Cultural awareness for competitiveness in the global market  IKEA’s Japan adventures as case study

University essay from Linnéuniversitetet/Institutionen för organisation och entreprenörskap (OE)

Abstract: In internationalisation, entering new markets is a challenging and risky process.  There are various factors to consider when planning a strategic approach to meet the demand and preferences of customers in a foreign market. To meet this challenge, knowledge of the new market plays a major role in the outcome of internationalization. Differences in consumer tastes, preferences and needs, as well as national cultures, economic and technical levels, market structures, business practices, political stability, government policies, laws and regulations should be taken into consideration. Problems in each of these factors can make a company's international marketing strategy ineffective and counterproductive in the foreign market.  When it comes to strategy, the marketing mix is one of the focus areas in international market research and one of the most important factors to emphasize is the decision to standardize or adapt the elements in the marketing mix (4P - Product, Price, Place and Promotion).  In reality, almost no marketing mix is customized-only or standardized-only; the strategy is more about finding the balance between a standardized (extension) approach to the marketing mix and a localisation (adaptation) method that is sensitive to countries or regional differences so that the company's identity does not disappear. By comparing IKEA's marketing strategies when they entered the Japanese market in 1974 and 2006, this dissertation shows that cultural awareness of the new market has an impact on the success of internationalisation and the benefits of adapting the marketing mix. The results of this thesis also shows that IKEA's choice of strategy was largely influenced by its vision, resources and capacity, as well as the company's ability to learn from experience and be proactive in turning obstacles into opportunities.

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