IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market; but to its managers and employees this was just the tip of the iceberg. They believed IKEA was poised for massive growth throughout the world in the coming decade because it could provide what the average customer wanted: well-designed and well-made contemporary furniture at an affordable price. IKEA’s ability to provide customers with affordable furniture is the result of the way it expands globally and operates its global store empire. In a nutshell, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. 

IKEA’s global approach derives from the personal values and beliefs of its founder, Ingvar Kamprad, about how companies should treat their employees and customers. Kamprad, who is in his early 80s (and in 2010 ranked as the 11th-richest person in the world), was born in Smaland, a poor Swedish province whose citizens are known for being entrepreneurial, frugal, and hardworking. Kamprad definitely absorbed these values—when he entered the furniture business, he made them the core of his management approach. He teaches store managers and employees his values; his beliefs about the need to operate in a no-frills, cost-conscious way; and his view that they are all in business “together,” by which he means that every person who works in his global empire plays an essential role and has an obligation to everyone else.

What does Kamprad’s approach mean in practice? All IKEA employees fly coach class on business trips, stay in inexpensive hotels, and keep traveling expenses to a minimum. And IKEA stores operate on the simplest rules and procedures possible, with employees expected to cooperate to solve problems and get the job done. Many famous stories circulate about the frugal Kamprad, such as that even he always flies coach class and that when he takes a soda can from the minibar in a hotel room, he replaces it with one bought in a store—despite the fact that he is a multibillionaire. 

IKEA’s employees see what Kamprad’s global approach means as soon as they are recruited to work in a store in one of the many countries in which the company operates. They start learning about IKEA’s global corporate culture by performing jobs at the bottom of the ladder, and they are quickly trained to perform all the various jobs involved in store operations. During this process they internalize IKEA’s global values and norms, which center on the importance the company attaches to their taking the initiative and responsibility for solving problems and for focusing on customers. Employees are rotated between departments and sometimes stores, and rapid promotion is possible for those who demonstrate the enthusiasm and togetherness that show they have bought into IKEA’s global culture.......

Discussion Questions 

1. List the various ways in which IKEA has managed the global environment over time.

2. How would you explain the rationale behind the success of IKEA’s approach to managing its environment?