IKEA: The Japanese Misadventure and Successful Re-entry

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Case Details:

Case Code : BSTR289
Case Length : 18 Pages
Period : 2002-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : IKEA
Industry : Furniture Retail
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Ingvar Kamprad (Kamprad) established IKEA in 1943 at the age of seventeen. He came up with the name IKEA by combining the first letters of his name (Ingvar Kamprad), followed by the first letters of the farm and village he grew up in (Elmtaryd and Agunnaryd). Kamprad started a small business by buying and selling pens, Christmas cards, matches, cigarette lighters, nylon stockings and other items in bulk...

The Japanese Misadventure

IKEA first entered Japan in 1974 through a joint venture with a Japanese company as part of its plans to expand globally. However, even after twelve years in the country, IKEA could not gain a foothold in the market and decided to exit Japan in 1986...

IKEA Japan: The Second Coming

IKEA sent some officials to start the ground work and carry out the initial set up process in 2002. Gordon Gustavsson (Gustavsson), who had been with IKEA since the 1980s was chosen for the task. His main task was to set up the first store in the country and make it operational. Earlier Gustavsson had played a major role in setting up IKEA stores in China...

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Opening New Stores

Most foreign retailers entering Japan preferred to lease stores but IKEA bought land to develop its stores. Analysts were of the view that this reflected IKEA's long term view for the country. IKEA initially planned to enter cities with a population of more than one million...

Store and Employee Management

IKEA's Swedish identity was also reflected in its stores' HR policies and practices and corporate culture.

For instance, IKEA's management style was characterized by informality, openness and caring which reflected the typical values of Swedish nationals. At the store level, there were only three levels of hierarchy between store manager and 'co-workers' as employees were called.

The employees in Japan were paid much higher compared than employees in other Asian countries like China.

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