Culture Factors

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2.What are the cultural factors that make expansion abroad in retailing difficult? What has made it possible in IKEA’s case? From IKEA’s history, they didn’t face much problems in oppening their stores until they decied to enter the US market. The US market was a bit different since most americans are DIY compatible. Much problems faced were based on incompatibility of products with current trend in the US. The root of most of these problems was the company’s lack of attention to local needs and wants. US customers preferred large furniture kits and household items. For example, Swedish beds were five inches narrower than those US customers were used to, IKEA’s kitchen cupboards were too narrow for the large dinner plates typically used in the US, IKEA’s glasses were too small for US customers who typically add ice to their drink and hence require large glasses—it is said that US customers bought flower vases thinking they were drinking glasses—and bedroom chests of drawers were too shallow for US consumers, who tend to store sweaters in them. In addition, IKEA Swedish-sized curtains did not fit American windows, a mistake about which a senior IKEA manager joked, ‘Americans just wouldn’t lower their ceilings to fit our curtains.’ As a result of initial poor performance in the US market, IKEA’s management realized that a standardized product strategy should be flexible enough to respond to local markets. The company has recently adopted a more balanced strategic focus (giving weight to global and domestic concerns). The current approach puts greater emphasis on global market coordination to limit duplication of activities and capture synergies or economies of scale and scope. In the early 1990s IKEA redesigned its strategy and adapted its products to the US market. While overall its subsidiaries are still no more than extensions of the corporate head office in Sweden, following instructions provided from the center, subsidiaries in the US are given more autonomy, to...
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