IKEA: Market Entry Modes

Mode of entries are ways that UPS can determine their goals, resources and policy in order to channel their entry into India to a sustainable expansion. There are six modes of entry; exporting, turnkey projects, licensing, franchising, joint venture and subsidiary. For a service company; strategic alliance, joint venture, franchising and subsidiary are the most suitable mode of entry.

Several other companies also specialize in furniture that is discounted e.g. Walmart, Home Depot, Galiform et cetera. However, the inevitable allure of ready-to-assemble furniture aids IKEA in its growth in developing countries like China, Japan and Singapore. Global recession has also intensified IKEA’s competition as it can cause more expensive priced companies to have to reduce their prices. Such recession, however, can also decrease competition as it render’s the consumers’ spending power to lessen and thus they will not prioritize furniture as a needed expenditure.

The success of the industry was the huge experiences in the product differentiation, cost leadership and retail market. IKEA unique concept is that furniture is sold in kits that are assembled by the customers at home. The company remains one of the world most successful multinational retailing firms, operating globally. This report will explains IKEA internal and external environment using PESTLE, PORTER FIVE FORCE AND SWOT. Furthermore IKEA globalisation and localisation strategy breakdown will be examined, CSR and ethic and recommendation will be also examined.

The need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions heavily influence the firm’s other marketing-mix decisions. Company can enter International Market with many ways, some of them are as follows:

* Finding new local alliances could allow IKEA to diversify and to put in place on new market segments. By finding good partner IKEA could expand into other market segments in which an IKEA competitor has established well.

The 3 entry modes present different advantages and drawbacks, Franchising Strategy showed low control in the operations, low risk of exposure, low investment and high support from the local partner. Joint Venture entry mode indicated moderate-high investment, moderate risk, medium exposure and moderate control. Lastly, Greenfield entry mode denoted high risk, high investment, high control of the operations and high exposure.

IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international

In order to achieve sales forecast, IKEA Malaysia has to develop an appropriate marketing strategy so that it can generate sales from the target market for its future. These 7ps of marketing tools are product or service, pricing, place, promotion, people, process and physical evidence.

In this business report on the global retail business IKEA, it will cover the nature of business, influences on operations, operation processes, operation strategies and how the business can sustain competitive advantage. IKEA was founded in 1943 by Ingvar Kamprad in Älmhult, Sweden. The business established after and with the money his father awarded him for succeeding in his studies, Kamprad sustained a cash inflow by selling pens, wallets, watches, picture frames, table runners, jewellery and nylon stockings at reduced prices to customers. Although, later on in 1958, IKEA was introduced as a leader of Swedish Furniture Company as they started to produce local furniture by the Swedish local manufacturers, which gained positive attention from their customers. Eventually, developing flat packs of furniture for storage and self assembly, making their signature style of IKEA and turning the small business into a global sensation.

The stores have restaurant, childcare facilities and plenty of parking. Customers can drop off their kids at the playroom and have delicious meal when they are tired. All of these not only provide customer with a comfortable shopping environment but also let them make an ‘IKEA trip’ and enjoy the fun of buying. Besides, IKEA’s distinctive show rooms help creating differentiation. Products are strategically placed in different small spaces like rooms which allow customers imaging this furniture in their own home. This makes everything looks more attractive.

IKEA stayed in Russia during their economic downturn gaining respect from the Russian public and government. To say competitive IKEA has tried to lower cost without losing quality in their

the China market IKEA China has been allowed to exceed and expand its sourcing of

There are many different types of market entry strategies that may be implemented by a foreign firm in an emerging country. Amongst the most popular are:

The reluctance of firms to change entry modes once they are in place, and the difficulty involved in doing so, make the mode of entry decision a key strategic issue for firms operating in today’s rapidly internationalizing market place.

In 1974, Japan had attempted to establish its business in Japan through a joint venture with a Japanese company. Ikea then withdrew from Japan market in 1986 due to its long term stagnant sales. About two decades later, having the assistance of Japan External Trade Organization, Ikea