Cultural and Non-Cultural Factors Affecting the Organization's Moving to Another Country - Case Study Example

Critically analyze which has greater impact on an organization moving from one country to another, cultural or non-cultural factors Introduction:This essay deals with the expansion of Ikea, a leading furnishings company and shows the changes in its marketing mix and business development perspectives from one country to another. The organizational structure within the chosen company and in a general business environment will be discussed, and the impact of the international environment on business will be discussed as it relates to international marketing. The influence of the international environment on international marketing strategies is studied and an analysis is done to show the effects of internationalization on the implementation of the marketing mix. The focus here is only on one origin and destination market and on the chosen company Ikea and its expansion from Sweden to the UK (Ikea.com, 2006) and the analysis will be based on business development, international marketing, training and the nature of organizational structure in different environments that seem to affect or are affected by place, people, promotion and product or the features of the marketing mix (Balmer, 2006). Ikea and Internationalization In considering the movement of an organization from one country to another, the impact of the international environment has to be considered primarily as the organizational structure is highly influenced by the international marketing environment. In this discussion we focus on the nature of the organizational structure and the impact of the international environment on the company that is analysed here and would also discuss the cultural and non cultural factors that seem to affect an organization that shifts base from one country to another (Axinn and Matthissens, 2006). We examine the organizational structure, also the international environment and business environment on international marketing strategies. The implementation of the marketing mix is also considered along with the effects of internationalization and movements of a company from one country to another (Axinn and Matthissens, 2006; Balmer, 2006). Thus there are several issues considered here, the organizational structure, the international environment and marketing strategies as also the effects and causes of internationalisation and implementation of the marketing mix. The focus is on understanding the dynamics and relationship between the origin and destination markets. The four elements of marketing mix consist of the marketing tactics and deals with price, place, product and promotion. These four Ps are the basic elements of marketing but recent theories on 7Ps have added people, process and physical evidence in the marketing mix (Balmer 2006, Gronroos 1993). These elements are important as what customers and buyers get will depend on the combination of the suitability of the price, the quality or acceptability of the product in the market, promotional services done to sell the product and the place in which the product is being sold. Thus some major issues in marketing success relate to the place in which a product is launched or promoted and if the environment is suitable for the product then it would be considered as successful in terms of place, as the place is in accordance with the expectations of the company if the product sold and the marketing techniques used are commensurate with the needs of the environment or social conditions. As place defines the social environment, it is an important ingredient in the success of any marketing program and is a part of the marketing tool as the place will show the marketing environment to be considered as also issues such as how far the local environment is suitable for launch or marketing of the product (Gronroos, 1993; Balmer, 2006). The place involves the cultural as well as social values, the lifestyle of the people, the preferences of the surrounding locals and residents, and the geographical or environmental factors that can affect the sale of a product or even the general acceptability of the product by the local population. The 'product' would deal with the nature or quality of the item that is being marketed or sold and would be defined by the features of the item as also what distinguishes it from other similar products in the market. Marketing is about making an impression and good quality products do make an adequate impression on the general public and the emphasis is on using the product and highlighting its features. The acceptability of any product would suggest how far a marketing endeavor has been successful, so the product and its reputation would in turn define the reputation of the company. The other Ps in the marketing mix are price and promotion. Price would refer to the value set for an item and would show how far an item could be valuable in terms of market acceptability. A suitable price helps in increasing the market value of an item and also increases its acceptability and promotion is the marketing strategy which finally makes any item acceptable. Promoting an item requires a proper marketing strategy and promotion only helps to increase the market value of an item. Thus these four elements of marketing mix including the price, place, product and promotion are interrelated in the sense that the quality of the product tends to affect the price as better quality may in some cases indicate a higher price, the price and place are related as in certain places any highly priced items could be priced less and all this affects and shapes the promotional programme set for any product (Gronroos, 1993; Balmer, 2006). Thus whether a certain highly priced product would sell within a specific local environment or place would depend on the promotional package set for any item. An item that is promoted better would also essentially add market value to the product and also set its standards according to its price. In this discussion organizational change in set up and environment and the issue of internationalization is put forward along with marketing strategies related to product, promotion and price according to change in place or location. Thus if an organization changes its operation or shifts base from one country to another, its products and prices change accordingly and its promotional strategies also changes according to cultural patterns. The prices vary from one country to another and as such when