IKEA Challenges and HR Solutions - Case Study Example

IKEA Challenges and HR Solutions IKEA is a Swedish multinational company dealing in furniture and home decorations. For several years, the company has been rated amongst the most influential brands in Sweden, a status it has earned partly from its tradition of absorbing fresh local corporate and engineering talents. Internationally, IKEA has been rated among world’s top 10 best retail brands. The organization’s websites attract a whopping 450 million visitors every day. Owing to the uniquely complex retailing business, IKEA faces different cultural challenges operating in foreign markets. However, IKEA has responded to the challenges of varying corporate and social culture by adopting innovation in its business strategy and merging its distribution channels. Regardless, the company still faces the problem of its branding professionals being obsessed with the strong brand image, which has consistently developed for almost four decades while underrating the real creators of brand competitiveness. Issues facing IKEA Brand internalization Brand-internalisation is the primary issue facing IKEA as it expands to other international markets where different cultures exist. The company faces the problem of recreating its brand identity based on the prevailing market conditions in different economies around the world. Its managers have been basically transferring its identities from Sweden to various stores which are under its brand in other countries, with fairly positive outcomes being registered in Europe while Asia creates mixed outcomes (Vizard, 2014). The attempt by its managers to advance the company’s sense making of the value of its products, reinterpreting and reactivating the brand to reflect the cultural needs of foreign markets has been largely missing at IKEA’s foreign excursions. As such, the process of brand-activating can be construed as a serious divide in the process of creating the common sense, hence requiring extra attention by an equally effective human resources management. Lack of a proper plan for brand internalization has resulted in IKEA being incapable of strengthening its brand in foreign markets for higher sales, hence the problem of heavy duties, especially in Asian markets (Tarnovskaya, & de Chernatony, 2011). In light of this, IKEA faces other brand challenges in culturally diverse international markets such as pricing of its commodities and complex bureaucracy, especially in China and India markets. As such, it has been extremely hard for the organization to fix prices at a rate that is appropriate for consumers and the supplier (Ritson, Elliott, & Eccles, 1996). IKEA is facing high import duties in some foreign markets in Asia, but it seeks to transfer production of a number of its products to important Asian markets such as China to cap its expenditures and stimulate growth. China, for instance, has already become a serious supplier of various materials used to make the products such as glass, timber, fabrics, hardware and plastic among other important assets the manufacturer requires. The challenge therefore becomes the lack of a properly trained manpower that has internalized the brand and culture of the organization for effective production of the furniture and marketing as well as distribution to local customers for maximum mutual gains (Shintaro et al, 2014). The end result has been a weaker IKEA brand, especially among many international consumers who feel that any cheaper, locally produced products which are similar to IKEA’s will just be fine. Reproduction of IKEA products The presence of many global chains and corporations that reproduce IKEA-like products is hindering the development of the brand in poorly regulated markets. As such, the more the company strives to popularize its brand for international use, the more it faces market rivalry from smaller and unexpected quarters (Tarnovskaya, & de Chernatony, 2011). As such, IKEA has been losing a significant chunk of its market share to actors that are hell-bent on unhealthy competition. The company now believes that the copying of its products will only continue. In addition, IKEA’s sharing of suppliers with other furniture and local design companies is also a major contributor in the company’s shrinking market share even as many customers and prospects troop to the stores to window-shop or buy the furniture of their choice. Despite the fact that IKEA benefits from the hundreds of millions of visits to its online sites every day, who it could be turn into clients, the company has failed to control access to sensitive brand information contained in its catalogues. As a consequence, IKEA is facing the issue of easy copying by competitors posing as customers (Uggla, & Nyberg, 2014). In addition, unhindered access to the catalogues means some local, smaller furniture companies are keeping catalogues of various IKEA products in their outlets and tell unsuspecting buyers that they can make the same products at a cheaper price. As such, many stores are successfully reproducing products which are similar to IKEA’s. They slightly alter the name in order to avoid copyright issues and slightly reduce the price to tap in the potential of middleclass buyers who are brand insensitive and would want to spend less but obtain attractive furniture. The illegal reproduction of IKEA products in foreign markets presents another issue: if the company spent the limited resources available at its disposal on fighting illegal competitors, especially in the current hard economic times me, it could face even more serious challenges presenting its products in the market in the first place (Roncha, 2008; McDougle, 2013). These challenges call for a new, human resource-based strategy, which includes; brand internalizing campaign among R&D staffs and customer care, informative sales and marketing staffs who understand and present the brand as superior to others, independent procurement staffs who are keen on protecting sensitive information about the brand and a well-trained team of staffs who are passionate about and joined together by the brand (Tarnovskaya, & de Chernatony, 2011). Staff recruitment and training As IKEA expands its market share internationally, the company’s concept of brand internalization can be best achieved by carrying out painstaking recruitment from the local market and training the staffs on the company’s brand and culture. This