IKEA's Market Entry in Saudi Arabia: Challenges and Recommendations

This report provides a comprehensive analysis of IKEA's expansion strategy in Saudi Arabia, identifying key challenges and offering strategic recommendations. The report highlights significant hurdles such as cultural restrictions, religious considerations, recruitment issues, and supply chain constraints that impede IKEA's market entry. It examines how the standardization of IKEA's products and packaging clashes with the diverse tastes of Saudi Arabian consumers and how the company's brand image, which appeals to a modern lifestyle, might not resonate with traditional preferences. Furthermore, the report delves into the issues related to talent acquisition and the Nitaqat Program, which complicates human resource management. To overcome these challenges, the report recommends proactive localization, leveraging benchmarking tools, and implementing performance evaluations to optimize operational, financial, and strategic advantages. The report also suggests specific actions, including the development of prestigious furniture lines, training programs, and targeted marketing campaigns to improve market penetration and overall success in Saudi Arabia.

Recommendations
Ikea plan is to penetrate all the important countries wherein it has chances of gaining
hits. Nevertheless, the Swedish retailer has chances of hitting a boatload of issues on its
venturing of business in Saudi Arabia which is likely to hinder its efforts. As quite rightly
inferred by one of the reports, which entitles Saudi Arabian Retail Landscape as an
undoubted place of opportunity but with unique challenges (Miska and Pleskova 2016). Ikea
seeks to grasp the opportunities flourishing in the Saudi Arabia’s fast-growing retail market
but is being constrained by several challenges like religious, recruitment issues, cultural
restrictions and supply chain constraints.
Standardization of Ikea product and packaging creates an economy concern for the
changed tastes of Saudi Arabia’s consumers. Ikea as a globalised brand upkeep its pride in
providing the same experience as well as their products in all markets. Ikea is immensely
popular in Saudi Arabia but not for its low-cost factor rather it is known to appeal to its rich
lifestyle, i.e., modern and cosmopolitan far off from the traditional tastes of the gulf. The
stereotype is one of the major concerns that have created the environment of concerns for
Ikea.
In the middle of such catastrophic economic transformation of Saudi Arabia, it resists
the challenge of meeting up the talent pool. Education and literacy rate is low due to which
the factor of critical and innovative thinking is rare which creates a tough situation for Ikea
management to reap the benefits in return for the wages so served. Human resource
recruitment and management is particularly criticized and poses challenges intensely
demotivated young Saudis (SaadAlawni, RushamiZienYusoff and Al-Matari, 2015). The
Nitaqat Program creates an obstruction in addressing the talent shortage problems as this
program puts forth Saudi Labour first irrespective of its skills or qualifications. Lastly, the
common issue of women equality also creates hindrance as a lot of women in Saudi are
highly qualified, but their access remains confined by the rigid division and disparities
between the genders.
When it comes to localising in a country like Saudi Arabia, which is culturally
confined, Ikea is expected to be proactive and not reactive.
Activity Resources Timeline Person Responsible
1

Required
Innovation Prestigious furniture
to attract the
traditionalist with
exposure to outer
world comfort and
wealth (Khamis,
2016).
1 months Manager
Training and
Brainstorming
session
Highly qualified
professionals shall
be hired to train
Saudi employees.
6 months Senior Managerial
Campaigning In order to
understand the local
market promotions
through media can
be used to deliver
the impact on Saudi
Arabia’s
4 months Marketing Head
In order to avoid making any critical errors and successfully meet the action plan, it is
important that Ikea uses benchmarking tool to identify and understand the market
continuously. The feasibility of current plan and areas of improvement can be identified
which shall make ultimately make it easier for optimizing the operational, financial and
strategic advantages (Stahl et al., 2016). Moreover, the performance evaluation from time to
time can help in framing a systematic discipline of adopting the best practices and
implementing crucial results.
2

References
Miska, C. and Pleskova, M., 2016. IKEA’s ethical controversies in Saudi Arabia.
In Intercultural Management: A Case-Based Approach to Achieving Complementarity and
Synergy (pp. 120-133). New York, NY: Palgrave Macmillan.
Khamis, S., 2016. Brand IKEA in a Global Cultural Economy: A Case Study. Consumer
Culture: Selected Essays.
SaadAlawni, M., RushamiZienYusoff, A.K.A.S. and Al-Matari, E.M., 2015. The
Relationship between Information & Communications Technology, Prior Experience and
Customer Loyalty in Saudi Arabia Insurance Industry Companies. Global Journal of
Management And Business Research.
Stahl, G.K., Miska, C., Puffer, S.M. and McCarthy, D.J., 2016. Responsible Global
Leadership in Emerging Markets. In Advances in Global Leadership (pp. 79-106). Emerald
Group Publishing Limited.
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