IKEA’s Global Renovations

Business Department, Barry University

MBA:603-01 International Business

Michael Provitera

Romaine Phipps

April 2nd, 2025

1. How would you describe IKEA’s overall approach to international expansion? What

were some of the important successes and challenges it experienced along the way?

IKEA has implemented a deliberate and strategic approach to international expansion that

balances standardization with selective localization. The company began by exporting its

successful Swedish business model, focusing on cost-efficiency, functional design, and a unique

customer shopping experience. As it moved into new markets, IKEA learned that flexibility was

critical to long-term success.

Initially, IKEA relied on its core strengths: flat-pack furniture, in-house design, and

economies of scale. This model allowed for global consistency and strong brand identity, helping

the company streamline operations and keep prices low across borders. However, as the

company entered diverse markets like the United States, China, and Russia, it faced challenges

that required adaptations to local consumer behavior, economic conditions, and regulatory

frameworks. For example, in the U.S IKEA had to adjust to customer preferences for larger
furniture and suburban shopping habits, prompting changes in product sizing and delivery

options. In China, IKEA modified its pricing strategy and store formats to meet the local

economic context, even incorporating local furniture styles to better appeal to Chinese

customers. This evolving strategy reflected a shift toward glocalization, thinking globally but

acting locally.

Key Successes and Challenges

IKEA’s major successes include its ability to create a universally appealing brand through

minimalist design, product functionality, and affordability. The company has successfully

established operations in over 50 countries, demonstrating scalability and cross-cultural appeal.

Its supply chain integration, cost control, and customer self-service model contribute

significantly to its competitive advantage, allowing it to offer consistent value regardless of

market.

Nevertheless, IKEA has faced notable challenges. Entering new markets often required

cultural adaptations and operational shifts. For instance, in Russia, the company encountered

legal, political, and infrastructural hurdles that slowed down store openings. In markets like

India, it had to address regulatory barriers around foreign direct investment and navigate

logistical constraints. Moreover, maintaining ethical standards across a vast and complex supply

chain has led to reputational risks, particularly when issues like child labor, unsafe working

conditions, and product contamination have surfaced. These challenges highlight the tension

between cost efficiency and ethical responsibility in global operations.

2. What macro- and micro-political risks did IKEA face when it first considered entry into

Russia? What kinds of pre-emptive and/or proactive political strategies might it have

pursued to mitigate these risks?

When considering entry into Russia, IKEA faced both macro- and micro-political risks.

On a macro level, the company had to navigate a complex and unpredictable regulatory

environment, high levels of government intervention in business, and potential for economic

volatility due to geopolitical tensions and fluctuating currency values. Russia's legal system

lacked transparency, increasing the risk of arbitrary decisions affecting business operations and

making long-term planning more difficult.

On a micro level, IKEA experienced corruption, inconsistent enforcement of regulations,

and difficulties obtaining necessary permits without paying bribes. These factors significantly

delayed the opening of stores and increased operational uncertainty. For example, IKEA faced

long delays in acquiring land-use permits and encountered demands for unofficial payments from

local authorities, which went against the company’s strict anti-corruption policies.

To mitigate the political risks encountered in Russia, IKEA could have implemented a

series of pre-emptive and proactive strategies. First, engaging with stakeholders by building

relationships with both local and national government officials would have fostered goodwill and

cooperation, potentially eased regulatory challenges and facilitated smoother entry into the

market.

Public relations campaigns highlighting IKEA’s economic and social contributions—such

as job creation and investment in local infrastructure, could have increased public support and

reduced opposition from both government entities and local communities.

3. How should IKEA respond to some of the recent scandals concerning product

contamination, sourcing, working conditions, and product safety?

IKEA’s reputation has been challenged by several scandals related to product

contamination, supply chain practices, and worker treatment. To address these issues, IKEA must

prioritize ethical sourcing, transparency, and customer trust. IKEA can respond to recent scandals

by strengthening ethical practices and increasing transparency. Supply chain audits should

involve regular and independent inspections of suppliers to ensure compliance with labor,

environmental, and quality standards. These inspections should go beyond formal compliance to

include unannounced visits, helping detect and prevent unethical practices. Sustainability

initiatives must expand with a stronger emphasis on using renewable and responsibly sourced

materials in alignment with global ESG (Environmental, Social, and Governance) expectations.

IKEA should also set ambitious sustainability goals and report progress annually. Public

accountability is equally important. Openly communicating about missteps and demonstrating

corrective action through public statements, product recalls, and customer compensation helps

rebuild trust and reinforces the company’s commitment to integrity.

4. What motivation, leadership, and international HR approaches has IKEA pursued to

achieve its international success? What additional steps might it consider given its

expanding global reach and impending change in leadership?

IKEA has achieved international success through a unique corporate culture grounded in

Swedish values of humility, teamwork, and egalitarianism. Leadership development focuses on

growing talent from within, often promoting individuals with a deep understanding of IKEA’s
values and operational model. This builds a leadership pipeline aligned with the company’s

mission and culture.

IKEA motivates its employees through a combination of empowerment, cultural

awareness, and aligned incentives. By encouraging input at all levels and fostering a sense of

ownership, employees feel engaged and valued, which boosts morale and drives innovation.

Cross-cultural training equips managers and staff to navigate diverse environments effectively,

enhancing global teamwork and cohesion. Performance incentives such as profit sharing,

sustainability-linked benefits, and development opportunities ensure that employee rewards

reflect the company’s long-term goals and values. As IKEA prepares for leadership transitions

and continued global expansion, it should strengthen global talent pipelines, adapt HR practices

to local markets, leverage technology for better decision-making and engagement, and

implement structured succession planning through mentoring, leadership rotations, and

international exposure.
 Reference

Othman, S. (2015, September 15). IKEA’s Global Renovation (Study Case). Academia.edu.
https://www.academia.edu/15746910/IKEAs_Global_Renovation_Study_Case_