SECTION A
Answer one question from this section
Read the item below and then answer the question that follows.
Ikea is one of the most extraordinary success stories in post war European business.
Now the world's largest retailer of furniture, Ikea has exported its iconic brand and retail
format with great success around the globe.
It has a reputation for a strong corporate culture based on shared values of togetherness,
cost-consciousness, respect and simplicity.
Ikea is renowned for the attention it gives to cost control, operational details and continuous
product development, allowing it to lower its prices by an average of two to three per cent
over the decade to 2010, while continuing its global expansion.
For customers around the world the Ikea experience is the same wherever they shop – a
global brand with consistent values and vision.
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1
Are cultural differences within an organisation an opportunity or a threat to
business success?
(40 marks)
Outline Answer
Possible paragraph points:
In support of the question:
Counter-arguments to the question:
Cultural differences are an opportunity and
should be encouraged and nurtured
Cultural differences are a potential threat to
business success. It is better for a business
to build and sustain one, consistent culture.
Sub-cultures develop naturally within an
organisation (products, functions, divisions,
geographies etc) and are common in many
highly successful businesses.
Sub-cultures potentially dangerous in that,
unchecked, they can undertake activities that
threaten the reputation of an organisation
and even lead to substantial loss. E.g. GSK
($3bn fine in US); BP (culture in Gulf of
Mexico); Wal-mart (bribery scandal in
Mexico); Mid-Staffs Health Authority.
Business is increasingly multicultural – a
feature of international expansion, increasing
use of takeovers, joint ventures in emerging
markets, strategic partnerships etc. Very
difficult to instil one culture across such a
diversity of activities and might be counterproductive.
Effective sub-cultures provide wide range of
business benefits. E.g. specialisation
(functional) or geographical (insights into
what works best in particular countries or
regions). HSBC example of how sub-cultures
are encouraged to provide local insights, but
to support a global brand.
Consistency of quality and customer service
is a key differentiator as markets become
more globalised. A brand experience should
be the same wherever customers touch it –
e.g. Apple retail stores in major cities;
Marriott hotels; McDonald’s, Starbucks.
Stimulus application points:
[don’t forget – at least two references to the stimulus case]
Ikea: strong influence of the founder (Ingvar Kamprad) who still exerts much control over
strategy aged 86!. Has become a global band using its distinctive approach to retailing –
strong use of symbols, style (“to visit Ikea is to visit Sweden”). Distinctive corporate culture
viewed as a core strength.
Possible lines of further analysis & evaluation
Modern business is becoming increasingly complex – and cultures are evolving in a similar
way, driven by increasing cross-border activity and changes to working practices. Makes it
much harder to create and nurture one consistent culture based on accepted core values.
Sub-cultures are inevitable. They can be a source of strength and opportunity; but if a subculture goes toxic, it can undoubtedly damage an organisation.
Use the research article on weebly to explain the various theories about why sub
cultures can be both good and bad (don’t worry if you only get a small summary from the
paper, you are not expected to understand / use all of it). Then see how any of this report
fits with some of the examples below:
1. Sub cultures an opportunity for further growth
HSBC example of how sub-cultures are encouraged to provide local insights, but to support
a global brand.
-
Encouraged - opp
Google: has deliberately maintained existing culture of acquisitions (e.g. YouTube &
Zappos)
-
Subcultures encouraged - opp
2. Main culture is their very strength, therefore any divergence from this could be
damaging
Ikea: has developed a consistent culture among employees around the world who “love the
values”
-
Sub cultures developed , Russia, France – threat to culture / reputation
3. Sub cultures can become toxic and more so far away from the original culture
that that can destroy the organisation
Barclays: impact of powerful sub-culture at investment banking division (came to dominate
retail bank)
-
Can almost bring down whole organisation