IKEA marketing entry strategy in China

University essay from Högskolan i Jönköping/IHH, Företagsekonomi

Abstract: Nowadays, with the big background of economic globalization, economic isolation became impossible, therefore,internationalization is necessary for development of enterprise. IKEA is a Swedish multinational group which wasfounded in 1943. Under the big background of economic globalization, IKEA sizes every opportunity to entryforeign markets And nowadays IKEA had already become the world wide largest furniture retailer since 2008.IKEA actually has already entered into Chinese market as early as 1998 .The success of IKEA in Chinese marketis very outstanding. But it’s not difficult to find on IKEA strategy map of China that the most retail stores areconcentrate distributed in the first-tier cities, such as Beijing, Shanghai, Guangdong. And there are very less retailstores in Chinese inland cities and some of areas are still the market vacancy. China as a country who has themost population on the world is never lack of purchasing power. Therefore, a reasonable marketing strategyshould be analyzed to help the expansion of IKEA in Chinese market.The research purpose of this thesis is to analyze a reasonable marketing entry strategy of IKEA for the furtherexpansion in Chinese market. This research would follow the classical foreign market entry strategies analysiswith three steps. And the research focus on answering these three questions: Where should be selected as newtarget market location of IKEA in China? Which entry mode of IKEA should be applied in the future Chinesemarket? Which factors would influence IKEA timing of entry in Chinese market? Which is through the multiresearch method.Summarizing IKEA marketing entry strategy in China is a gradual process. IKEA should firstly select the marketlocation in the areas with lower cultural distance and high level of GDP and GDP per capital, and then graduallyexpand in to the areas with relatively higher cultural distance and relatively lower level of GDP and GDP percapital. And in general, this process also could be viewed as the expansion from the eastern costal area to theinland cities of China. And the gradual “internationalization” of IKEA in Chinese market also reflected on theentry mode choice. From the “joint venture” run to the coexisting of “joint venture” and “wholly ownedsubsidiary”, and finally run to the “wholly owned subsidiary” as the only entry mode of IKEA in Chinese market.Finally, as for the timing of entry, IKEA should catch the “window of opportunity”, accumulate “near marketknowledge” and pay attention to “world-of-mouth” to remain the good reputation of IKEA in China to completethe earlier entry as a gradual process with the “stepwise internationalization” into Chinese new target market.

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