Strategies Used by IKEA to Enter the Chinese Market

This document discusses the strategies used by IKEA to enter the Chinese market and explores their effectiveness in cultivating a presence in China. It covers the reasons for IKEA's entry into China, potential strategies used, and the impact of these strategies on IKEA's presence in the Chinese market. The document also includes a literature review on globalisation and the need for companies to expand into emerging markets. The research methodology, including research paradigms, design, and data collection methods, is also discussed.

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The different strategies used by IKEA to
enter the Chinese market

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Table of Contents
Introduction......................................................................................................................................4
Background to the Topic.............................................................................................................4
Research Question.......................................................................................................................4
Research Aims and Objectives....................................................................................................4
Research Aims.........................................................................................................................4
Research Objectives.................................................................................................................5
Rationale for choosing the Research Topic.................................................................................5
Academic and Practical Importance of the Research Topic........................................................5
Literature Review............................................................................................................................5
Advent and aspect of Globalisation.............................................................................................5
Need for companies in expanding over to emerging markets.....................................................6
Strategies used by companies for entering into emerging markets.............................................7
Literature Gap..............................................................................................................................8
Methodology....................................................................................................................................9
Research Paradigm......................................................................................................................9
Research Design..........................................................................................................................9
Research Strategy......................................................................................................................10
Data Collection Methods...........................................................................................................11
Sampling....................................................................................................................................11

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Data Analysis Methods..............................................................................................................12
Research Ethics..........................................................................................................................12
Timeline of research activities.......................................................................................................13
References......................................................................................................................................14

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Introduction
Background to the Topic
Business institutions focus on enhancing on their core competencies and in planning their
business operations associated to emerging economies in close collaboration with their corporate
objectives for gaining needed success. The firms also to understand the needs and interests of the
local consumers and the cultural parameters for designing the business and organisational
structure and products and services aimed at targeting the emerging markets. The firms are also
required to develop key networks and relationships with regional distribution and marketing
partners for developing an effective presence in the market.
Research Question
1. What encourages IKEA to enter an emerging market like China?
2. What are the potential strategies used by IKEA to enter the Chinese market?
3. How does the entry strategies used by China help IKEA in cultivating an effective
presence in the Chinese market?
Research Aims and Objectives
Research Aims
The research aims in understanding the reasons or factors that encourage the entry of IKEA into
an emerging market like China and the entry strategies used by the firm. The research activity
also focuses on understanding the effectiveness of the market entry strategies in cultivating
IKEA’s presence in China.

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Research Objectives
 To understand the factors requiring IKEA to enter the Chinese market.
 To reflect on the potential strategies used by IKEA to enter the Chinese market
 To understand the effectiveness of the entry strategies used by IKEA in developing a
potential presence in the Chinese territory.
Rationale for choosing the Research Topic
The selection of the research topic contributes in understanding the strategising potential of firms
like IKEA regards to entering emerging markets like China and subsequently in helping the firm
develop an effective presence in the emerging market.
Academic and Practical Importance of the Research Topic
The selection of the research topic and the associated research activity ideally help in
understanding the fashion in which business institutions can both enter and thereby develop their
key presence in emerging markets.
Literature Review
Advent and aspect of Globalisation
Irani and Noruzi (2011) identify globalisation as an effective process that encourages the
integration of diverse economies and societies spread over the international landscape. Further,
the aspect of globalisation has brought forward untold changes and also contributed in the
outburst of emerging trends associated to the lifestyle and socio-cultural parameters. Moreover,
the aspect of globalisation also finds increased association with the emergence of the ‘free

