Ikea in Saudi Arabia
IKEA entered the Saudi Arabia without having thought through the potential issues they could face as a result of the cultural differences and gaps in the core beliefs of the organization versus Sharia law which is driven from religious traditions. Although they were successful from a business standpoint when they initially entered the Saudi Arabia market, it was later discovered and posted publicly that Ikea was violating their company values and organizational mission by adhering to local laws and excluding women from their catalogs. They had two options – either they could add women back in their catalog which would violate local laws, or they could do nothing in hopes that people would eventually move on to a different topic and the issue would be forgotten. Because one of the core components that make up Ikea’s identity is its commitment to social progress and justice, the best answer from an organizational mission perspective would be to add women back into the catalogs.
If IKEA decides instead to continue with business as usual, they would be risking their reputation and credibility with their major stakeholders and long-time supporters, something they’ve worked so hard to build. They would be able to generate profits in Saudi Arabia, but potentially at the expense of losing revenue in the U.S. and other countries where they generate much larger revenues and have a much larger following.
IKEA is known for its courage in making efforts towards social justice. In 1990, it was one of the first to play a TV commercial in the U.S. that included a gay couple. By putting women back into their catalogs they would be continuing those efforts. Because Saudi Arabia may see this as breaking a law, the risk they take is potentially having to close the business. Saudi Arabia only accounts for about 2% of their revenue, so it would overall be less of a risk than to lose customers in the U.S. or other more socially progressive countries. Additionally,