Ikea Malaysia and the Halal Food Crisis

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Executive Summary

This report provides an analysis and evaluation of IKEA Malaysia. The report gives the answers about the strategies of IKEA and how they response after the crisis in the restaurant. It also talks about what are the mistakes IKEA made which led to this crisis. Here, we also give suggestions for the possible approaches to overcome the cultural resistances in the clusters and identify the best approach to reach the organizational goals.

IKEA entered Malaysia in 1996 as a part of the One Utama mall in Bandar Utama, Seinngor and later relocated in Mutiara, Damansara, Selangor, in 2003 which was considered as the largest IKEA store in Asia. As a muslim country, all food outlets of Malaysia are bound to serve halal food and must have verified halal certificates. IKEA has that certificate but the suppliers supplied sausages, which is considered as non-halal and it was revealed that the halal certificates of that factories had expired that is why  IKEA store, was raided by the Malaysian Domestic Trade and Consumer Affairs and Health Ministry, the Selangor Religious Affairs Department (JAIS) officials, Malaysian Muslim Consumer Association and police and they were liable to be charged under the under the Trade Descriptions Act 1972 which provides for a fine of up to RM 250,000 (approximately £51,280 then).

They cope up with it by using some unique strategies and surprisingly have done better than before. In this report we have given the SWOT analysis of IKEA. Furthermore, it is also looking at the facts that IKEA can do as a response for the crisis in the restaurant of IKEA and how IKEA can response in a more tricky way than they did.

Introduction:

IKEA Malaysia and the Halal Food Crisis

Culture is a complex whole which includes knowledge, belief, art, morals, law, custom religion and any other capabilities and habits acquired by man as a member of society. Culture is defined as a social domain that emphasizes the practices, discourses, and material expressions, which, over time, express the continuities and discontinuities of social meaning of a life held in common. For any organization if they want to survive, cultural adaptation is a must.

Ingvar Kamprad was the founder of IKEA in 1943 in Sweden. Since then the IKEA Group has grown into a global retail brand with franchise stores in more than 53 countries/ territories. All together, there are 301 IKEA stores in 37 countries/territories. IKEA entered Malaysia in 1996. The new IKEA store open in 2003 and it was the largest in Asia at that time and it currently covers 35,000 square feet.

Cross-cultural literacy is needed for international managers for understanding of how cultural differences across and within nation can affect the way in which business is practiced. But unfortunately IKEA was failed. In 2005 they faced their most serious challenges since they started operations in the country, when their restaurants were raided by government officials on suspicion that food served there did not comply with the strict religious dietary regulations in the country because Malaysia is a Muslim country and they strongly prefer halal food. But they overcome it very tactically, restart their business on 26th March 2005 and became more popular than before.