way, IKEA will have a better trained and polished workforce who will have ready answers on the company’s product brands at the stores (Tarnovskaya, & de Chernatony, 2011). Similarly, a better workforce that has internalized the brands will equally have better explanations when they visit pilot homes around the world every year to market their products and respond more effectively to market demands. Brand internalization among the employees will improve company-customer in all interactions, especially those held in the latter’s living rooms, kitchens or verandas. The company aims to extend its presence in international markets by establishing its large out-of-town outlets stocked with contemporary Scandinavian brands to 26 countries. However, adequate, well-integrated staffs trigger the company to recruit enough staffs who can make the brand immediately recognizable to all of them (De Roeck, Maon, & Lejeune, 2013). In China, for example, the issue of enough staffs is especially true considering the sheer number of customers and prospects visiting the stores on weekends. The company’s Beijing stores receive an average of 28,000 visitors every Saturday, which is roughly seven times the number of customer visits to any IKEA store situated in Europe in a busy week. This implies that IKEA’s stores in the populous China require more staffs who have internalized the IKEA brand to attend to the enquiries of all of those consumers in order to maximize the sales. A workforce, especially sales teams that have internalized the IKEA brand will attract more local buyers. In addition, brand internalization among staffs will reduce the costs incurred from sending workforces all the way to the homes of current and prospective furniture buyers. This is especially true because those who have internalized the company’s brand will be better-placed to explain to the clients which type of furniture meets their individual goals and how best they can use them (Kling, & Goteman, 2003; Chu, Girdhar, & Sood, 2013). The strategy will also go a long way in turning the current internal expert-based approach to furniture handling and experience into an all-employee knowledge affair. Encouraging creativity among local staffs Exporting a thin workforce of Swedish staffs, for example, who are highly experienced in the company operations and culture would be the most effective strategy to carry along important cultural aspects of the organization into the new international ventures (Tarnovskaya, & de Chernatony, 2011). However, recruiting a majority of the workforces from the host market and providing them the necessary training and space to innovate will go a long way in enabling the multinational to stock its showrooms and stores with effective goods and services which accommodate the local employee and customer cultural preferences. Shu-Fang (2014) added that by being relatively flexible in allowing the workforces to be creative in how they can express the already internalized brand, IKEA will customize its R&D operations and eventual products based on the needs and preferences of the local customers, and thus, remain effective in virtually all markets. A workforce that has internalized the IKEA brand will advise the company on the market needs and thus ensure that customers with smaller apartments have access to products that can meet their interests, even as those with more space have bigger products to fit in the space. Building working teams Owing to the reality of multiculturalism in international markets, IKEA should build strong, working teams made up of individuals from different cultures so as to forge a common organizational culture centred on strengthening the brand image. IKEA’s workforces working in developed countries should work as a team and present the company as the home of a competitive-priced, mass-market brand of furniture. By contrast, for staffs who are deployed in emerging economies like China and India, the company sales staffs, should work as teams in presenting the brand as low-priced (Lee, 2012). This way, the staffs will have a consistent brand message to customers and prospects, especially members of the middle class, about IKEA’s determination to bring a variety of international lifestyle furniture at their disposal. Yet, by setting up an effective working team that is knowledgeable enough about the company’s products, IKEA brand will surely achieve the status of epitome of internal house attraction. In addition, building working teams includes giving all staffs the opportunity to ‘own’ the company and the brand. For IKEA, the key to equal opportunity does not just end with restricting experienced Scandinavian staffs from being used abroad or limiting their preference over local workforces, but ensuring their accountability through regular performance management practices. Other best practices also encompass holding the human resource management accountable during hiring, promotion, demotion or downsizing operations (Edvardsson, & Enquist, 2011). By making sure that the department practices fair employment values such as treating applicants equally when handling issues that are not related to job such as gender, sex, race, nationality, and religious inclination, IKEA will build a stronger team that is highly experienced, and competent to make important business decisions about the company brand in the increasingly competitive global furniture industry (Briggs, 2012; Tarnovskaya, & de Chernatony, 2011). Conclusion IKEA’s determination to expand its market share across the world has triggered negative impacts on the company’s workforces and brand image, especially in the wake of smaller, lower-priced brands. The company’s expansion into Asian markets has particularly brought about the company’s interaction with diverse cultures. As the result, the company’s workforces have become less integrated. As such, brand internalizing is considered as one of the ways through which the company’s workforces can strengthen the brand by making it more competitive. Team-building, fair employee hiring and proper training on the company’s products, conducting performance management, and encouraging creativity are some of the strategies which can enable the company’s staffs to internalize the brand and be its good marketers, irrespective of the risk of cultural diversity in international markets. References Briggs, C., (2012). 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