Founded by a 17-year-old young man in Sweden, IKEA has experienced rapid international growth since its beginning. It currently employs over 128,000 and operates in 36 countries. More than 10,000 items are offered and each is appeals to the eye and the wallet. These are two characteristics consumers look for when purchasing goods for their home. As of December 2008, IKEA had 292 stores in operation. (IKEA: Facts & Figures, 2008)
In an effort to enter markets not currently explored by IKEA, they could choose to participate in a joint venture with a retailer that could sell select IKEA products in their stores. The positives would be spreading IKEA’s products to locations not having exposure already, and having the ability to determine which locations would be potential sites for new stores by the popularity of its sales in partnering retail stores. The negatives could include competition with the partner retailers. For instance, if IKEA partnered with Target, and both companies had similarly designed dinner tables at comparable prices, the customer might choose Target’s own table for its higher quality. IKEA’s products would have to be sold slightly higher than at the IKEA stores due to Target’s markup and the cost to ship the goods to the retailer’s location. It might not be an easy marketing campaign if IKEA cannot maintain its low prices. Joint ventures with local companies would be a lower business risk. As risk levels decline, bolder moves to occupy strong competitive positions in each market create a more globalized strategy (Thompson, Strickland, & Gamble, 2008). If IKEA made the decision to move into new markets across the globe, a joint venture with another retailer would be a good way for them to get exposure and feedback before they made the leap to open a store in an area that might not find IKEA’s products as valuable as other markets.
References
IKEA [Facts & Figures]. (n.d.). Retrieved January 30, 2009, from...