Ikea and Its Mode of Entry

1793 words 8 pages
Ikea

5/20/2012

Global marketing | Ikea Case |

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Question 1: should Ikea change its mode of entry?
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.

In the 70’s and the 80’s the IKEA’s method as mode of entry was simple: try to establish a link with a supplier in the host country before opening a retail outlet through company-owned subsidiaries. This direct mode of entry was used to enter European and North American markets and it worked well to develop IKEA concept (without any adaptation) in these countries.

Then IKEA looked for an expansion by franchising,
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Moreover, franchising allows to the Swedish firm to control the value chain, to keep the IKEA’s spirit everywhere in the world and to have a very centralized control of headquarters. Changing the mode of entry would affect these keys factors ok IKEA’s success.

Question 2: should Ikea enter Brazil? Growth Potential of Business in Brazil - furnitures | | | | | | | | | | | | Rating | Assessment | | Market Demand Criteria | | | | | Market size | | 4 | 4 | In 2000, Brazil counts 174 million inhabitants and the furniture market represents USD 3.6 billion. 3% of the furniture market revenue was from imports. 85% of the demand (residential and office) could be interested in Ikea. In 2001 the unemployment rate was 5%, there were less than 4% of the population leaving below the international poverty line and the GDP per capita was rising to reach USD 7.4K. | Market Growth | | 3 | 7 | According to the document the growth in demand in the coming years should be about institutional furniture. However, even if the previsions are positive it is important to emphasize on how Brazil’s economy can suffer from its interdependencies with others (US, China, etc.). Even if the conditions in Brazil seem gathered to foresee a growth, it will also depend on the state of other economies. | Buying Power of Customer | 5 = highest buying power | 2 |

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