an organization shifts its operations, its salaries and price of products and all financial aspects change accordingly. According to the needs of a different culture and place, products made by companies also change accordingly and that depends on the needs of the people. The people and process are other aspects of marketing, business operations and management that change along with the social environment (Constantinides, 20; Balmer, 2006). In any geographically or culturally different environment not only do people and price differ as we have suggested but the nature of products differ according to differing cultural and social needs of the people, the promotional strategies also differ as these will have to appeal to potential customers who may think or react differently according to social and cultural patterns and the process of marketing also changes due to a change in the internal and external environment of the organization. Thus considering 'place' as central to this discussion and as an important aspect of the marketing mix, the role and importance of products, price, process, people and promotion could be described and analysed in this discussion and in accordance with the theories of management and the practice of one particular organization in different countries and the changes in its marketing mix in accordance with the change of place or location has been discussed here. The movement of companies is considered in accordance with the changes in price, promotional strategies, products, processes and people when companies relocate, and shift its operations from one country to another (Balmer, 2006; Contantinides, 2006). This discussion is about the transferring operations of Ikea, a Swedish furnishing company to United Kingdom. A short introduction of the company would be followed by an analysis of the business related issues and the 7Ps of the marketing mix would be considered in the light of Ikea's shift from Sweden to UK as a major retail furnishings chain. IKEA is an international budget furnishings retailer, managed and controlled privately by a Dutch foundation with offices in Belgium, Netherlands and Sweden. The company distributes its more than 5000 products to retail outlets and sells contemporary furniture through 247 stores in 34 countries (Ikea.com,2006). Although Ikea is spread around the world, the country's Swedish presence is now being increasingly shadowed by a strong British presence in the UK market. One of the strongest marketing devices and tools are its promotions and advertising and the company regularly distributes its catalogues and promotion letters to boost sales and retail sales on the internet is also a growing option. Although the company has stores across the world, the focus here is on the movement of operations from one origin country, in this case Sweden to one destination country United Kingdom. Ikea was founded in 1943 and sold picture frames, jewelry, watches, pens etc and Ikea began to design its own furniture by 1955 (Ikea.com,2006). Ikea sells its products considering the concept of utility and modernity. Utilitarian and modern designs are used and consumers assemble their own furniture giving the company a modern conceptual orientation to marketing and selling. Ikea has a sustainable approach to mass consumer culture and maintains a democratic and environmental approach to design. The company maintains an integrated approach to manufacturing and design. Ikea has expanded its base since its launch in Sweden and now it also has bases in Nordic countries and in the UK. In England, London, Manchester, Leeds and Liverpool are some of the places where Ikea furniture are now manufactured (Ikea.com,2006). Although Ikea products are designed in Sweden, the furniture is now manufactured in developing countries to keep production costs low. Ikea now has its base across Sweden and other countries including the United Kingdom and in this discussion, we focus on the company's policy changes with its expansion to the UK, as UK seem to be a largely consumer based society. As T.K (1997) suggests Ikea is the largest retailer of home furnishings in the world and its stores are visited by 139 million people from around the world. The paper suggests that despite Ikea philosophy of working together with its customers in providing effective services and products at a convenient price, Ikea would have a dangerous position if it becomes constricted in its approach to business or marketing philosophy and becomes too rigid to go beyond its formula and have a more open system of marketing and business development. Considering a 2006 report on Strategic Directions, the latest management developments across the globe in the light of globalization would be an increasingly global nature of business. The report shows that shopping malls in large city centres and bill boards n front of stores seem to have similar attributes yet retail stores are increasingly products of the communities they serve and some companies adapt and as a consequence succeed in the local market despite being a global brand. The paper provides strategic insights into the world's leading organizations and the role of globalization in changing business organizational structure and functions. Jonsson and Elg (2006) presented their views on retail internationalization and internationalization is associated with knowledge management and organizational learning and constructs and approaches that are successful in a globalised management structure. Internationalization and globalization is largely a process of knowledge sharing and globalization and internationalization in retailing requires the process of developing both theoretical and practical understanding of knowledge sharing (Jonsson and Elg, 2006). The approach to knowledge and knowledge sharing could be understood in accordance with the international retailing and internationalization processes. Jonson and Elg (2006) used Ikea's entry into the Russian market as an example of the internationalization process and knowledge sharing. Some studies have accounted on the technology emphasis within Ikea and that technology could drive efficiency through a supply chain and reduce the retail prices (Lentz, 2002). The importance of transaction supply and trading patterns has also been highlighted in most cases. The relationship between service culture and service strategy and services marketing strategy could in turn provide a better understanding of the strategic role of service culture and strategy within long term business