics” (41). According to the researchers, China is a collective state where private and work lives are interwoven (Chaletanone and Cheancharadpong, 2008). IKEA’s management, baring this in mind, has put in place policies and strategies aimed at taping the advantages of collectivism, for instance, in marketing. IKEA’s advertisements in China use “more culturally congruent collectivistic appeals than culturally incongruent individualistic appeals” (Lin, Koroglu & Olson, 2012).

China is strongly inclined towards selective application of rules and policies. Therefore, they tend to favor members of their groups in implementing rules and policies, resulting to nepotism and favoritism. IKEA, like many other businesses venturing in China, has labored to counter all aspects of nepotism and favoritism in the country by compelling its employees to respect its anti-nepotism policy requirements (Lee, 2003). In Sweden, a country that is highly individualistic, IKEA’s operations have continued to reflect strict adherence to the nation’s cultural alignment. For instance, managers steer clear of employees’ private lives (O’Donnell & Boyle, 2008).

Additionally, company rules are applied universally without any form of favoritism, which is typical of most nations with high IND. Canada, a country with IND of 80, considered to be in the range of that of Sweden, widely uses the same management style where managers do not interfere with employees’ private lives. The contrast, however, comes in the level of appreciation of employees’ private lives. An interview carried out by Silvia Iacuzzi, focusing on the management style of IKEA’s managers; found out that the managers occasionally organize family outings for employees to motivate them (IKEA mangers; personal communication). Masculinity vs. Femininity

Masculinity and femininity are founded on the fundamental drivers of motivation. While those who are driven by a strong desire to be the best in what they do are masculine, those driven by liking what they do are feminine. Competition, success, and achievement drive masculine societies. On the other hand, quality of life one leads and caring for others, drive feminine societies. In this dimension, Sweden scores five (5). This places it as a highly feminine society. According to Ekstrom and Nilsson (2009), IKEA is bent towards feminine culture in Sweden and in many other countries where it has crossed borders. They claim that most of the company’s operations are influenced by this culture. For instance, they claim, “They search for people that think alike; knows how to listen, with abilities to transmit knowledge, do not think of oneself as better than the other, and have curiosity of what is going on around them” (Ekstrom & Nilsson, 2009). The commitment of IKEA’s management to feminine culture is not in doubt.

The managers promote equality, humility, and solidarity through consensus. One manager claimed “from our humbleness in approaching our task and from the simplicity of our way of doing things. We must look after each other and inspire each other” (Ekstrom & Nilsson, 2009). Ranelid & Bello (2005), while analyzing IKEA’s culture in Sweden and Denmark, realized the use of incentives in Sweden to motivate employees, which is characteristic of feminine cultures. In contrast, however, incentives were not provided in Denmark. Considering that Denmark has a low score of 16 in this dimension, they fall in the same category with Sweden; feminine culture. China, on the other hand, scores 66 in this dimension.

This places it as a highly masculine society driven by the desire for success. It is no surprise that Chinese prefer extending their working hours to being with family or going for leisure activities (Russell, 2008). However, Silvia Iacuzzi’s interview with IKEA managers in China revealed that the company has adopted a policy discouraging overtime and holiday work to give employees more time with their families (Personal Communication). Uncertainty Avoidance

The future is always uncertain. Different societies deal with uncertainties characterizing the future in different ways. Whereas certain societies struggle to control the future, others let it take its course. The manifestations of anxieties and threats arising from future uncertainties are reflected n UAI scores. Societies that have high UAI scores exhibit high levels of anxiety and stress (Ghemawat & Reiche, 2011). These societies avoid failure at all costs, display emotions publicly, fear any form of conflict, seek consensus on many issues, and create numerous rules to guide their activities and lives. Societies that score low on UAI index, on the other hand, exhibit almost opposite characteristics; they like taking risks, are more relaxed, have few laws, and view conflicts as a way of life. Sweden scores 29 in UAI index. This is low and is indicative of a society that has “a low preference for avoiding uncertainty” (Hofstede, 2009). China scores 30 on the same scale, thereby putting the two countries in the same region.

IKEA has shown a low level of UA in its operations in both countries. According to Dragon News (2007), “Swedish managersencourage and expectsubordinatesto take the initiative, and theydelegatetasks.” Unsurprisingly, IKEA managers in Sweden give responsibilities to subordinates who are then expected to perform to their best in a free environment. Since hard work is taken up unwillingly in low UAI cultures, IKEA’s managers have been able to reach their targets by setting higher targets. Rules are also minimal, with reason taking centre stage. The company’s informality and unconventional solutions got a warm reception in China, making transition from foreign managers to local ones easy due to same UA. In contrast, however, IKEA has not succeeded in narrowing the gap between the management and subordinates in China as it has done in other regions. For instance, in Spain, a country with a very high UAI of 86, which is expected to have a bureaucratic system and a long distance between the management and the subordinates, IKEA has succeeded in narrowing the gap. Long-term vs. Short-term Orientation

This dimension deals with how societal values and traditions are projected; short term or long term. Societies with low LTO scores are dynamic and creative. They show great respect for traditions and history and have a tendency of expecting quick results. When fully involved in the execution of a new idea, low LTO societies can perform beyond expectations. Sweden scores 20 in the LTO index. As such, it falls in the category of short-term orientation cultures. IKEA’s managers have adapted the company’s operations to suit this culture. For instance, the managers have traditionally broken down the company’s targets into quarterly targets to enhance focus (Arrigo, 2005). The society has a low propensity to save, hence the company’s promotion of social retirement benefits. China, on the other hand, scores 118 in the LTO index. As such, it falls in the category of long-term orientation cultures.

Perseverance and persistence are fundamental for success in China. Many people in the country would rather reject a good offer today in anticipation of a better one tomorrow. This explains why most Chinese prefer investing in long term projects such as real estate. IKEA has tapped aspects of this culture by producing and distributing long lasting products. In fact, durability forms the core of all IKEA adverts in China. This is because any people in China would rather save for a long time to get durable products than buy cheap ones that do not last. In conclusion, IKEA’s culture in Sweden is clear and very strong.

However, in other countries where it has set foot such as China, there have been adaptations and compromises to ensure acceptance. For instance, aspects such as hierarchy and utmost respect for managers have persisted in China. Despite varying cultural application in the various nations, IKEA has succeeded in creating an unrivalled brand globally. Today, the company has a variegated and solid customer base that has continued to propel it to its global dominance in the retail industry, especially in the furniture market.

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