Expansion Project: Towards Emerging Markets
For the last past years, Ikea has been showing interest in emerging countries. The success in Russia and China has brought Ikea’s eyes to India and Brazil. Of the five largest Ikea stores in the world one is located in Russia and three are in China.
In India, the company has already received the local government's authorization to start a plan that aims to open 25 stores with an investment of almost 2 billion USD in the country. While in India, the Ikea process of market entrance is more advanced, in Brazil the situation is a bit different.
True or False?
Ikea has been established in the country for more than one year with an office of 20 workers in Curitiba, but its entrance in the Brazilian market has been a target of speculation since 2009. Even now, with the company analyzing its arrival in this emerging economy, no data exists for the opening of the first Brazilian store and the brand has already announced that its entrance in the retail sector won’t be immediate.
Even though the Brazilian project is less advanced, the confirmation of Ikea’s interest in the national market must be considered an important change in the company's rhetoric, which had always denied any type of plan for Brazil. Latin America had been studied by Ikea for at least three years, when its first store in the region was opened in the Dominican Republic and in Puerto Rico.
ther hand, has been extensively utilized in expanding to other areas of the world.
IKEA expanded to Malaysia and approaches high- risk market by franchising. In franchising, the franchisees have to carry basic item but have the freedom to design the rest of the product to mix to fit the local needs.
Yes, we agree with this strategy. The reasons are:-
By franchising, a supplier link with host nation is established. This is a strategic risk reducing approach in which local suppliers provide valuable input. Example of the inputs are culture which is during...