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market’ philosophy that that triggers the advent of trade liberalisation policies across the global
landscape (Irani & Noruzi, 2011). Again, the advent of globalisation is also figured based on the
use of internet and digital technology resources for carrying out communication and trading
activities on a considerable scale. The incidence of globalisation has potentially contributed in
the development of a global village that generates two different outcomes. The emergence of the
global village ideally helps in the growth and access to business and other opportunities while
again the issues like trade/market liberalisation and open access to emerging opportunities and
resources happens to deprive the businesses operating in emerging economies and makes them
amenable to growth of competitive pressures (Irani & Noruzi, 2011).
Globalisation is further evaluated by Edwin and Okpara (2015) as the flow of human and capital
resources, investments and products and services across international boundaries. The term
globalisation is observed to have gained emergence from the Greek word, Globe that refers to
worldwide. Globalisation is also viewed to be multi-faceted in nature such that the same
encompasses various types of globalisation associated to the socio-cultural, economic,
technological and political paradigms. The incidence of market liberalisation triggered by
globalisation is also viewed as an effective factor that would help in eliminating the chances of
discrimination based on race, gender, colour, class, ethnicity and religious backgrounds (Edwin
& Okpara, 2015).
Need for companies in expanding over to emerging markets
The emerging markets are evaluated to generate potential amount of opportunities for the
business institutions which in turn attracts them in cultivating an effective presence in such
regions. It is estimated that by the close of 2025 the value of annual consumption of the

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population associated to the emerging markets would tend to rise to an amount of $30 trillion.
The same portrays the existence of considerable demand for the products and services marketed
by international and regional firms in the emerging markets. Further, the emerging markets also
reflect to be untapped or totally new markets for the business organisations to venture into and
thus help the firms to gain the advantage of reduced competition and abundance of resources and
unexploited distribution and marketing networks. The above privileges taken into account thus
help the product/service firms venturing into emerging markets to rapidly gain on revenues and
market share.
Herrmann (2015) in an article published in Huffington Post reflected that by the close of 2025
around 230 Fortune 500 organisations would tend to expand and open up their branches along
different emerging economies. The development emerging economies essentially form groups
like PINE encompassing Philippines, Indonesia, Nigeria and finally Ethiopia and again MINT
comprising of Mexico, Indonesia, Nigeria and also Turkey. The estimation of GDP in terms of
Purchasing Power Parity (PPP) rates for Indonesia and Nigeria is taken to surpass the like
estimate made for developed nations like United Kingdom and France by the end of 2030. The
growth of middle class consumers along with development in the infrastructural, technological
and educational landscape contribute in enhancing the potential of these regions in attracting
investors and potential firms for developing their business presence (Hermann, 2015).
Strategies used by companies for entering into emerging markets
Bourlier and Gomez (2017) reflect that the employment of e-commerce is observed as an
effective strategy that is being undertaken by the business institutions retail or otherwise for
strategically expanding their business over to emerging economies. The sales values of the e-

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commerce firms are estimated to gain a growth by around 15 percent along the periods ranging
from 2015 to 2020 associated to the emerging economies. In that the emerging economies tend to
be attractive markets for the product and service companies operating across the e-commerce
platform the same attracts and encourages them to expand to such markets. The companies
focusing on expanding over to international markets like the emerging economies are required
firstly to focus on understanding the consumer demographics of the region and thereby in
customising the market and product offerings to meet the needs of the targeted customers
(Bourlier & Gomez, 2017).
Lang et al. (2018) reflect on the key success factors that contribute in helping international
organisations for actively penetrating and thereby in retaining an effective presence in the
emerging markets. The key success factors are identified as effective entry into the emerging
market and thereby in expanding over into untapped regions, generation of differentiation in
terms of innovative product offerings and competitive pricing, developing an enhanced
understanding of purchase intentions and behavioural changes of the consumers and thereby in
customising product and service offerings, development of an effective networks for distribution
and retailing of products and services along the market, developing tactics for both sourcing and
retaining of quality talents and finally focusing of development of optimal engagement with
internal and external stakeholder groups (Lang et al., 2018).
Literature Gap
Shen et al. (2017) reflects that different factors associated with the existence of autonomy in
operational issues, sectors attracting potential investment, speed at which the market entry is
being undertaken, needed knowledge and experience concerning international expansion and

