Market Entry Strategies Employed by IKEA in China

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The Research and Report on Market
Entry Strategies employed by IKEA for
gaining an entrance into the Chinese
market

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Executive Summary
Summary of the Report
The report outlines based on the use of a case study associated to IKEA an effective entry
strategy taken for entering an emerging market like China. It outlined the effectiveness of the
joint venture strategy used by IKEA for entering into the Chinese consumer market and
subsequently changing the strategic model to ‘wholly owned subsidiary’. The application of the
joint venture strategy in the initial period by IKEA for entering the Chinese market helped it in
cushioning itself from the emerging business risks and also growing competition both in the
regional and international landscape. Further, the use of the joint venture as an entry strategy also
helped IKEA in optimally exploiting the existent marketing and distribution network for
developing an effective presence in the Chinese soil. The shift from joint venture to wholly
owned subsidiary model was also reflected in the research report as the need changed from
gaining an effective entry point to market expansion and penetration. IKEA working based on
the use of the wholly owned subsidiary model gained the potential of setting up its own retail
stores and other production and distribution centres along the Chinese market. The gaining of
regional consumer and market knowledge in terms of working based on the joint venture model
in the initial period helped IKEA in easily adapting its products, price structures, promotional
and distribution activities in ideally matching the Chinese culture and needs. The above strategic
model used by IKEA rightly helped the company in cultivating large number of retail stores
along the railway transportation network in that Chinese commuters are interested more in
availing public transport systems. The research report also reflects on the further outlook of
IKEA in taking resort to e-commerce and social networking applications for enhancing its
presence in the Chinese market and in generating greater market penetration.

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Outlining the Purpose
The purpose of the report is to understand the key market entry strategies that are undertaken by
business organisations for effectively expanding their business presence in key emerging
markets. The report also focuses on understanding the manner in which the business strategies
are customised for developing an effective business and marketing presence in an emerging
market like that of China.
Research Method used
Secondary research activities are incorporated regards to studying of printed literatures like
books and journals and other online resources. The study of the secondary sources provides
needful background information in carrying out primary research activities in a subsequent
fashion. Primary research methods associated to the undertaking of interview and survey
activities are constituted for gaining of contemporary information from target respondents about
the efficacy of the entry and market penetration strategies used by IKEA in China. Interview and
survey activities carried out in the report also helped in involving of qualitative and quantitative
datasets that ideally helped in meeting the objectives of the triangulated research activity.
Further, in that the research is narrowed down on IKEA the application of the case study
research method also gained use in the research report.
Findings gained
The main findings reflect that IKEA used joint venture for gaining an effective entry into the
Chinese market in contrary to use of franchising model regards to entering India that acts as
another emerging market in the Asian economy. It reflected that the use of joint venture as an
entry strategy not only helped IKEA in cushioning against competitive pressures and business

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risks but also helped the organisation to adapt its market entry strategies based on adapting to the
Chinese consumer culture and needs. Interviews and surveys were constituted in the report for
understanding the effectiveness of the market entry and other expansion strategies undertaken by
IKEA for developing and sustaining an effective presence in the Chinese market.
Main Conclusions and Recommendations
The research report concluded that IKEA gained effectiveness in using the Joint Venture mode
as a potential strategy for entering the Chinese market. It also highlighted on the subsequent
marketing strategies and also the business and market expansion models that IKEA had
undertaken for gaining needed market penetration in China. In terms of recommendations, the
research report is reflected to be further enhanced based on the incorporation of the macro and
micro business environmental analysis such that the same would be able to highlight on the
opportunities and challenges that are ought to be faced by IKEA in terms of carrying out
business in China. It would also help in analysing the level of competitiveness in the furniture
market of China that would impact IKEA.

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Table of Contents
Methodology....................................................................................................................................6
Research Philosophy....................................................................................................................6
Research Design..........................................................................................................................6
Research Strategy........................................................................................................................7
Sampling......................................................................................................................................8
Data Collection strategy..............................................................................................................9
Data Analysis strategy...............................................................................................................10
Research Ethics..........................................................................................................................11
Results............................................................................................................................................11
Results of the Interview.............................................................................................................11
Reasons for which IKEA focused on the Chinese Market....................................................11
Emerging markets other than China......................................................................................12
Market Entry Strategies undertaken by IKEA for entering China........................................12
IKEA’s market strategies in developing business in China...................................................13
Need for development of country oriented strategies............................................................13
IKEA’s presence in China.....................................................................................................14
Link between market entry strategy and corporate objectives..............................................14
Results from Survey..................................................................................................................15
Consumer demand in the Chinese consumer market.............................................................15

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Product Designs of IKEA Furniture in China........................................................................16
Affordability of IKEA Furniture to Chinese Consumers......................................................17
Effectiveness of Joint Venture as an effective entry strategy in emerging markets..............18
Responses regarding the selection of different types of market entry strategies...................19
Responses regarding the use of technology by IKEA for both expanding and developing an
effective presence in China....................................................................................................20
Responses regarding existence of Glocalisation strategy regarding IKEA’s expansion in
China......................................................................................................................................21
Discussion......................................................................................................................................22
Consumer demand in the Chinese consumer market.............................................................22
Product Designs of IKEA Furniture in China........................................................................23
Affordability of IKEA Furniture to Chinese Consumers......................................................24
Effectiveness of Joint Venture as an effective entry strategy in emerging markets..............24
Responses regarding the selection of different types of market entry strategies...................25
Responses regarding the use of technology by IKEA for both expanding and developing an
effective presence in China....................................................................................................26
Responses regarding existence of Glocalisation strategy regarding IKEA’s expansion in
China......................................................................................................................................26
Conclusion.....................................................................................................................................27
Recommendations..........................................................................................................................29
Reflection.......................................................................................................................................29

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References......................................................................................................................................32
Appendix........................................................................................................................................35
Personal Information.................................................................................................................35
Interview Questions...................................................................................................................35
Survey Questions.......................................................................................................................36

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Methodology
Research Philosophy
The research is conducted through employing interpretivism and subsequently positivism
research paradigms. Use of interpretivism research philosophy gains ground in that the
researcher focuses on developing unstructured questionnaires for interviewing middle and high
level managerial respondents working in IKEA (Shannon-Baker, 2016). Employment of
interpretivism research philosophy is identified to render in-depth inferences in narrative format
that help in understanding the perception of the respondents associated to the research issue
(Maginess, 2016, pp. 1-6). Other than interpretivism research paradigm the development of
structured questionnaires for surveying employees and consumer groups of IKEA requires the
application of positivism research paradigm. Employment of positivism research philosophy is
taken to generate specific and quantitative nature of inferences that are ideally meant to address
the research objectives. It thereby helps in clarifying the inferences gained and in making the
work scientific in nature (Kivunja & Kuyini, 2017).
Research Design
The research is based both on the application of inductive and deductive research. The
significance of employing inductive research is gained in that the research activity requires the
study of considerable number of literatures available from books, journals, online articles, online
newspapers, company reports and other publications associated to the issue of strategies used by
companies for entering emerging markets (Beta, Picciarelli, & Ogilvie, 2015). The study of
considerable number of literatures ideally help in providing salient information regarding the