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    IKEA Cultural Barriers To Entry Into International Markets

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    This document discusses IKEA's expansion into international markets and the cultural barriers they faced. It provides a history and timeline of IKEA's growth from 1943 to 2011. It then examines some of the common barriers to entering new markets like costs, customer loyalty, and government policies. Specific cultural differences that challenged IKEA in countries like the US, Russia, China, and within Europe are analyzed. The document concludes with recommendations for how IKEA can improve cultural sensitivity when expanding internationally.

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    IKEA Cultural Barriers To Entry Into International Markets

    Uploaded by

    Ew
    1K views39 pages
    This document discusses IKEA's expansion into international markets and the cultural barriers they faced. It provides a history and timeline of IKEA's growth from 1943 to 2011. It then examines some of the common barriers to entering new markets like costs, customer loyalty, and government policies. Specific cultural differences that challenged IKEA in countries like the US, Russia, China, and within Europe are analyzed. The document concludes with recommendations for how IKEA can improve cultural sensitivity when expanding internationally.

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    IKEA Cultural Barriers to Entry Into International Markets

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    This document discusses IKEA's expansion into international markets and the cultural barriers they faced. It provides a history and timeline of IKEA's growth from 1943 to 2011. It then examines some of the common barriers to entering new markets like costs, customer loyalty, and government policies. Specific cultural differences that challenged IKEA in countries like the US, Russia, China, and within Europe are analyzed. The document concludes with recommendations for how IKEA can improve cultural sensitivity when expanding internationally.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views39 pages

    IKEA Cultural Barriers To Entry Into International Markets

    Uploaded by

    Ew
    This document discusses IKEA's expansion into international markets and the cultural barriers they faced. It provides a history and timeline of IKEA's growth from 1943 to 2011. It then examines some of the common barriers to entering new markets like costs, customer loyalty, and government policies. Specific cultural differences that challenged IKEA in countries like the US, Russia, China, and within Europe are analyzed. The document concludes with recommendations for how IKEA can improve cultural sensitivity when expanding internationally.

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    You are on page 1of 39

    Only while sleeping one makes no mistakes

    Ingvar Kamprad

    Cultural Barriers to Entry into International Markets - IKEAs Case Study


    Chichi Natasha Wambebe Ewa Kochanowska Maria Blanco

    Agenda
    Who What Where How IKEA Barriers to entry Case studies Recommendations

    History & Timeline

    1943 IKEA is founded

    1951 IKEA publishes 1st catalog

    1953 IKEA s first showroom

    1958 First IKEA store opens

    1963 IKEAs 1st intl store

    2011 - Thailand IKEA opens its 332nd store

    Annual sales ( billions)

    Sales worldwide
    North America 15%
    Asia & Australia 6%

    Europe 79%

    Value curve
    12 10 8 6 4

    2
    0

    IKEA

    Low-end retailers

    High-end retailers

    Barriers defined?
    Market

    Most Common Barriers


    Absolute cost advantage Economies of scale Customer loyalty Firms concentration/size Capital requirements Customer switching cost Distribution channels Government policies

    Distances to Successful Entry

    Cultural Administrative Geographic Economic

    Firms size Country risk Country openness

    Porters Five-Forces Analysis


    Supplier Power

    Buyer Power

    3.1

    Threat of Substitutes

    3.5
    Threat of new entrants

    3.1

    Rivalry
    3.1

    Complementors

    3.0

    3.1

    Brand value

    $7.3 billion, rose by 28% 10th on the list of TOP retail brands network of 1,300 suppliers in 53 countries

    Cultural differences are a nuisance at best and often a disaster


    Prof. Geert Hofstede

    Cultural Dimensions

    Power Distance Index Individualism

    Masculinity
    Uncertainty Avoidance Index Long-Term Orientation

    Cultural Dimensions
    120

    100
    80 60

    40
    20 0 Power Distance Individualism Masculinity Uncertainity Avoidance Long-Term orientation

    US

    Russia

    Sweden

    China

    USA
    1985 1st store in Philadelphia 2011 38th store in Centennial

    Initial poor performance and slow start

    Clothing storage ways

    Result

    Godis glass in the EU 10 cm high 23 cl

    Godis glass in the USA 16 cm high 40 cl

    Size matters

    Measurements
    Standard EU: 140 x 200 cm vs. 152 x 202 cm 59 7/8x 79 Standard US queen

    Language surprises for Anglophones


    Fukta

    Jerker

    Fartfull

    Lyckhem

    Families size and preferences

    One doesnt discuss taste, or do they?

    70% Modern IKEA vs. Traditional US taste

    SOLUTIONS
    Turnaround Adaptation Customization

    Revenues doubled over a four-year period US the 3rd biggest market

    IKEA experienced similar obstacles worldwide

    bureaucracy

    The unpredictable character of administrative procedures in some regions

    Language Kge

    Swedish imperialism in Denmark

    Lebanon

    China from 1998


    Misperception of IKEA as a luxury brand

    Web site challenges Low-focus on customer service concept misunderstood

    Other Culture and Life Style Barriers

    IKEAs ideas to improve its cultural sensitivity


    Learning as a driving force behind internationalization

    Backpacker Journey Program for Co-workers

    Customization of some IKEA products Food items are replaced/changed/added Products with inappropriate names are withdrawn quickly

    Recommendations
    cultural adjustment costs move along learning curve exploit previous experience

    Invest more in Market Research

    Be cheeky Educate about the Swedish design Be sensitive Customize to habits (through local detectives) Consult with linguists and cultural studies specialist Spread the IKEA spirit among new co-workers to ensure quality customer service

    Expand higher-end furniture i.e. Stockholm line

    The more stores we build and the more we increase our market share, the more we have to find ways to appeal to a broader public. Scandinavian design and style is a niche and it is not to everyones taste. But we dont want to be just another supplier of traditional furniture. Scandinavian design is what makes us unique.

    We have to find a balance


    Andres Dahlvig, president of the IKEA Group 1999-2009

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