development perspectives. Considering the case study of Ikea, the importance of a strong and dynamic service culture has been projected for the market and business success (Bo and Bo, 2002). Latest management development shows practical implications of research and management development relates to training, employee selection and changing the organizational structure. Training and people management are also associated with knowledge management and seems to have influenced the world's business organizations by providing a combination of strategic insights and practical thinking. Product strategies have been considered as driven by markets or driving markets and Kippenberger (2000) writes that companies that work with a revolutionized philosophy tend to rely on the vision set by the leader rather than on market research. Being competitive is very important in a globalised market and competing by being market driven is just one of the orientations of any company. The case of Ikea has been described by Kippenberger (2000) as having pioneered in making it impossible for other companies to copy the unique designs of Ikea and Ikea goes ahead in every aspect of furniture design and manufacture giving it an edge over all other furnishing companies in global and local markets. The main focus is on companies that can think and act differently and if companies want to change the rules of the game, they would have to see things from a different perspective and bring about major changes. Warnaby (1999) details the buying of the Habitat by Ikea in 1992 and the strategic issues which are involved in acquisition of a retail organization that is global in its operations. The development of the retailers, in this case especially Ikea and the international development of such retail companies have to be understood from management and sales perspectives. Considering the global strategic framework, the future development of all acquisitions by a company would be related to issues of segmentation and positioning and reference to retail branding in a global market. Discussion and Conclusion: The focus of the discussion has thus been on Ikea and its management changes within the globalization and internationalization perspective and the cultural and non cultural factors that seem to affect internationalization. The expansion of the company from its original Swedish base to UK and other Nordic countries is especially of importance. The base to UK involves setting up of chain stores as well as taking care of business and corporate social and environmental responsibility. Ikea's mission and vision has been to promote low cost home furnishings which everyone can afford (Ikea.com, 2006). The focus however is on innovative design and functions with prices kept low to attract a large range of customers. Ikea being a Swedish company opened its large first store in the UK in 1987. Since the 80s and 90s of the 20th century has also seen the beginning of globalization, Ikea could be considered as one of the pioneering companies in promoting and actively participating in the globalization and internationalization process (Ikea.com, 2006). When we consider the 4Ps of the marketing mix as we have elaborated in the discussion, the people, place, product and promotion issues are considered and in the same way, within UK the expansion of the company would mean the local environment would be completely different and the changes in cultural values and social expectations from the Swedish to the British environments will have to be considered primarily when people become the focus of the marketing mix. The changes here have been mainly in terms of the place or location of the company and thus place remains a constant within the discussion and all other factors are discussed in terms of changes in place for the company. Promotion used within the UK market would be considerably different from the Swedish market as in UK advertising is the primary tool although customer feedbacks and large number of responses regarding the stores workings will be helpful in promoting its products. The Swedish market is also based on advertising although may not depend on feedback and interaction with a large number of customers. Finally the importance of the product could not be understated and the product quality and brand designs have remained the same across countries giving it a distinct brand feature, a unique style statement and its low price identity that has made Ikea a unique and renowned furnishing brand across the world. Ikea's signature products have a unique feature of design and the furniture company is also very innovative in terms of concept and assembly of products and has made its mark with its affordable yet contemporary focus (Ikea.com,2006). The main aspect of product identity would remain unchanged in Ikea products across the world and this also applies to UK and Sweden and a distinguishing Ikea brand mark has evolved to differentiate Ikea from all other retail furnishing companies. From the analysis and report it could be suggested that cultural values being central to any relocation projects and endeavors, the effects of cultural factors are more important in relocation and expansion or shifting of operations rather than non cultural ones. Some of these would be related to change of currency, language problems in a new country, religious and social values and in case of changing location or expansion from Sweden to the UK, the major change would be adapting to a more British and also cosmopolitan environment in the larger cities of UK than in Sweden. Adapting and adjusting to changes within a culturally and socially different environment would mean considering all religious and language issues as well as general cultural, social and management issues in a new environment. Bibliography Axinn Catherine N., Matthyssens.Paul (2001) Reassessing the internationalization of the firm /edited by Catherine N. Axinn, Paul Matthyssens. Advances in international marketing ; vol 11 Oxford :JAI. Balmer, John M. T. (2006). Comprehending corporate marketing and the corporate marketing mix /John M. T. Balmer. Bradford :Bradford University School of Management. Bo Edvardsson;Bo Enquist (2002) 'The IKEA Saga': How Service Culture Drives Service Strategy The Service Industries Journal, Volume 22,Number 4, October 01, pp. 153-186(34) Gronroos, Christian. (1993). From marketing mix to relationship marketing :toward a paradigm shift in marketing /Christian Gronroos. 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