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also existence of contingencies and uncertainties all govern the selection of the entry mode of
companies along emerging and developed economies (Shen et al., 2017).
Methodology
Research Paradigm
The research activity associated with understanding and evaluation of entry strategies used by
IKEA to enter an emerging market like China is carried out in terms of incorporating two
research paradigms viz. interpretivism and positivism. The application of interpretivism research
paradigm gains ground in that the research is carried out based on developing unstructured
questions that are used for interviewing both the middle and higher level management of IKEA.
Interpretivism research style in use is taken to yield narrative and in-depth inferences that helps
in understanding the perception of the interviewees associated to the research issue (Shannon-
Baker, 2016). Further, the application of positivism research style is also meant to be undertaken
such that the same requires the construction of structured questionnaire for surveying of
employees and customers of IKEA associated to the Chinese market. The application of
positivism research style yields in the generation of quantitative data sets that in turn help in both
clarifying the research findings and in making the study scientific in nature (Maginess, 2016, pp.
1-6).
Research Design
Both inductive and deductive research design styles are focused on being undertaken in terms of
carrying out the research activity. The inclusion of inductive research design gains significance
in that the researcher is required to undertake background research based on the study of

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potential literatures associated to journals, books, online articles, reports and other such
publications that highlights on market entry strategies that are undertaken by firms for entering
into emerging markets (Beta, Picciarelli, & Ogilvie, 2015). The undertaking of the literature
review contributes in the development of refining new concepts and theories associated to the
research issue. Subsequently, in the carrying of out of deductive research the researcher focuses
on developing research hypotheses and then in conducting of interviews and survey activities for
proving of the same (Kivunja & Kuyini, 2017).
Research Strategy
The application of secondary research resources in the form of books, journal articles, online
articles and other such relevant literary sources are required to be involved by the researcher for
undertaking the research on the globalisation project. The study of secondary resources rightly
contributes in serving as a background for primary research works that needs to be carried out
subsequently (Singh & Khan, 2019, p. 150). Use of secondary research also accounts to be both
cost effectively and timely in nature and thus gains needed popularity associated to research
activities. The undertaking of primary research regarding using both interview and survey
activity is associated with the development of open and close-ended questions. Focused
interviews are to be conducted of IKEA managerial staffs while surveys are required to be
carried out of both employee and consumer groups. Qualitative and narrative inferences are to be
gained based on undertaking of interviews while quantitative and specific inferences are gained
based on surveying of staffs and customers (Creswell, 2014, pp. 105-107).

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Data Collection Methods
Regarding interview, the researcher is to focus on developing unstructured questions and thereby
in collecting data based on the use of gadgets like microphones and tape recorders such that the
same contributes in development of interview transcripts. The researcher is also required to keep
a note on the observations made during the interview. Regarding survey, the development of
structured questionnaire sets are required to be made which encourage the respondents to render
their responses along a five-point likert scale incorporating parameters ranging from ‘Totally
Disagree’ to ‘Totally Agree’. The questionnaires need to be mailed to the respondents based on
the use of online and physical mailing system and also based on the use of an online survey tool
like that of Survey Monkey (Creswell, 2014, pp. 105-107).
Sampling
The focused group is to be constituted based on the application of non-probability sampling
technique, cluster sampling that contributes in the selection of specific middle and senior level
managers from the total set of managerial respondents associated to IKEA. Focused sampling
style is easy to be carried out in terms of dividing the entire working population in IKEA in
specific clusters and thereby in constituting the sample of 20 respondents out of the managerial
cluster or group (Mooij, Heskes, & Posthuma, 2015). The survey population of 100 respondents
is required to be selected based on the application of stratified random sampling such that the
entire survey population is required to be divided along two strata sets like customers and
employees. The application of stratified random sampling style reduces the chances for
occurrences of sampling errors as observed owing to use of random sampling (Rahi, 2017).

