a) Culture can be defined as “the sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations” (Ball & McCulloch, 1999) or “the collective programming of the mind.” (Hostede, 1980) Understanding culture and adapting to it as a business is necessary for survival.
To be culturally savvy is a key skill that many companies tend to underestimate. It is a skill for managing people and processes in other countries, using a working knowledge of cultural variables affecting management decisions. It may seem like a meniscal matter however a lot of business have lost and also gained a substantial amount of wealth due to their competence in cultural literacy. Neil Saunders at retail consultancy Conlumino observed that “As IKEA expands globally, the price of global expansion is that the company does become less cohesive.” ( Ringstrom, 2013 ) Although IKEA initially believed that it would not need to adapt its business for the Chinese and North American markets as it had succeeded financially in Europe with little alterations, it had learned that that was not necessarily the case and struggled for the first couple of years to create a profit. In America IKEA had to customize its products to appease the locals an example would include creating bigger beds and closets.
Section B: Cultural Issues
b) Since IKEAs success and initial interest in globalization. The company struggled to maintain its inherently Swedish core characteristic which can still be seen subtly by the blue and yellow colours of the logo, the Swedish language on all items, even within Ireland or even by the infamous “Swedish meatball” placed on their menu. (Jackson , 2002) Although its Swedish features is still very much present it has been successful in adapting to other cultures and has even taken 4 years to research India's market in order to have initial success rather than lagging success as it had experienced in North America and China (Ringstrom, 2013). Specific cultural issues that an international manager should be aware of when operating globally include; language, religion, technology, geography, social issues, education and cultural values.
Language, when people speak the same language even though they are from different countries it is safe to assume that their cultures hold many similarities, for example English-speaking countries tend to have similar cultures, like English people and Irish people. Another example would include the majority of Spanish speaking countries in South America hold similar cultures. However, compare English speaking countries to Spanish speaking countries their cultures will have many differences. Language affects spreading culture and also affects business and commerce due to higher cost of money and time spend translating.
Religion is very strong element in culture, also the effectiveness for religion in many countries has been declining. For example, in China the Telletubbies were banned as they were assumed to encourage homosexuality in children. Thus, when advertising it is important to avoid provocative or rebellious advertising.
Geography. Before our advanced transport global business was deemed extremely challenging due to the high costs of travelling and the amount of time spent traveling from one country to another, thus with airplanes and technology many of those barriers have been less challenging, yet not fully eroded. The cost of exporting resources to other countries can prove to be expensive. Particularly, if there is political unrest within the country or countries surrounding the said country.
Technology has expanded globalisation further than ever before but it is important to note that not all countries have the advanced technology that the home country might have like Sweden or the US. As a result, importing the technology, maintaining the technology and training the local staff to be familiar with the said technology can be very expensive.
What are the social norms? For example in China and India customers are not used to assmbling furniture, instead they buy whole sets and have them home delivered. As a result, IKEA has much more of a strong home delivery system and has catelogues filled with home décor ideas matching furniture that is sold separately together to inspire ideas.
Although, the cost of setting up in third world countries can be considered cheaper, an issue that many companies tend to forget is that the education level might not be up to speed. For example, in India executives are high sought after due their scarcity and as a result the salaries for said executives can go up to double the wages of an executive in the home country. Also, even though unskilled labour is cheap, many third world countries have a high turn-over rate and as a result end up spending due to recruitment and training.
Cultural value came first from family, which create the basic value which cannot change, easily like bad versus good, rational and irrational, wrong and right, normal versus abnormal. Thus it is necessary to adapt to said culture through cultural literacy and the ability to be culturally savvy.
Section c) Management of cultural Issues
c) In order to manage these cultural issues, companies should do extensive research before setting up in the targeted country, need for culturally savvy managers, hire mangers from within that country that are apt to the culture and language, when advertising consider the cultural and religious undertones of the country, adapt your policy to the country using Hofstede's four dimensions.
An international manager duties include cultural marketing, overseas manufacturing and international sales.
In terms of cultural marketing, international managers need to hire culturally savvy managers, preferably natives from the country that the store is place. An example would be IKEA setting up in Spain, initially IKEA assumed that as Spain is placed within Europe there would be little cultural difference, but as shown below through Hofstede's four dimensions is it clear that Spain and Sweden have many cultural differences. Particularly in the management it was found that IKEAs more informal attitude and unconventional solutions were being poorly accepted by the Spanish populations, thus hiring a manager from the locals adapted IKEA to fit the Spanish culture with a more structured style (MS, n.d.).
Before setting up within a foreign country, it is important to do extensive research and avoid stereotypes and underestimating the impact of culture; doing this could prevent loss of funds. This is what occurred in China. In China and India it is very rare to DIY your furniture and set it all up together, usually all the furniture is bought it sets as a whole and delivered to the home. Home Depot failed in China due to its lack of understanding this cultural difference. IKEA on the other hand realised this mistake and offered home deliveries. It also had an advantage, as many of the Chinese citizens are interested in Westernising their homes but do not know necessarily were to being. However, IKEA creates different home décor ideas within its stores that helps people in creating their homes. IKEA has learned from this and has done extensive research on India for four years before setting up. The interview people in their homes and see what the consumers actually want (Ringstrom, 2013).
