Uppsala

The rapidly growth in sales of IKEA in its own country thanks to its innovative new concept in furniture and its reinforcement with polish suppliers, during the 1950s and 1960s, gave to IKEA the option to consider in going further of Swedish borders. Thus, in 1963 was opened the first Store in Oslo capital of Norway. This first step was a guideline to continue the expansion process IKEA has started, and helped to strengthen the internal market in Sweden with the opening of the biggest store in Stockholm in 1965, and the second international store in Denmark in 1969.

Stages of company Internationalization (Uppsala Model) 1. International Marketing – Ethnocentric Orientation 2. Multinational Marketing – Poly centric Orientation 3. Global marketing – Geocentric Orientation 4. Transnational Marketing – Glocal

British grocery and general merchandise retailer Tesco PLC had announced they were to depart from their international operations within Japan and the United States markets, Tesco had stated that they were to end of such operations due it being unprofitable (Reuters, 2013). This paper seeks out to critically analyse and address the factors which had led to Tesco’s failure in the Japanese and United States market. To aid in justifying the influences in Tesco’s departure relevant international business literature will be evaluated for the suggested reasons for the exit. Furthermore, Part (B) of the paper seeks out to discuss the management of transnational businesses , a range of theories concerning the internationalisation of firms will be compared and contrasted, for instance the explanations presented by Vernon, Johnson and Dunning will aid towards the reasons for the internationalisation process of emerging market multinationals.

Global sourcing is an important sourcing strategy for IKEA Company. According to Hultman, Hertz and Johnsen (2012), in 2008, IKEA has 54 different sourcing countries and 30 purchasing departments which were located all over the world. With the expansion of its market, IKEA was not satisfied with selling its product only in domestic and Nordic market instead it put its higher goal in global market. Therefore the sourcing market also expanded with the growing market. There were 64% of its products were sourced from European countries which were mainly in eastern part like Czechoslovakia, Rumania and Hungary; China with a 22% share of the supply was the largest single supply market, and Poland with a 16% share (IKEA 2007). However, IKEA also trades off the cost of raw materials and cost of transportation, hence IKEA combined the Global sourcing with local sourcing strategy to lower the total cost.

In IKEA’s history two different modes of entry were used. Both were met with big success and allowed IKEA to enter new markets very easily, and in a secure way.

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

IKEA is a worldwide expanded company. They enlarge their showrooms to North America, Europe, Australia and Asia. Customers can check out IKEA’s product in the show rooms and also by checking out IKEA’s websites to get their selected products to be home delivered. This is an effective way of selling their products as customers who are busy with their own work can purchase their preferred

IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)

IKEA organized their stores in a different way than its competitors. While its competitors put its items in

The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industry.

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

Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.

In 1977 Swedish researchers at Uppsala University came up with a model/theory how businesses should grow their activities in foreign market, this model explains that companies should select an entry mode by taking into consideration their own resources and exploring costs, and risks based on market nature. (Johanson and Vahnle, 2009) Researchers at Uppsala University in their empirical study found that Swedish firms mostly started their process of internationalization by exporting, initially companies had agents that represented them in foreign market, but these firms exported in countries that had little differentiation in culture, language and political systems from their home country, this was labeled in their model as physically close countries. Uppsala Model considers two types of knowledge objective and experience based knowledge, the model describes that after first entrance in foreign market businesses understands how to work in external country, and later they step by step increase level of internationalization to physically distant countries. (Johanson and Vahnle, 2009) But, can Uppsala model be applied to services? This model was mainly reliable for manufacturing industries; a paper with contrary arguments was published in 2008, providing two variables; environment-related and service specific, to question whether Uppsala model can be used for service

The practical studies focus on identifying that internationalization was regular or incremental process .The internationalization process is study focusing on attitudes and behaviors of firms in market that are in the process of internationalization. The practical studies focus on identifying that internationalization was regular or incremental process. Some observations are also made on de-internationalization that point towards the flexibility seen in the duration of the internationalization process.

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.