Abstract
Managing across cultures is a priority for companies that pursue an internationalization strategy.
The case of the Swedish furniture company IKEA illustrates the complexity of this process.
The Swedish company IKEA, which pioneered flat-pack design furniture at affordable prices,is the world's largest furniture manufacturer. The Group owns 258 IKEA stores in 24 countries. In total, there are 292 IKEA stores in 36 countries/territories. The other stores are owned and run by franchisees outside the IKEA Group in 16 countries/territories. Historically, IKEA started its business in a �small village in Sweden in 1943 and was founded by Ingvar Kamprad when he was 17. The name IKEA comes from his initials (I.K) plus the first letter in Elmtaryd and Agunnaryd, the farm and the village where he grew up. The founder has provided patriotic values to profile IKEA very much as a Swedish company.
To illustrate this point, all outlets are painted in the same colors, the blue and yellow of the
flag.
The internationalization of IKEA witnessed a sharp increase in the early 90s particularly in Asian territories. In 1998, the company opened its first store in Shanghai. The strategic orientation of the group to access more foreign investment in China can be explained by the positive global environment of the country. The rational for foreign furniture companies like IKEA for direct investments in China is two-fold: to produce furniture for the export market and to produce furniture for the huge domestic Chinese market.
Ikea's decision to enter China stems from supporting political, social and economic conditions that allow IKEA to beneficially exploit advantages in the Chinese market.
Economic: China has seen tremendous economic changes in the last few decades. China's annual GDP growth has averaged more than 8 percent in the past 25 years, and in 2007, its GDP grew by a record-breaking 11.4% .The development of China's economic policy during the last twenty years was aimed at manufacturing; especially export oriented manufacturing.