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Data Analysis Methods
Qualitative data analysis activity is required to be carried out based on the use of Ethnographic
research tools such that the grounded theory approach can be best undertaken for the purpose.
The grounded theory method requires the researcher to aptly codify and group the inferences
based on the identification of keywords and key phrases such that effective relationship can be
observed between the different groups (Singh & Khan, 2019, p. 168). Regarding, quantitative
data analysis the data gained in terms of estimating the percentage of responses against the
different categories as underlined in the likert scale attributed for each structured question need
to be tabulated in an excel sheet in the form of frequency distribution table. The inferences
gained based on the above analysis needs to be represented both in tabulated and graphical
fashion (Kienzler & Kowalkowski, 2017).
Research Ethics
In that the research focuses on using both interview and survey the researcher is required in
gaining permission from target respondents for encouraging their participation. The researcher is
further required to deliver a written promise that the personal information and inferences
provided by the respondents would not be made accessible to the public in either printed and
digital format without gaining the prior consent from them. The same enables the enhancement
of trust of the respondents on the researchers (Halcomb & Hickman, 2015).

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Timeline of research activities
Activities April May June July August September October November December January February March
Underlining
the aims,
objectives and
rationale for
carrying out
the research
Conducting of
Literature
Reviews
Reflecting on
the research
methodology
Sourcing of
Data based on
Interviews and
Surveys
Analysing of
Data
Interpretation
of the
qualitative and
quantitative
inferences
Generating
conclusions

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References
Beta, J., Picciarelli, G. & Ogilvie, C., 2015. Procedure‐related risk of miscarriage following
amniocentesis and chorionic villus sampling: a systematic review and meta‐analysis. Ultrasound
Obstet Gynecol, 45, pp.16-26.
Bourlier, A. & Gomez, G., 2017. Strategies for Expanding into Emerging Markets with E-
Commerce. Chicago: Euromonitor International.
Creswell, J.W., 2014. Research Design: Qualitative, Quantitative, and Mixed Methods
Approaches. United Kingdom : SAGE.
Edwin, A. & Okpara, A., 2015. Strategic review of the impact of globalization on the
sustainability of communities and business organisations. International Journal of Business and
Management Invention, 4(4), pp.55-62.
Halcomb, E. & Hickman, L., 2015. Mixed methods research. Nursing Standard: promoting
excellence in nursing care, 29(32), pp.41-47.
Hermann, P.P., 2015. Why Are Businesses Shifting Focus to Emerging Markets? [Online]
Available at: https://www.huffpost.com/entry/why-are-businesses-shifti_b_7024692 [Accessed
13 April 2019].
Irani, F.N.H.A. & Noruzi, M.R., 2011. Globalization and Challenges; What are the
globalization's contemporary issues? International Journal of Humanities and Social Science ,
1(6), pp.216-18.

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Kienzler, M. & Kowalkowski, C., 2017. Pricing strategy: A review of 22 years of marketing
research. Journal of Business Research, 78, pp.101-10.
Kivunja, C. & Kuyini, A.B., 2017. Understanding and Applying Research Paradigms in
Educational Contexts. International Journal of Higher Education, 6(5), pp.26-41.
Lang, N., Khanna, D., Bhattacharya, A. & Chraïti, A., 2018. Why MNCs Are Still Winning Big in
Emerging Markets. United States : Boston Consulting Group.
Maginess, T., 2016. Enhancing the Wellbeing and Wisdom of Older Learners: A co-research
paradigm. New York : Routledge.
Mooij, J.M., Heskes, T. & Posthuma, D., 2015. MAGMA: Generalized Gene-Set Analysis of
GWAS Data. PLOS Computational Biology, 11(4).
Rahi, S., 2017. Research Design and Methods: A Systematic Review of Research Paradigms,
Sampling Issues and Instruments Development. International Journal of Economics &
Management Sciences, 6(2), pp.1-5.
Shannon-Baker, P., 2016. Making Paradigms Meaningful in Mixed Methods Research. Journal
of Mixed Methods Research, 10(4), pp.319-34.
Shen, Z., Puig, F. & Paul, J., 2017. Foreign Market Entry Mode Research: A Review and
Research Agenda. The International Trade Journal, pp.1-28.
Singh, R. & Khan, A., 2019. UGC NET Paper 1 - 30 Solved Papers (2004 to 2018). New Delhi:
Disha Publications.