case study ikea
Can you see any alternative entry strategy that IKEA could have applied when entering the Russian market? What would have been the advantages and the disadvantages of these alternative strategies ?
For IKEA there was alternatives strategy for entry the Russian market, as any other foreign market, the options for the company where:
• Exporting
• Licensing
• Joint ventures
IKEA can use any of these alternatives but there were not in the same line has the company wanted to be in Russia, so they didn´t use it and stay with the direct investment.
If the company used this strategies the advantages and disadvantages would be:
• Exporting
Advantages:
-Cheapest way to enter
- the company do not have to know a lot about the new market
- is the minimizing the risk and investment
Exporting strategy allows to have a speedy way to enter the new market and also maximizes the scale using existing facilities.
Disadvantages:
There is no company image transfer to the local market, also there is a limit access to local information and the company is seen as an outsider. By taking the export strategy the IKEA will have a lot of transport costs and have to be aware of the trade barriers and tariffs that are always a disadvantage for the company.
• Licensing
Advantages:
The advantages that comes with licensing in that the company minimizes the risk and investment and a speedy entry in the market, like in the previous alternative, but it has a difference because in here the company is able to circumvent the trade barriers. This alternative also has a very high return on investment.
Disadvantages:
There is a lack of control over use of assets for the company that its lending the license, also there have been cases when the licensee becomes a competitor for the original company. Another disadvantage is the knowledge spillovers and the fact that a license period is limited.
• Joint ventures
Advantages:
One of the most wanted advantage with tis alternative is
For IKEA there was alternatives strategy for entry the Russian market, as any other foreign market, the options for the company where:
• Exporting
• Licensing
• Joint ventures
IKEA can use any of these alternatives but there were not in the same line has the company wanted to be in Russia, so they didn´t use it and stay with the direct investment.
If the company used this strategies the advantages and disadvantages would be:
• Exporting
Advantages:
-Cheapest way to enter
- the company do not have to know a lot about the new market
- is the minimizing the risk and investment
Exporting strategy allows to have a speedy way to enter the new market and also maximizes the scale using existing facilities.
Disadvantages:
There is no company image transfer to the local market, also there is a limit access to local information and the company is seen as an outsider. By taking the export strategy the IKEA will have a lot of transport costs and have to be aware of the trade barriers and tariffs that are always a disadvantage for the company.
• Licensing
Advantages:
The advantages that comes with licensing in that the company minimizes the risk and investment and a speedy entry in the market, like in the previous alternative, but it has a difference because in here the company is able to circumvent the trade barriers. This alternative also has a very high return on investment.
Disadvantages:
There is a lack of control over use of assets for the company that its lending the license, also there have been cases when the licensee becomes a competitor for the original company. Another disadvantage is the knowledge spillovers and the fact that a license period is limited.
• Joint ventures
Advantages:
One of the most wanted advantage with tis alternative is