Writing Assignment help on : IKEA

BACKGROUND

IKEA is known as the most successful retailer of the mass market. It is famous for selling home furnishings in Scandinavian style. They also sell the other household goods. They own about 230 stores in about 33 countries and they are also famous for hosting 410 million shoppers every year. The name of the country is the abbreviation of the name of the founder of the company, Ingvar Kamprad and his childhood hometown Elmtaryd, Agunnaryd. It started its operations in Sweden in the year1943. The company makes and designs its own furniture. This is created by suppliers who are more than 1500 in number across about 50 countries. The company followed the saying, low price but not any price. This proved the company as an example of business growth and innovation. The company also sells its products online and through mail order. The key component of the success of the company is to find the right manufacturer for the product. The biggest market for the company is Germany. (Dircon, n.d)

It has spread itself across 55 countries which include trading and retail presence. IKEA was started at a small city Almhult which is situated in the south of Sweden. It is a private held company which deals into selling bathroom accessories, kitchens, flat pack furniture’s. Many countries have been playing an important role in the expansion of the business. The focus area of the company is said to be China. The company has decided in opening more than 10 stores by the year 2010 in the this part of the world, it has been recorded that more than 18 % of the purchase is carried on in this country and thus this country is included in the top most purchasing countries.

The report studies the challenges of the cultural understanding when this Swedish company started its IT operations in Shanghai. This is done with the help of theoretical framework of Hofstede’s dimensions of cultural understanding.

INTRODUCTION

China is a country which is known as the focus area for the company IKEA because this is the destination which contributes most of the purchases and as discussed before more than 18 % of the purchases are done in this country. The IT department at IKEA is the department which is to provide business solutions to the company, the common architecture, service and the support along with doing the daily operations of the business. The main role is managing the flow of the information so that development and the growth of the company can be supported. The new helpdesk was started at Shanghai so that IT could be kept as close as possible to the business. This was done in the year 2007. (China daily, 2010)

The main focus of the report is to highlight the issue of the cultural gap which came into existence when a new IT division was to be established in Shanghai. The people who were recruited i.e. the people from china and the expatriateriates, since then, have been learning and making efforts to understand the culture and the working style.

The culture of IKEA can be traced by its roots in Smaland which in the southern Sweden. This place has always been linked with the hardworking and dedicated people who have been able to develop themselves by sustaining on limited resources and making the most out of these limited resources. Shanghai on the other hand is the largest city in China when it comes to population. It is also known as the world’s largest urban areas. Shanghai is considered as the place where everything which comes under the term “modern” in China was born. In the first half of the twentieth century, Shanghai was knows as the cultural and the economic center for East Asia. (IKEA, 2012)

A lot of effort was involved in order to spread the IKEA culture when initially IKEA IT opened their division in Shanghai. It is noticed that there is a lot of gap between the culture of china and Sweden especially when it is studied in terms of the distance which is there between the subordinates and their superiors and the focus which is on success rather the quality of life.

The Masculinity dimension of the Hofstede Model states the extent to which the leading values of the society are masculine. This will include being assertive, the acquiring of money and things, not empathizing with others, and the quality of life of the people.  It is stated that China has a very high score when it come to this dimension of the Hofstede Model. In the culture of china assertiveness, challenges, money, ambition has a lot more value than other aspects like working relationship and cooperation. There is one cultural difference between the Chinese culture and that of the countries in the west. The difference is that in china high power distance is one of the main cultural traits. This means that the distance between the subordinates and their superiors is very much. The relationship between the superiors and subordinates can be seen as a triangle where at the top is the manager or the superior and the subordinates at the bases. There are very few or no instance when the management can be questioned. This cultural aspect makes doing business in china a new game altogether. There are a lot of differences between the cultures of Sweden and China. The main barrier between the two is the language which makes it difficult to communicate. The culture in china emphasizes more on power and prestige while according to the western European culture the managers or the people of the high authority have to try their level best to convince and also influence the subordinates so that they follow certain set of directions. (Crown Relocations, 2012)

EXPLANATION

Hofstede’s dimensions of culture were derivative of the organizational research which was carried out by Geert Hofstede. These dimensions are used by various companies in order to study on the culture and the working environment of the business. There are five major dimensions that affect the culture of a company. These are:

