Enhancing global integration

IKEA became a brand leader in furniture retailing by pursuing a strategy of global integration, leveraging its standardized design and distribution process into global dominance through superior pricing and customer experience. In this chapter, we build on the IKEA story to explore the benefits of global integration strategies and to outline the key mechanisms of global integration and their implications for the organization and people management. In firms like IKEA that focus on efficiency, global integration relies on vertical control to align operations across functions and countries. We review four principal control mechanisms as well as related capabilities and people management processes: personal control exercised through expatriation; process control embedded in standardization of organizational procedures; output control supported by performance management; and normative control enabled by socialization. From a people strategy perspective, one implication of global integration is standardization of people management, and we review the key tensions related to this issue. The last section outlines the limitations of global integration and challenges ahead when traditional control mechanisms cannot cope with the complexity of demands facing the organization.