Internationalisation of operations is critical to company’s success in today’s competitive environment, but success of international operations are dependent on how well a company adapts to the local culture in that environment. As globalization increases and more and more company’s move offshore, more managers have to communicate across a diverse range of people and cultures. Recognising and understanding cultures and diversity becomes more important and critical to an international company’s success.
By using theories and concepts of Hofstede including Masculinity, collectivism, uncertainty avoidance, long term orientation and culture shock. I will illustrate how and why IKEA in Japan failed to reach the Japanese market. I will also explore how managers and businesses are perceived through different, specifically through Japanese culture. It is important for companies to understand and adapt to local culture therefore, a lack of understanding can have a negative effect on that company and may lead to business failure.
One company that moved offshore and into 40 different countries was IKEA. The company was first founded by Ingvar Kamprad in the 1920’s in southern Sweden. It went from selling matches, flower seeds, greeting cards and Christmas tree decorations to now selling hundreds of assortments of furniture and home ware. IKEA went onto explore self assembly, furniture design, advertising, the use of a catalogue and showrooms. By the 1970’s, IKEA grew rapidly opening major retail stores in Denmark, Switzerland, Germany, Austria and Netherlands. By the late 1980’s IKEA had expanded dramatically into new markets such as USA, Italy, France and the UK, becoming today's largest furniture retailer in the world. (Ikea, n.d.)
In the mid 1970’s, IKEA decided to enter the Japanese market at a time when economic expansion in Asia was active. But after difficulties and low interest from Japanese customers, IKEA decided to withdraw from Japan but to later return. Cultural difference and lack of understanding may have caused friction and Failure within the Japanese market.