• Power Distance Index: this is referred to the extent to which the employees with low power of organizations and institutions accept the fact that the distribution of power is unequal. The inequality of the distribution of the power should be stated from below and not from above. The culture of China as discussed before has high score in power distance index as the managers have the upper hand over his subordinates. This is quite opposite to the culture that is followed in the Western Europe. (Word Press, 2010)
• Individualism: this is the extent to which the people are converted into groups. If the individualist side is focused then it means that the people have to take care of themselves and their family. There are no strong ties between individuals. If the collectivist side is focused then it means that groups are formed since birth of individuals and they are tied in strong ties. This often results into extended families. Here the people protect their families throughout their lifetime. In China the culture is more titled to individualism and the culture of Sweden is tilted more towards Collectivism. Societies in Sweden are characterized by institutional collectivism. They combine the individual needs to the welfare of the society as a whole. The problem of industrialization is handled in China by adopting the approach of Individualism whereas Sweden adapts the Collectivism approach. (Avinash Jha, 2010)
• Masculinity: it refers to the distribution of the work between the genders of the society. This is another issue for any society. There have been issues also with the company relating to the rights of the women. IKEA had prepared a catalogue for promoting its product but in its print which was send to Saudi Arabia, the pictures of the women were removed. This was in contradiction to the values of the company. The company was accused for removing the women from the catalogue. The company realized its mistake and was found apologizing for the same. The culture of the company is not in accordance with this act.(The Wall Street Journal, 2012) The culture which is prevalent in Sweden appreciates contribution from the women as well unlike the culture of china that which again has a very high score on masculinity.
• Uncertainty Avoidance Index: it shows that to what degree a culture of a particular country is able to make its members feel either very relaxed or uncomfortable in situations that are unstructured. These are of two kinds which are uncertainty avoiding culture and uncertainty accepting culture. The initial kind minimizes the uncertainty by following certain strict laws and regulations, while the second kind tries to live peacefully with the unstructured situation. (Avinash Jha, 2010)
• Long Term Orientation: this was a dimension which was added later on after taking interviews of a few Chinese scholars. It is said that the western culture is short term oriented which means that the people value their traditions and accomplish all their social obligations. The Chinese culture on the other hand is long term oriented which is thrift. The people in china use their capacity to work and the people in the western culture use their capacity to love.
• CONCLUSIONThere are a lot of gaps in the culture of the company as well the two different nations. It can be concluded that the Chinese culture was a high scorer in Power distance, Masculinity; individualism whereas the Swedish culture was low on power distance, gave stress on feminists, collectivism and was based on the achievements of the employees. The IKEA culture and the Chinese culture, however had too similarities. They both were characterized by long term orientation and low uncertainty avoidance. There were cross cultural problems and the problem of the language which had to be addressed in order to fill the cultural gaps. Hofstede was used because it provided a comprehensive cultural framework. (Geert Hofstede, 2012) This should be used as an effective example to understand the problems that can arise due cross cultural problems and thus the company should be prepared to deal with such problems as the company will be expanding to more companies. It can be concluded that it is not tough for the Chinese to be a part of the IKEA culture. The main reasons for the difference between the culture of the people of Shanghai and IKEA were the balance of their work life and their attitude towards their work. As per the IKEA culture the people need to maintain a work life balance but the people of china were ready to sacrifice it for the sake of their career. The culture of IKEA is collectivist while the culture of the Chinese was Individualistic. The IKEA culture was feminine and they believed in providing equal opportunities to the women while it was the opposite when Chinese culture is considered. The fact that the IKEA culture is quite simple cannot be ignored. They have simple beliefs but these are held quite strongly. IKEA is a company that is driven by the achievements. These achievements are won by the competency of every individual. They firmly believe in the fact that the company grows with the growth of every individual. The employees who are of the home country and will be working in the new country should be given the training of the culture of the country before they start working with the people of the country. The Swedish culture is almost similar to the IKEA culture and this fact is quite evident. IKEA should give the Chinese employees training about their own culture and also make them aware about the effort that has been involved in doing so. (IKEA, 2012)

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