May 27, 2012
The Former Soviet Union: A Study of Three Companies: PwC, Ikea, and AES When countries open up to capitalism and economic freedom, businesses can move in easily and capture markets with little effort. However, what are the issues that accompany this ease of initial introduction?
There are often great benefits that come with being the first to enter a new market – gaining a competitive advantage being one, as you have the ability to secure customers, suppliers and intellectual property (Tozzi, 2009). Some of the challenges that come with the initial introduction are learning to navigate through bureaucratic setbacks, red tape, government corruption, communication gaps, and fundamentally differing business cultures. The cultural, legal and economical environments have to be evaluated prior to entering any new market, especially if you are the company taking the lead. Proper planning is vital, as these are the three pivotal areas that can create issues. The key to remember is that it is not just another market but another culture. Global diversity means learning how to sustain corporate values, while respecting local cultural nuances. This then entails gaining a better understanding of the culture, politics, and economy within the region the business is operating. “By concentrating on the development of a global mindset and an international perspective and put less focus on exporting strategies that may work in one region but are irrelevant or ineffective in another” (Mitchell & Creary, 2009, p.5).
Ikeas discovered in 2010 that one of its executives responsible for leasing the generators was accepting kickbacks for awarding those contracts. Ikea fired the executive, but what issues arise from this conduct?
IKEA had had a long standing corporate policy of not accepting bribes or any form of government corruption when doing business. In 2001, the Moscow store opening...