Case spotlight: IKEA: The Swedish Conquest

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This case was featured in Connect, issue 53, September 2021.

Who – the protagonist

Bjorn Braagaard, senior internal auditor at IKEA.

What?

IKEA is a global giant in the retail and manufacturing of furniture, with an annual turnover of approximately €25billion and the operation of hundreds of stores in dozens of countries.

ikea

Why?

In this case series, Bjorn looks at how the company dealt with major disruptions prior to it becoming so big, and the leadership and strategic decisions Ingvar and his management team took during challenging situations.

As part of IKEA’s international expansion, Bjorn explored their move to Russia at the turn of the millennium.

Where?

IKEA is an international brand, however, their decision to open two stores in Russia, just outside Moscow, proved challenging but ultimately successful.

When?

IKEA’s entrance into the Russian market started with the opening of two stores, accompanied by two huge company-owned retail parks, in 2000 and 2001.

Key quote

“We won’t compromise on morals on a single point.”
The construction compliance legislation in Russia is tangled and sometimes contradicts to itself. Local business culture includes circumventing practices in navigating ways through bureaucratic hurdles.

What next?

The fourth part of the case series investigates a new turn of events: IKEA’s ex-supplier of electric diesel alternators for their second Russian store is prosecuted in a criminal court.

After initially losing to the ex-supplier, are IKEA able to claim back the money previously paid out, now the subject has been found guilty of fraud in a separate case?

AUTHOR PERSPECTIVE 

Why a case series?

Sergey said: “The idea of writing the series had been sparked during a discussion about strategy and international business. We saw how many cases focus on one strategic decision, but business situations evolve. We wanted to offer a more experiential mode that offers the experience of being in the developing situation. Specifically, this series was inspired by the challenges companies face when they internationalise. When company leaders are formulating and adjusting their strategic initiatives they need to respond to unexpected demands for customisation that are often driven by the context. This surely is the case in Russia.”

ikea

Appeal of IKEA

Sergey continued: “IKEA is an extremely interesting company from a strategic management perspective. There are many aspects of the company’s success that attract interest and can be used to bring frameworks to life. For example, the remarkable pace of business growth or the customers’ perceived value of IKEA goods. There are so many innovations in the company’s design, business model, supply chain, and positioning that helped it to fundamentally change how people buy. What makes this series so unique is that it looks behind the scenes and allows discussing the process, the nitty gritty of strategic decision making. 

“On top of the strategic management perspective, the students are usually keen to discuss the IKEA products and their personal customer experience in class. Many love the company’s offering, some less so, but this, invariably brings a vivid conversation in the class about students’ preferences towards IKEA products. Even in a highly international group, there is hardly anyone who has not been to IKEA. This is what makes the case concrete, rich and relatable. Everyone has views, most acknowledge IKEA’s astonishing success. Yet, few realise how hard the strategic decisions are that lead IKEA to such outstanding performance. This makes the students’ experience in studying cases written about IKEA very interactive and effective.”

Learning from IKEA’s travails in Russia

He added: “IKEA’s experience in Russia was a steep learning curve for the company, and so is discussing the case for students. When they discuss their strategic options, much is based on assumptions and what remains usually hidden comes out. Progressing through four parts of the case, the students increasingly appreciate the need for contextual knowledge for successfully implementing a company’s international expansion and operating business units overseas.”

Getting to grips with the developing situation

Sergey explained: “The situation with IKEA’s adventures in Russia was developing while we were writing the case. And in some ways, it is still ongoing. Certainly, responding to the questions in the final two parts of the case requires the students to deploy leadership skills together with strategic thinking. The challenge that the exercise brings usually facilitates animated debates among students in their learning teams. It requires them to balance conflicting motives and factors in formulating their options in response to the unfolding situation. Usually, the question and answer session with students that follows the exercise indicates the students’ immersive engagement with the case, and the story behind the company’s successful business in Russia.”

Scholarship support

Sergey concluded: “The scholarship helped me in many ways. In the first instance, having the honour of receiving The Case Centre writing scholarship was a wonderful boost to my confidence. We have been honing this case with many groups and the recognition of these efforts was most welcome. Then being selected for the support, provided us with the sense of legitimacy for exploring how far to push for an immersive yet paper-based case. It also helped with gathering additional data. 

“Additionally, participating in the case writing workshop organised by The Case Centre helped in organising the story in a structured and engaging way. 

“Finally, the rounds of feedback offered by The Case Centre’s experts and by the writing workshop tutor substantially improved the quality of the case. We are overjoyed to have it included in The Case Centre collection. 

“It was a demanding project and an amazing journey, and we are extremely grateful for the support and guidance provided by The Case Centre.”

THE CASE 

The case

Who – the protagonist

Bjorn Braagaard, senior internal auditor at IKEA.

What?

