A market entry strategy is said to be the planned means of delivery of goods and services to a target market (Vineet 2013). Several market entry strategy are being employed by business entities and the include Joint venture, Exportation, franchising, Licensing, Outsourcing, and producing products in the target market (Wikipedia1 n.d).
a. Market entry strategy of China
IKEA in its entry into the Chinese market chose the joint venture approach which was as a result of the Chinese government foreign policy which encouraged foreign companies to team up with indigenous companies. (Li, 2007). Joint venture is when two or more investors have shared ownership and control …show more content…
This franchise was with a Japanese trading company. According to Wikipedia2 n.d a franchise is a practice of using the rights of a firm’s business model and brand for an agreed period. This method of market entry failed to yield profitable returns and after 12 years, IKEA shut down market operations in Japan (Chaletanone et al …show more content…
IKEA employed another market strategy which was to research the Japanese market and after five years IKEA understudied the Japanese market by studying 100 homes; its peculiarities and customers IKEA final decided to re-enter using other marketing approach.
IKEA set up directly in the market by opening two retail outlet owned by IKEA in 2006 located in Funabashi and in Kohoku. The opening of a sophisticated shop that could house about 40,000 persons with a restaurant that could seat 700 persons, this approach created awareness among potential customers and also intimidate the local competition with their grandeur. With the setup of several retail stores in Japan heavily invested in, IKEA has indicated its intention to succeed and dominate the Japanese market (Clayton 2013).
Ikea also employs a more realistic Japanese home display in their showroom by creating versions of Japanese housing in true colour. This enables the customers see the product offering in settings that make them more real to the Japanese people and improve their enthusiasm for IKEA products. This advertises the product offerings of IKEA by the use of Japanese houses on display in their showrooms modelling the practical use of IKEA products in true colours thereby improving visualisation and