September 9, 2014
Ikea and Russia: Corruption and Sound Business
Attempting to do business in Russia can formidable for any company and this includes Ikea. The Russian political atmosphere is rife with bribery and the blatant use of corruption in government dealings has become an accepted way of doing business. The Ikea example shows how government regulation can halt a business dead in its tracks. The mall Ikea has invested in has been ready for over a year, yet sits unused due to pending government approval for safety concerns. These concerns include a government restriction due to walls not having reinforcement for near-hurricane winds. The article claims that there has never been a recorded incident of those types of conditions in the mall’s area. The Russian government however conveniently had a company on standby that could fulfill this “extra” requirement. This further highlights the issues of corruption in Russia. Having covered the issue of corruption and how deeply seeded it is in the Russian business world, the question of continuing business in Russia for Ikea arises. Also needing to be asked is if Ikea chooses to stay what they can do to help them operate in Russia without having to succumb to corruption. Ikea, in my opinion, needs to stay and continue doing business in Russia for a few reasons. First Russia has had a recent modernization. This has led to rise in the middle class and thus a rise in the more informed consumer. This growing middle class allows room for a more sophisticated buyer for Ikea to target. Also Russia is an enormous nation. The country itself is vast and the ability for Ikea to cement itself as a known brand is too good of an opportunity for it to pass up. Due to these reasons, I feel it is prudent for Ikea to continue doing business in Russia.
First, I would make sure Ikea had a training program in place to make sure company frontline employees and executives understood and...
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