IKEA is a global giant in the retail and manufacturing of furniture, with an annual turnover of approximately €25billion and the operation of hundreds of stores in dozens of countries.

ikea

Why?

In this case series, Bjorn looks at how the company dealt with major disruptions prior to it becoming so big, and the leadership and strategic decisions Ingvar and his management team took during challenging situations.

As part of IKEA’s international expansion, Bjorn explored their move to Russia at the turn of the millennium.

Where?

IKEA is an international brand, however, their decision to open two stores in Russia, just outside Moscow, proved challenging but ultimately successful.

When?

IKEA’s entrance into the Russian market started with the opening of two stores, accompanied by two huge company-owned retail parks, in 2000 and 2001.

Key quote

“We won’t compromise on morals on a single point.”
The construction compliance legislation in Russia is tangled and sometimes contradicts to itself. Local business culture includes circumventing practices in navigating ways through bureaucratic hurdles.

What next?

The fourth part of the case series investigates a new turn of events: IKEA’s ex-supplier of electric diesel alternators for their second Russian store is prosecuted in a criminal court.

After initially losing to the ex-supplier, are IKEA able to claim back the money previously paid out, now the subject has been found guilty of fraud in a separate case?

AUTHOR PERSPECTIVE 

Author perspective

Why a case series?

Sergey said: “The idea of writing the series had been sparked during a discussion about strategy and international business. We saw how many cases focus on one strategic decision, but business situations evolve. We wanted to offer a more experiential mode that offers the experience of being in the developing situation. Specifically, this series was inspired by the challenges companies face when they internationalise. When company leaders are formulating and adjusting their strategic initiatives they need to respond to unexpected demands for customisation that are often driven by the context. This surely is the case in Russia.”

ikea

Appeal of IKEA

Sergey continued: “IKEA is an extremely interesting company from a strategic management perspective. There are many aspects of the company’s success that attract interest and can be used to bring frameworks to life. For example, the remarkable pace of business growth or the customers’ perceived value of IKEA goods. There are so many innovations in the company’s design, business model, supply chain, and positioning that helped it to fundamentally change how people buy. What makes this series so unique is that it looks behind the scenes and allows discussing the process, the nitty gritty of strategic decision making. 

“On top of the strategic management perspective, the students are usually keen to discuss the IKEA products and their personal customer experience in class. Many love the company’s offering, some less so, but this, invariably brings a vivid conversation in the class about students’ preferences towards IKEA products. Even in a highly international group, there is hardly anyone who has not been to IKEA. This is what makes the case concrete, rich and relatable. Everyone has views, most acknowledge IKEA’s astonishing success. Yet, few realise how hard the strategic decisions are that lead IKEA to such outstanding performance. This makes the students’ experience in studying cases written about IKEA very interactive and effective.”

Learning from IKEA’s travails in Russia

He added: “IKEA’s experience in Russia was a steep learning curve for the company, and so is discussing the case for students. When they discuss their strategic options, much is based on assumptions and what remains usually hidden comes out. Progressing through four parts of the case, the students increasingly appreciate the need for contextual knowledge for successfully implementing a company’s international expansion and operating business units overseas.”

Getting to grips with the developing situation

Sergey explained: “The situation with IKEA’s adventures in Russia was developing while we were writing the case. And in some ways, it is still ongoing. Certainly, responding to the questions in the final two parts of the case requires the students to deploy leadership skills together with strategic thinking. The challenge that the exercise brings usually facilitates animated debates among students in their learning teams. It requires them to balance conflicting motives and factors in formulating their options in response to the unfolding situation. Usually, the question and answer session with students that follows the exercise indicates the students’ immersive engagement with the case, and the story behind the company’s successful business in Russia.”

Scholarship support

Sergey concluded: “The scholarship helped me in many ways. In the first instance, having the honour of receiving The Case Centre writing scholarship was a wonderful boost to my confidence. We have been honing this case with many groups and the recognition of these efforts was most welcome. Then being selected for the support, provided us with the sense of legitimacy for exploring how far to push for an immersive yet paper-based case. It also helped with gathering additional data. 

“Additionally, participating in the case writing workshop organised by The Case Centre helped in organising the story in a structured and engaging way. 

“Finally, the rounds of feedback offered by The Case Centre’s experts and by the writing workshop tutor substantially improved the quality of the case. We are overjoyed to have it included in The Case Centre collection. 

“It was a demanding project and an amazing journey, and we are extremely grateful for the support and guidance provided by The Case Centre.”

THE CASE 

Read the case

Educators can login to view a free educator preview copy of this case and its teaching note.

CASE - Reference no. 320-0339-1
CASE - Reference no. 320-0339-1B
CASE - Reference no. 320-0339-1C
CASE - Reference no. 320-0339-1D
TEACHING NOTE - Reference no. 320-0339-8
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