Corporate Diplomacy: IKEA and the Russian Market
A Communication Strategy of Multinationals in Relation to Host Governments
Corruption in the Russian Market
One of the main issues IKEA faced when it attempted to get into the Russian market was corruption (Heath, 2010). Because of the level at which that corruption took place, IKEA publicly rallied against it in an effort to change some of the problems that appeared to be so inherent in Russia's political system (Meyer, 2011). The corruption was something likely seen in other markets, as well, but not as blatantly as it was seen in Russia. IKEA's slogan in Russia was "Now Everything is Possible!" (Heath, 2010). That made sense in many ways. It sounded good in Russian, it spoke to the economic and political resurgence the country was experiencing, and it also related to the large number of items that can be found for sale in the IKEA stores (Heath, 2010). However, there was more to the slogan, which was used for IKEA's new catalog that year. Part of it was letting people know that IKEA was serious about being a part of their country, and that they wanted to make their country a better place to shop, and to live. The company even went so far as to fire two executives, who had been giving bribes to a utility company (Heath, 2010).
That sent a clear statement to the Russian people and the Russian government, that IKEA did not tolerate bribes as part of the way work would be done at the company, no matter what country it was located in (Meyer, 2011). Most of IKEA's bribery problems were centered in St. Petersburg, where the company was building a case against the corruption that it was finding in the Russian government and in the utility companies (Meyer, 2011). Unfortunately, two of the representatives who were on the committee to address these issues were found to have been taking bribes, and IKEA had to let them go (Heath, 2010). It is not possible to rail against bribery if people in the company are taking bribes. That was unacceptable behavior to IKEA, and did not help their case.
The swiftness of the action taken against the bribes was very important for IKEA when building a case that bribes were not acceptable and attempting to show that they were not going to take or give bribes for any reason. Without their willingness to do that, they may not have had a case when stating that bribery was not acceptable and that they would not play that particular game with the Russian government or any of its companies (Health, 2010). It is always possible for there to be a bad person at a company. That really cannot be helped. What the company does about that person, though, can make a strong statement about how the company really feels and the things that matter to the company, overall. With corruption running so rampant in the Russian market, IKEA soon found itself struggling to keep the values it held and still get anything done. It was not willing to give up on the idea of success in the Russian market, though, and was ready for a hard-fought battle (Heath, 2010).
Bribery From the Utility Company
The issue with bribery could not have come at a worse time, either, because the bribes between the company officials and the utility company Lenenergo took place right around the time the company launched a campaign saying it could not go forward with its planned expansion into Russia, because it does not accept or allow bribery (Heath, 2010). That all occurred in 2009, when the company was first working toward having a presence in Russia and getting everything worked out with the government, contractors, and utility companies there (Heath, 2010). Just as IKEA was about to open their store, the utility company approached them and said they would have to have a bribe before they would turn the power on (Bush, 2009). IKEA refused, and rented generators that ran on diesel and would power their store. It was not long until the power was turned on, without the bribe (Kramer, 2009). However, doing that was just the start of the problems faced by IKEA, which then tried to build a case against the corruption but quickly found that the courts did not want to side with the company and against Russian utility companies (Bush, 2009).
There were other behaviors engaged in that IKEA also had difficulty with, and one of the big questions was when the company...
IKEA is a Swedish company that is well-known for its brightly colored furniture and among the largest furniture retailers in the whole world whose specialty is modern and competitively priced furniture that is Scandavian designed. The company boasts of having about 270 stores in 24 countries. The company's mission is to ensure that they offer their customers a value for their money. Their typical customers are young families of low
IKEA's Competitive Strategies How IKEA's Competitive Strategies Worked The success of IKEA emanates from the concept based on providing customers with a wide variety of well-designed and functional home furnishing products. Further, the aspect of affordability enables a wider population of individuals to enjoy these products. Selling products at lower prices with a wider customer base enables the company to penetrate markets. The Swedish company has provided a unique style and brand
1 Summary of �Which Competitive Advantage(s)? Competitive Advantage�Market Performance Relationships in International Markets�IntroductionKaleka and Morgan (2017) conducted a study to evaluate the elements of competitive advantage among exporters in the UK. Specifically, they looked at the factors that affect competitive advantage and which types of competitive advantage yield the best results. The authors focused on price, product and service quality in relation to performance among international firms. The framework for
On Globalization 1 The difference between internationalization, transnationalism, and glocalization are that each represents a different aspect of globalization. Glocalization is what happens when international products are adapted to meet the particular needs (cultural or socio-economic) of the locality/community where they are sold. So for example, Nabisco might make Oreo cookies that look and taste one way in the U.S., but when the same company makes the “same” cookie for sale in
Retail Marketing Analysis of Retail Management at Zara in Klaipeda, Lithuania Zara is a fashion retailer that is part of the Spanish parent company Inditex, one of the largest distribution groups of the world. The company is unique in the fashion retail industry because it is the most highly vertically integrated company in the fashion industry. It owns every stage in the value chain instead of outsourcing manufacturing to low wage countries
37). Indeed, the company's emphasis on so-called "social clauses" (discussed further below) has been at the forefront of its corporate philosophy: "Socially, ecologically, and ethically produced products were key aspects of Migros' product offering. Riedener knows that Migros benefited from a unique position -- and he wants to make sure that Migros defends it from both new and old competitors" (Reinhardt et al., p. 37). Current and past issues. The company
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now