Cultural Gap Experienced by IKEA in Russia - Essay Example

The paper "Cultural Gap Experienced by IKEA in Russia" is a perfect example of an essay on business. In regard to the wide cultural gap experienced by IKEA in Russia, the best alternative entry strategy would be partnering. This concept is very critical when venturing into new foreign markets in some parts of the globe like in the case of Russia. There is an intensive and extensive cultural challenge among the consumers, workforce and even the government which is discussed as some of the key challenges IKEA has to deal with in Russia. In that case, partnering is a strategy that would help IKEA gain gradual and significant market command through the local partners who would serve it with local market knowledge, prospective customer contact and relevant tactics of dealing with restrictive government rules and regulations (Cavusgil, et al. 56-9). This strategy IKEA could use in two ways i.e. entering a co-marketing arrangement or a more organized strategic alliance focused on manufacturing. The risk IKEA would be exposed if they adopt this market entry strategy is a possible loss of technological control to the partner. This may culminate in investment firms’ conflict with heavy costs to the foreign market entrant like IKEA.

The Russian market for furniture and other products reflects a culture of low retailing and this means large scale shopping avenue is strange to them. It is also worth noting that the pricing strategy used by IKEA has received the opposite effect where people attach a price to quality. Even human capital and suppliers are significantly influenced by local culture. To combat these two obstacles, IKEA is engaged in strategic reconciliation of adaptation and standardization. The management has been carrying out intensive marketing with an emphasis on quality products that meet the demand of the Russians. There is more emphasis on recruiting locals into the IKEA team and training them on the culture of the company with the aim of pursuing the common goal of high quality, simplicity and low-cost production that focuses on customer taste and preference (Cavusgil, et al. 76-8). Using local suppliers is also an adaptation strategy while maintaining standard quality and type of products in Russia like many other parts of the global market entails standardization.
IKEA has a tradition of absolute adherence to its standard management approach and marketing strategy based on pricing. This has been the case due to relative cultural closeness in its western markets. However, in Russia, the culture of the consumers, suppliers, workers among other parties has forced it to reorganize its marketing strategy which is focused on adjusting to the local product desires and pricing policy (Kelly 132-6). IKEA has to take Russians and train them in preparation for the expansion into other parts of the country since they are much familiar with their people. This is a different case in IKEA which has always brought its Swedish trained managers to foreign markets. This approach will probably break the socio-cultural challenges to their long-term market strategies in Russia.
IKEA’s vision of being a global brand is achievable and almost in existence. Its current entry strategy in Russia is complete ownership of subsidiary and this means all value creation activities are within their control. Their products in Russia are the same as their other stores across the world with small marketing differences in respect of the local culture (Cavusgil, et al. 77-9). This includes the recruitment of locals, training them and dispersing them to other areas using their local language. With the strong belief in standardized products across the world, IKEA remains a global brand.
By fully owning the value creation activities in Russia, IKEA has maintained its internal management and production culture while maintaining external equilibrium with government authorities, suppliers and customers. This will make it conquer the conservative people of Russia with time and create a brand image throughout the country.
The cultural resistance towards market penetration in some parts of Russia is a great opportunity for IKEA. They believe that such markets are not easy to be conquered by other competing firms either and all they plan to do is to gain national market popularity, create better relations with its customers, the government and local suppliers who would in term initiate easy access to the other parts of the country. Increased local recruitment and promotion of using local language in its marketing makes IKEA think globally but act locally hence fostering progress with a long term larger market share (Kelly 233-8). The central challenge that IKEA has to grapple with in its plans to open new stores in other cities across Russia is the culture and attitude of the local consumers in addition to the relatively hesitant government authorities in permitting such retail store openings.