Category winner: IKEA in Saudi Arabia (A)

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This case won the Economics, Politics and Business Environment category at The Case Centre Awards and Competitions 2021. #CaseAwards2021
 
The case

IkeaWho – the protagonist

IKEA is the world’s leading furniture retailer, manufacturer, and franchisor. In 2012, they had 5% of the global market share and were the only furniture retailer with a global footprint.

What?

On 1 October 2012, a Swedish newspaper revealed IKEA had erased all images of women from its catalogues for Saudi Arabia. This sparked immediate media attention and criticism of the brand from those who believed this was in conflict with their values and commitment to human rights and gender equality.

saudi flagWhy?

Saudi Arabia had strict laws based on a conservative moral code whereby women were banned from driving, travelling alone or mixing with men in public spaces. IKEA’s catalogue ran the risk of being censored or withdrawn, as well as incurring financial penalties unless it was adapted for Saudi Arabian culture. Many global customers, however, have questioned whether the move was consistent with its value statement “to create a better everyday life for the many people” or if it was simply happy to discriminate to sell more products.

Where?

The case examines the reaction to a Swedish newspaper article about IKEA’s erasing of women from its Saudi Arabian catalogue. The reactions in both Sweden and Saudi Arabia are explored alongside a wider global context.

When?

The case is set in October 2012.

Dee MadiganKey quote

“A visit to IKEA is a quasi-visit to Sweden. Their values are akin. IKEA is a brand that prides itself on inclusiveness and social decency.  And Sweden is a country that prides itself on its strict gender equality protections.”Dee Madigan, political analyst.

What next?

In the US and Northern Europe there were calls to boycott IKEA products and, as the coverage grew, the management needed to respond to the situation quickly. The B and C cases follow the response by IKEA and the changing situation in Saudi Arabia.

 
Instructor viewpoint

Discover how this case works in the classroom.

elizabethbstephens“This case is a rare find as it addresses the political risks international corporations confront in their overseas investments from both the governmental and cultural perspective. It provides fascinating insights into the challenges corporations face in their efforts to replicate successful business models in new territories.

“Whilst considering the Saudi context, the case study demonstrates how IKEA’s attempts to adhere to the cultural sensibilities of the Kingdom, generated a social media backlash in western markets amongst consumers who considered the corporation to be compromising its own values in the pursuit of profit.

“The power of social media and reputational damage this medium can inflict is aptly demonstrated and an important learning point for new entrants to the business world.”

Elizabeth Stephens, Managing Director of Trendline Analytics, Henley Business School.

The authors

authors

Karthik Ramanna, Jérôme Lenhardt and Marc Homsy

This is the third award for Karthik following his case competition wins in 2017 and 2019. It is the first award for his co-authors Jérôme and Marc.

Across three continents

Karthik said: “We are absolutely thrilled to win this award! This case was written across three continents (myself in Boston, Jérôme in Paris, and Marc in Dubai) in record time to meet a Across three continentsteaching deadline. It was a sensitive case, both for IKEA and for Saudi Arabia, so it involved a lot of thoughtful writing, which was driven by Jérôme and Marc and their teams across Europe and the Middle East.” 

Marc added: “I was motivated by a desire to share the region’s many success stories and its failures with fellow business students across the world. This award gives me hope that the world has become increasingly interested in individual tales from the Middle East, and that stories from our region are indeed worth sharing.”

Controversial

Marc continued: “This case was controversial on several fronts. Having a Swedish, ultra-liberal firm trying to navigate and thrive in the ultra-conservative (at the time) Kingdom of Saudi Arabia ecosystem, surfaced several important questions that leaders of the future should be asking themselves. What norms and values should a firm be unwilling Stones balancing on sandto compromise on, for the sake of business? Where to draw the line between cultural sensitivity and unacceptable norms? These are questions that individuals, companies and governments will have to increasingly deal with.”

Exciting tension

Jérôme explained: “A great feature of working on this sort of case is to collect and compare key information from different sources in Europe and the Middle East, to create an exciting tension in the case.”

Marc adds: “Writing this case was particularly challenging to me given my personal upbringing and heritage. I found myself fighting an internal struggle between defending the Kingdom of Saudi Arabia and the region to which I belong, while portraying the contrast between norms in the Kingdom and the West in an objective and realistic way.

“A good case is one that is capable of spurring strong feelings and emotions within oneself and even amongst the authors.”

Top tip

Karthik commented: “Good cases have no single right answer; they present opportunities for multiple creative solutions, and it is through a discussion of these solutions that managers build better judgment.”

About the authors

Karthik Ramanna is Professor of Business and Public Policy at the Blavatnik School of Government, University of Oxford. He was a professor at Harvard Business School when he wrote the case.
e karthik.ramanna@bsg.ox.ac.uk

Jérôme Lenhardt is CEO at Restaurant la Maison des Tanneurs in Strasbourg, France. He was a Research Associate at Harvard Business School’s Europe Research Center when he wrote the case.
e jerome.lenhardt@essec.edu

Marc Homsy is an Associate Partner at McKinsey & Company. He is an MBA graduate of the Harvard Business School class of 2015 and was leading Harvard Business School’s Dubai research office covering the Middle East when he wrote the case.
e homsymarc@gmail.com

 
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IKEA in Saudi Arabia (A)
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