Understanding the culture also means asking questions like what is the majority religion? Is this a collectivism or individualist society. What is acceptable and unacceptable within this society? Rebellious and provocative themes should be avoided in family oriented societies. It is noticeable if we look at the IKEAs catalogues the difference and changes it has adapted from one country to another. Apply the Hofstede dimensions will help analyse what is acceptable and unacceptable in that society.
PART B: Home Nation (Sweden) vs “Country B” (Spain)
Professor Geert Hofstede is a Dutch social psychologist who through his cultural dimensions theory, conducted one of the most comprehensive guide for cross-cultural communication. According to Hofstede, there is no such thing as a universal management method or management theory across the globe as the word ‘management' has different origins and meanings throughout the world. Management is intertwined with family, politics, government, religion and beliefs, and does not exist in isolation. This research will compare the cultural dimensions of IKEAs home country, Sweden to the cultural dimensions of Spain under Hofstede's (1983) four cultural dimensions: power distance, individualism versus collectivism, masculinity versus femininity and uncertainty avoidance.
1) power distance
The concept of this dimension refers to how a country deals with inequality. Sweden traditionally has a low PD score (31), while on the other hand, Spain has a mid to high score of (57). (MS, n.d.) This means that countries with high scores often have a strong sense of hierarchy and difference in social- economics classes can be stark. While countries like Sweden, with low scores there is less of a power distance and subordinates are more likely to view one another as equals, leading to more cooperation and less corruption. It is said that when the Swedes gave the throne to a Frenchman in 1809, their newly-crowned king was laughed at by the citizens (commoners included) after delivering an acceptance speech in poorly-pronounced Swedish; this was because there was not such a large power distance within that society and therefore it was not seen as disrespectful to laugh at the King (MS, n.d.).
2) individualism versus collectivism
In is interesting to note that as we progress we see societies head closer and closer towards the idea of individualism and stray away from thinking collectively and what is better for society as a whole. Many people believe the fading away from collectivism is the downfall of society and people placing what is best for themselves as opposed to what is best for the group is what has led to the increase of crime, selfishness and lack our care towards more vulnerable groups in society such as the elderly and children. Sweden is more individualistic then Spain with their IND scores being (71) and (51) respectively. (MS, n.d.)
3) masculinity versus femininity
It can be unusual to determine whether a nation is one of masculinity or femininity nature, especially when most nations have almost equal populations of male to female ratios and how subjective “male” and “female characteristics” can be, if there is even such a thing. However, according to Hofstede masculinity refers to the degree to which traditionally masculine values including assertiveness, materialism and lack of concern for others, prevail. While countries that are deemed to be feminine emphasize female values such as concerns for others, relationships and the quality of life. Sweden scores the lowest in masculinity with a score of (5), making it the most feminine culture tested. Spain has a low to mid score of (42). (MS, n.d.)
4) uncertainty avoidance
Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations, meaning that a high score in the Uncertainty Avoidance Index (UAI) meant there was a “low trust” culture. Many attributes can impact this, such as cultures like Japan have a need and high regard for principles, rituals, routines, rules and procedures within regulations. In one way it has benefited countries like Japan, because the continue to build upon what has worked and perfect skills through diligence and repetitiveness. However, in the case of other countries, it may mean that failure is severely punished even if an admirable risk is taken. For example, here in Ireland according to the Companies Act 2014, a company is seen as a corporate individual, thus its liability cannot be conferred onto it founders. This allows companies to take more advantageous risks as they do not have the fear of facing crippling poverty for a mistake or an unexpected market response. In other countries this may not be the case. A mistake is punished severely and the Government have an active role in protecting its citizens and encouraging local businesses through support. Cultures with low UA Index appear to have less laws and rules and appear more relaxed and free from stress. This may be due to the fact that their Governments are known to support their citizens and local business and attempt to uplift them rather than hastily punishing them for their mistakes. Unsurprisingly due to Sweden's strong sense of rehabilitation instead of punishment, which can be seen throughout all aspects of Swedish life, for example its prison, education, medical and welfare systems, the country has a relatively low Uncertainty Avoid Index of 29. In comparison, Spain has scored a UA Index of 86. The stark contrast was a the reason for IKEAs struggle in setting up in Spain, IKEAs informality parred with its unconventional solutions was poorly accepted and creating more structure regained IKEA managerial position with its Spanish companies (MS, n.d.).
In conclusion, Sweden has scored much lower in comparison to Spain on all four of Hofstede's dimensions. Culture was “the collective programming of the mind distinguishing the members of one group or category of people from others” (Hofstede, 1980) and from this study it is clear that Spain is a more collective country with high Index numbers while Sweden is a more individualistic, flexible, nurturing and equal society.
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1) Ringstrom A.(2013), “One size doesn't fit all: IKEA goes local for India, China” Available at: https://in.reuters.com/article/ikea-expansion-india-china/one-size-doesnt-fit-all-ikea-goes-local-for-india-china-idINDEE92603L20130307 [accessed 27th November 2017]
1) MS (n.d.) Cross-Cultural Management: The IKEA Approach, [online] Available at: https://manuscriptservices.co.uk/extras/examples/ikea.pdf [accessed 27th November 2017]
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