Group 6, Ikea Case Study

We thank our Russian friends in group 6 at the University of Khabarovsk for their contribution.

From Johan Påhlman 2011-03-11.

We have learned a lot from this case study. Particularly surrounding issues that can occur when westerners try to do business in Russia. Our Russian colleagues at the University of Khabarovsk and their countrymen seem to be more tolerant with corruption. In Sweden we in general seem to distance ourselves more from bribery. Bribery contradicts one of the central parts of our ideals; we therefore find it difficult to accept corruption even if it takes place outside of Sweden. Two of IKEAs managers in Russia Per Kaufmann and Stefan Gross were forced to leave their positions because of the bribery scandal. If IKEAs senior management including Mr. Ingvar Kamprad himself had owned a deeper understanding of the Russian business culture perhaps they had been allowed to keep their jobs. Dismissing their own upper management in Russia seem to us be an act of desperation by IKEA in order to “save face”.  Markets outside Russia such as the Swedish do not accept bribes, in this sense they had to act to satisfy their other markets.

The two sacked bosses hade according to our research no deeper experience or training in understanding Russian business culture. We have also learned by the other groups that despite our many shared believes Russia and Sweden have different attitudes and levels of tolerance in many matters.

We also found that IKEAs failures are likely to be economic blow for Russia. Despite IKEAs size and financial strength they have been struck we great force. What will the Russian bureaucracy do to smaller companies?
Russia is a major exporter of steel, gas and oil. These unprocessed materials are already exploited and process in the highest possible rate. If Russia want to experiences further economic growth they have to find new products export, fresh foreign capital as well as know-how surrounding foreign companies and markets. If the Russian objective is to compete for capitalists in the international arena they probably need to avoid new horror stories like IKEAs.

IKEAs managers have themselves to blame for the company’s failures in the Russian market. They took shortcuts that made it difficult for the Russian government agencies to help them. In worst case scenario for Russia IKEAs scandal might have brought bad publicity among investors who see IKEAs failures like obvious and inevitable implications for those wishing to do business in Russia.

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