IKEA Case Study: Ikea
In IKEA’s case there is a selection process in which potential franchisees are evaluated on retail experience and sufficient financial backing. The franchisee has to carry a certain number of standardized items, from the product-line of over 12,000 products, but he also has some room to adapt to local market needs. All products have to be purchased from IKEA’s product lines. All franchisees are periodically audited and compared to overall corporate performance. IKEA also offers training and operational support to its franchisees. Franchisees operate on their own, but all promotional activities and catalogues are taken care of by the …show more content…
This would be the good country to go to in South America, since Brazil has over 4.6 million hectare of forest, which can be used for locally sourcing. The advantage of sourcing locally is based on IKEA’s idea to “think global and act local”, which means that multinational corporations are encouraged to build their own roots. Furthermore Brazil´s economical situation is growing and will keep growing, since Brazil is one of the key emerging economies today. The political situation in Brazil has improved a lot over the years and is becoming more stable with time. These factors together make Brazil an attractive market and once IKEA has opened a first store in Brazil, the South American market is entered. This opens up the possibility for IKEA stores to expand to countries like Mexico which will be able to use sources from Brazil, or other countries on the South American continent, due to near-shoring.
Taking everything into account the recommendation to IKEA is as following. IKEA should firstly change their centrally controlled marketing strategy to a transnational organization as hierarchical entry mode. This would be a managerial fit to the problems on demographical and cultural differences, that IKEA is currently facing when entering new markets. IKEA should take some time to implement this new hierarchical entry mode, so that the currently problems and weakness concerning rapid growth will be solved, and could become a strength of